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10 Nov 03. The FT reported that EADS has proposed restructuring the £50bn (€72.3bn, $83.2bn) Eurofighter project to create extra “centres of excellence” in each of the four participating countries to make it more like its successful Airbus commercial aircraft programme.

EADS unveiled the plan to the German government last month, company officials said, and Berlin is considering raising the proposal in December when the four participants – UK, Italy, Spain and Germany – discuss the troubled combat fighter project.

The proposal seeks more thoroughly to integrate Eurofighter manufacture and assembly more thoroughly, although details of how that would be done were left vague and EADS is seeking to find out how far the four countries are willing to go.

At present there are separate Eurofighter assembly lines in each country, and there are a number of other duplications throughout the project. The British government, among others, has suggested that reducing such duplication could help cut the growing costs of the programme.

“We have been discussing concrete measures and proposals to make the system more efficient, but we must also know how many duplications in the production process governments are prepared to remove,” an EADS official said yesterday.
Any such integration plans would face an uphill struggle, however.

The first tranche of fighters is already in production, and workshare arrangements – in which each country gets a precise amount of manufacturing work in relation to how many aircraft they are buying – have been tortuously negotiated.

BAE Systems – the British defence giant building the aircraft in partnership with EADS and Italy’s Alenia Aerospazio, a subsidiary of Finmeccanica – said yesterday that while it was seeking to cut costs in Eurofighter, “we do not envision a major restructuring”.

These efforts to cut costs are part of a series of intense negotiations, ongoing since July, to begin production of the second tranche of 236 fighters.
Lord Bach, the UK procurement minister, has proposed cutting 10 to 20 per cent of the cost of the troubled 620-aircraft programme and has suggested eliminating duplications as a key way of achieving savings. The EADS proposal seeks to cut duplication by establishing more “centres of excellence” that could become the single provider of certain parts; currently there are some such arrangements – the right wing is made in Spain, for instance, while the front fuselage is made in the UK – but the proposal seeks further rationalisation.

Although the EADS plan falls short of calling for an outright merger of combat fighter divisions at the participating companies, the move, if approved, could be a step in that direction. The three companies consolidated their missile businesses in 2001 into London-based MBDA.

Comment: Cost have spiraled out of control on the Typhoon programme and for the aircraft to remain competitive with JSF, this type of rationalisation is vital, particularly given the threat to Tranche 3, the demise of which appears inevitable. Tranche 2 will now include the Ground Attack variant for which a source close to BATTLESPACE suggests that an extra £200m of UK money has been spent developing. The numbers the UK will procure, given a larger attrition rate for any Ground Attack variant now look closer to 153, with one source suggesting as little as 65! One stumbling block in the development of the aircraft ahs been the closed system software architecture designed into the aircraft. Germany and Italy have been reluctant to spend on upgrading the software to accommodate new weaponry, whilst the software, which is based around the Raytheon AMRAAM system, will need a major change to incorporate Meteor, which may put a question mark as to when this system will eventually enter service with Typhoon

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