EADS – ENABLING CHANGE
By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.
10 Dec 13. ‘A company that fails to recognise an ongoing need to improve efficiency if it is to remain competitive is one that will be ill prepared to meet the challenge of constantly changing market conditions and demands.’
These are words of warning that I first used over twenty-five years ago to describe a large and then clearly struggling Birmingham based engineering concern that has now all but disappeared. They are also words that may with the announcement of major restructuring of its defence and space business activities today that have long been recognised by EADS, the parent company of Airbus and Europe’s largest aerospace and defence equipment manufacturing organisation.
The high level restructuring plan confirmed by EADS today is aimed primarily at reducing costs and to make defence and space activities not only more competitive but an attempt to open up more doors for them in international markets. Having already taken the decision to consolidate the defence and space activities of Cassidian and Astrium into one single division earlier this year and, by July next year, to have completed integration of all current EADS activities including Airbus Commercial and Eurocopter under the single ‘Airbus Group’ brand EADS CEO Tom Enders has wasted little time concluding that if EADS defence and space businesses are to achieve the improved level of scale and access to international markets required they will also need to be more far efficient and competitive in what they do.
EADS defence activities which under the current Cassidian name are based around a range of product manufacturing including the A400M heavy-lift aircraft that is now under construction for a number of European air forces including the Royal Air Force and that also encompass the manufacturing partnership with BAE Systems on the massive Eurofighter Typhoon military fast jet build programme are already strong and profitable. But aside military aircraft production for the various European government partners and the associated export success suffice to say that EADS defence activities lack a sufficient level of international scale. It is to address this EADS management have decided that major restructuring within defence and space activities should be combined within a wider plan to change the divisional structure of the company next year and also to brand all current activities including Eurocopter under the single Airbus Group name.
Driving down cost within EADS defence and space activities through the elimination of waste and duplication of effort in product and potential resource overlapping is but one part of the Enders strategy to make the new division more competitive. Equally important is the perceived need to make better use of the massive research and development resources from within the new ‘Airbus Group’ structure and to seek and create synergies and better use of what is already available within the company wherever this may be appropriate.
Of necessity the restructuring plan announced today calls for a 5,800 reduction in headcount that will be spread across all the various divisional activities under review. To that end the company hopes that the forced level of redundancies will actually total less than 1,450 jobs and that other divisions such as Airbus Commercial and Eurocopter will be able to offer alternative employment.
The restructuring plan has clearly been well thought through and will now be discussed by the company with the various trade unions and employee groups concerned. Within the plan EADS has confirmed site consolidation and closure including planned divestment of locations in France, Germany, Spain and the United Kingdom. Importantly the new divisional structure for defence and space which will be known as Airbus DS will start operating at the executive level as early of January 1st next year.
Restructuring should p