EoW May 2008

In brief . . . Canada has signed a free trade agree- ❈ ❈ ment with the four-nation European Free Trade Association designed to improve access and fuel their $8.7 billion trade relationship. Norway, Iceland, Switzerland and Liechtenstein agreed to remove duties on goods with Canada, the EFTA countries’ fifth-largest trading partner in 2006.

the American dollar. Whatever the current woes of the US currency, it remains the principal medium of exchange in the aviation industry. When the dollar falls, Europeans’ profits fall along with it. Meanwhile, Business Week notes, EADS pays 70% of its costs in euros. The article observes: “Until recently, it seemed as though the Gallois speech at Eurocopter was one intended to indicate what the future might hold [rather] than impending reality for German, French, and Spanish workers [at Airbus]. “Now his plans, grandiosely dubbed ‘Vision 2020’ within the company, will become reality sooner than expected.” The first outpost of the transatlantic ❈ ❈ shift is, of course, the EADS research and development centre in Mobile, Alabama, where some 90 American engineers are engaged in research for the European plane maker. Plans call for the tanker version of the Airbus A330 to be assembled there, where the company’s US partner Northrop Grumman will install the electronic systems. But the Airbus plans go beyond the R&D centre. In late January, a month before the US Department of Defense awarded the Air Force contract to EADS, Airbus CEO Thomas Enders visited Alabama. If the Airbus/Northrop Grumman joint venture were to win the Air Force contract, he said, Airbus would also be assembling cargo versions of the A330 in Mobile. “But this doesn’t necessarily mean that Airbus will stop there,” notes Business Week . “Once production has successfully begun in Mobile, this provincial city could conceivably become the fourth-largest Airbus assembly site for passenger aircraft, after Hamburg, Toulouse, and Tianjin, China. “There are no such plans at present,” an EADS spokesman said. Not yet, that is, mused his interviewers.

As noted by the Post : “[The deal] gives EADS a bigger foothold in the US military aircraft business and an opportunity to expand its commercial business. It leaves Boeing, which built the KC-135 tankers that the Air Force has used for nearly 50 years, with the strong likelihood that it will have to shut down its 767 line on which its tanker is based because commercial sales of the aircraft are down.”

The Airbus coup from a European perspective

If the rivalry between Airbus and Boeing is a tiresome old story, an article translated from the German and published in the Europe edition of Business Week offers some new interest. In it, Dinah Deckstein, Cordula Meyer, and Gabor Steingart make the point that, for all the hot clamour pumped out by American lawmakers over Airbus as a threat to American workers, the company’s contract with the Pentagon for in-flight refuelling aircraft may lead to an accelerated exodus of jobs from Europe to Asia and the US (“Air Force Deal Could Cost European Jobs,” 10 th March) Harking back to a traditional New Year’s address given by the chief of Airbus parent EADS (European Aeronautic Defence and SpaceCompany) at its Eurocopter subsidiary, the three German writers identify a move away from Europe “[getting] underway in earnest.” First, EADS CEO Louis Gallois expressed his gratitude to the workers in the Bavarian town of Donauwörth. Then he told them that the group planned to shift significant portions of its production to the dollar zone. Mr Gallois said that at least 20% of the group’s workforce would be posted in the medium term to factories far from Europe, mainly in Asia and the United States. As noted by Business Week , “Such a shift would represent a major change for the company. Until now, an impressive 97% of employees at EADS and its key subsidiary, Airbus, have held European passports.” The EADS head also said that the group plans to procure both parts and complete subassemblies outside Europe, thereby protecting itself against further decline of

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EuroWire – May 2008