Bangalore: Tom Enders, chief executive officer of European plane maker Airbus SAS, the world’s largest maker of commercial aircraft, has his task cut out in the coming years. Enders has to ensure that the A350, the long-range, mid-size, wide-body aircraft now under development, is ready in time by 2012.
He also has to ensure cost-efficiency, through measures such as relocating part of the work to low-cost countries such as India.
In an interview on his second visit in three years to Bangalore, where the firm has an engineering subsidiary, Enders talks about the challenges facing Airbus and how the contentious issue of a World Trade Organization (WTO) ruling that Airbus and US plane maker Boeing Co. got illegal aid to fund airplane programmes can be resolved. Edited excerpts:
What are your views on the recent WTO ruling that Boeing and Airbus got illegal aid from governments to develop planes, giving them an unfair advantage over others? What are the implications the ruling will have on manufacturers, going forward?
I am very relaxed about it. Anybody who is knowledgeable in this field would predict that it is not one-sided. But WTO would not just (have) ruled against the Europeans, but also against the Americans. We have always said that this conflict, which is a long one because the EU (European Union) and Americans have different support systems for the industry, cannot be solved by the WTO, but eventually, perhaps with some sort of negotiations. Right now it’s important that the WTO process runs its course and then we will see. I don’t see any immediate consequences here.
Where do you see India in the Airbus global supply chain by 2020?
If you look at what has developed in the last 5-10 years, I am confident in 2020 we will see, first of all, a much stronger role for the Airbus Engineering Centre (in Bangalore) inside the Airbus system. As you know, we are planning to ramp up to 400 people in 2013 (from 180 now) and that I think will necessarily not be the end point of the engineering centre. I think we will have more sub-contracting, particularly in those fields where Indian companies are especially good—increasingly IT-related, services-related and these areas. We will see increasing cooperation between us and universities and the institutes here. It is not by chance that this is centering very much on Bangalore and around Bangalore because this is the aerospace hub of India. It is an aviation hub and Silicon Valley in one place, so to say. On top of that there comes training. We will be far more present when it comes to training activities—alone, but also with partners, pilot training, maintenance training—to support the enormous growth of Indian aviation. I am happy to see that growth has clearly picked up again. What is important to India is infrastructure; I am very happy to see that the Indian government has done a lot in the last five years in improving infrastructure, in terms of air traffic management, airport infrastructure, in Delhi, Bangalore, Hyderabad.
Do you see a lot of your manufacturing shifting out of EU by 2020?
We certainly see that in terms of engineering activities; sub-contracting activities we have moved quite a bit compared with earlier projects into countries outside Europe for cost reasons but also for tapping some of the best and brightest talent. That’s one of the reasons we are in India. We believe you guys here are building a fantastic, highly skilled workforce. The engineers that are coming out of the universities here (at) the Airbus Engineering Centre here are a living example of it. Already, after three years of operations, it’s highly appreciated within the larger Airbus setup for its skills and competence. It’s all done on a case-to-case basis. India competes with everybody when a new project comes up; if there is an engineering project coming up, India will bid, this (Bangalore) centre will bid.
As an aircraft manufacturer, how are you looking to tackle the environmental challenges for future aircraft projects and the new taxes coming into play globally?
I don’t want to discuss the merits of various tax schemes; it puts additional financial burden on airlines at least in certain regions. What, in turn, that requires from Airbus is (that) we try to deliver even more efficient aircraft to airlines so that they can operate at a lower cost, so that they can offset the taxes and the burden governments put on them. That is what we are trying to do with the A350. We are discussing reengineering the single-aisle A320 aircraft because lower oil consumption means lower operating cost.
You mentioned reengineering of the A320 which is seeing a lot of interest. How is that moving?
We are in advanced stage of discussing that project; decision is not taken. Once we take that decision we will announce it. We plan to take a decision before the end of this year and that’s still the perspective.
Any lessons from the Boeing Dreamliner 787 project delays that you are applying to the Airbus A350 programme? Are you tightening the supply chain?
Well, (in) lots of places we are taking lessons away from the A380—quite a few where we made mistakes. We are trying to learn from the mistakes of the 787. But taking lessons from the past only is one side of the coin...The other side of the coin is to anticipate new problems, that is the real art. Everyone can learn lessons looking back. I would compare that to generals who loved to fight the last war rather than think about what the next war might look like and very often get it wrong because they think retrospectively rather than proactively into the future. Particularly if you venture into new technology, new processes, you establish new partnerships like we are doing on the A350—a much more carbon-fibre aircraft than any previous aircraft—it’s very important to anticipate the new problems that come up than just the lessons of the past. We do that, but that’s the easy part, I would say.