13 October 2006

How (not) to fix Airbus

As a European (and an ex-plane spotter!) it is sad to see the situation that Airbus has found itself in lately. It managed to take the talent of wilting country civil aerospace programmes and show that such talent with reasonable investment could compete with the best. (The ongoing debate about tax breaks is too much for here, but I would argue that the US companies have benefited from effectively similar breaks at state level, and particularly through Federal defence spending).

While Boeing descended into despair with its own management failings, corruption and older aircraft, Airbus seemed to go from strength to strength - and in the process perhaps vindicating that the Chirac/French Establishment view of European industrial collaboration COULD be successful.

Now, as most of the problems appear out in the open (I hope), it's quite clear that all is not well and hasn't been for some time. The business of civil aircraft development is a tough one indeed. But success and change can only be talked about in terms of decades, not years. What is worrying however is how when problems happen governments resort to interventionist behaviour.

Read this article from the BBC to see what I mean. The focus is on Chirac (as usual) supposedly batting for the French worker, but in fact undermining efficient corporate governance which in the long run will cost the very jobs he so wants to protect. But, he's not alone. Even right wing Angela Merkel is considering the German government intervening to buy the shares from Daimler Chrysler (that will help their debt problem). And, of course, Spain is considering doubling its stake to safeguard the jobs in its own country.

Nothing of course from the UK. I come from near the main factory that builds the wing assemblies for most Airbus aircraft. They have transformed themselves from a business jet building factory to an efficient provider of leading edge (sorry for the aviation pun) wings, even as the pound has risen. There will probably be no UK government help for them (as indeed there shouldn't be). But how that must irk when their supposed colleagues are getting taxpayer subsidies to put them out of a job.

Will France ever get a government that is prepared to be honest with its population and show that it must grasp change not fight it? How long can the average French citizen really believe that massive subsidies to small contingents (farmers, state-run firms, etc) are really a good use of their taxes? I have a high regard for most French people I've met as individuals. They're not stupid, and their country has a great amount to offer the world.

But, if Chirac goes ahead with his plans and dictats, Airbus will be a weaker international competitor in a market of just two companies. That will be a waste of an opportunity that has been won by hard work and European ingenuity.

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