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AIRBUS – TIMELY REMINDERS OF THE VALUE INTEGRITY, OPENNESS, TRANSPARENCY AND APOLOGY By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.

airbus28 Jan 15. Airbus CEO Tom Enders was on extremely good form last evening at the company’s annual UK reception held in London. An excellent event it was too and despite a handful of problems and issues Enders and his team have much to be proud of in terms of what they have delivered and achieved over the past year. For most just adding in another 1,456 net commercial aircraft orders last year might be enough to cheer them up but 2014 was also the year that witnessed Airbus delivering the first of its new wide-body generation aircraft, the A350-XWB to an airline customer as well. It was also the year in which Enders led through a huge structural re-organisation that was announced the previous year and that in its wake has witnessed the final dumping of the old EADS corporate name and importantly, the restructuring of defence, space and helicopter businesses.

I have listened to Tom Enders speak on many occasions over the year that I have known him and I have long appreciated the openness and honesty. His words of wisdom are almost certainly guaranteed to provide food for thought and even provoke. On both those scores last night was no exception. But perhaps what stood Enders out from the crowd last evening and in front of the end user customers as well was the genuine and meaningful apology that he gave for delays on the A400M programme.

There were timely reminders from Enders in this short address that as we moved into 2015 the world was not such a happy and peaceful place as we might like it to be. Corporate responsibility, he said, “was about supporting those that attempt to keep us safe, offering hope to people trying to build a future and working with governments” were all well-made points. But there were several other issues raised by Enders last evening that are extremely relevant to all of us. The first concerns UK industry strategy, the second surrounds the value and importance of Airbus to the UK economy, the third is about the importance of continuing UK membership of the EU and the fourth, about an apology for delays in the A400M programme:

UK Industry Strategy – Both the now well established Aerospace Growth Partnership and the Defence Growth Partnership were held up by the Airbus CEO last evening as being strong foundations that let companies like Airbus invest in long term development. He also pointed to the importance the UK Governments “Your Life” campaign which is designed to encourage young people to study science, engineering and mathematics. I very much agree with all of this and would remind that the very scale of investment required in individual aerospace and defence project requires that industry and government must be totally at one in terms of long term strategic thinking. Growth partnerships are designed to do just that and cynics would do as well to realise that it is only by this type of joined up thinking, investment and planning that Britain will be able to remain at the forefront of the European aerospace and defence industries.

Airbus Value Importance To Britain – The size, scale, importance and value of Airbus to Britain should certainly not be ignored. In terms of investment this is absolutely massive and so very important to the UK economy and the potential for growth. Fortunately I am in no doubt that when it comes to jobs and exports the UK coalition government gets it. Industry Minister Vince Cable was on hand to last evening to give that extra degree of certainty.

Around 100,000 jobs, the vast majority of these being highly skilled, are currently generated in the UK by Airbus on wing work, both directly and also indirectly through an extended supply chain of 400 companies. When UK built wings and Rolls-Royce built engines are involved on a specific aircraft it can be said that the value of the UK contribution represents no less than 40% of the total cost of the aircraft. All Airbus commercial aircraft wings are of course made in the UK but so too are the Rolls-Royce engines that are used on most of the wide-bodied Airbus aircraft. Add to this landing gear that is manufactured by Messier Dowty and used on certain Airbus aircraft and you get the picture!

The value of the Airbus contribution to the UK economy in terms of annual UK turnover of all aspects of its business can be estimated at close to £8bn per annum. Add in the value of Rolls-Royce engines and other UK manufactured product and services and I suspect that the overall value to the UK economy of Airbus work is closer to £20bn. So in terms of Airbus whether it is aerospace be this commercial or defence, together with helicopter and space itself – all should be seen as very important aspects of value and benefit the company brings to the UK economy.

Along a similar and ongoing theme of how industry and government are working together Tom Enders reminded the importance of the Aerospace Technology Institute and that has led to a £100m investment by Airbus in research, development and training at Broughton and Filton operations. The hope is also that the current year will see another major new investment, in partnership with the UK government, being confirmed. This is called ‘Wings of the Future’ and will it is hoped lead to further new investment being made at Filton.

Finally along this same theme, Tom Enders reminded his audience that Tom Williams, the newly appointed Chief Operating Officer for the whole Airbus Group, is the first British born national to become a member of the Executive Committee of Airbus Group. Williams who I know is well known to many of us has been the driving force behind the UK wing manufacturing for many years. That he should now head up the overall manufacturing operation as Group COO made a great deal of sense. Not to be forgotten, other Brits also climbing the ladder include Julian Whitehead and Paul Kahn who is the new head of Airbus UK.

Staying In the EU – Turning to EU membership Tom Enders stressed a view that the new generation of those running the EU in Brussels are very different to those in the past. He referred to the “shuffling” of teams in Brussels and how beneficial this had been. Importantly he stressed that he wanted Britain’s usefully critical voice being heard within rather than outside of EU membership. I share the Enders view if hoping that Britain does “stick around” in Europe and that it keeps on “asking tough questions from inside the debate

A400M – In reminding that the first and more recently, the second of what will eventually be a fleet of 22 A400M Atlas airlifters have now been delivered to the Royal Air Force at Brize Norton Tom Enders went to extraordinary lengths to apologise for delays and problems that have beset the programme and caused significant delays. “We have not performed as we would have wished to” he told us “and I must apologise for that” he said.  To an audience comprised senior Royal Air Force officers, Ministers, MP’s, senior company executives and others with strong links to industry and defence to hear an apology along the lines of that given by Enders last evening is as rare as I am sure it is hugely gratifying for those to whom it was aimed. But then, that is Tom Enders all over, a man who is rightly trusted by those he works with not least because he is recognised for his qualities of being open, honest and transparent, of saying what he means and meaning what he says. Enders went one stage further than might have been expected at such an event pledging “management and organisational consequences” for what had occurred and that “we have learned our lessons”. This can only suggest that not only will the company move mountains in order to better deliver on the A400M programme but also that more heads might be about to role.

The reassurance given to the Royal Air Force that it will receive the additional five A400M aircraft that are due to be delivered through the rest of this year and the commitment made to support the aircraft in service are both reassuring and welcome. In terms of relevance it was hugely appropriate that Enders should use the opportunity to set the record straight. What happens next in terms of management and organisational consequences I have no idea but I would suggest that radical changes may be afoot in Spain to ensure the programme gets itself back on track.

hwheeldon@wheeldonstrategic.com

chwheeldon@yahoo.co.uk

Tel: 07710 779785

 

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