Airbus, Boeing cost-cutting

AirbusNewSept. 20, 2016: Airbus is planning cost-cutting measures to offset program write-offs and delivery delays, according to The Financial Times.

One of these delays involves the well-publicized problems with the Pratt & Whitney Geared Turbo Fan engine on the A320neo.

The CEO of United Technologies, parent of PW, last week said engine deliveries could fall 50-100 engines short of the 200 originally projected for the year, with a likely shortfall of about 50.

The A320neo “gliders” (as an Airbus executive put it) are well known. Bombardier also said it will deliver about half the number of CSeries this year because of GTF issues.

Sam Pearlstein, the aerospace analyst at Wells Fargo, had this synopsis:

150 engines

  • United Technologies now expects to deliver 150 GTF shipments (vs. 200 units previously) in 2016 due to issues with fan blades. UTX projects about 350-400 deliveries (vs. 400 units previously) in 2017 with the delays being recovered over the next 9-10 months. Given recent comments from Bombardier and Airbus (and customers like Aercap), falling short of the deliveries is not a surprise. UTX loses money on the deliveries and so fewer deliveries should put upward pressure on profits, but we expect it to be offset by penalties for the OEMs and airline/lessor customers. UTX noted that it is “struggling to come down the learning curve” on the aluminum titanium fan blades. UTX wants to manufacture the blades at a rate of 30 days (vs. current 60 days) and improve the learning curve to 85% (vs. current 60%). YTD UTX delivered about 80 engines with the remaining 70 units expected in Q4.

Airbus write-downs

Airbus continues to write off costs of its A400M program. It’s now facing new losses on the A380. Lack of demand prompted two announcements for production rate reductions. The first is from 24/yr to 20/yr and the second to 12/yr in 2018. Airbus said it cannot make money on the airplane at the latter rate.

Airbus also is facing customer penalties for A320neo and A350 delivery delays. Airbus itself isn’t at fault; the delays are caused by PW and interior supplier Zodiac. But it’s their name on the side of the airplane and customers want compensation.

Boeing cost-cutting continues

Boeing also is pursuing additional cost-cutting, according to The Seattle Times. Overtime for salaried workers is being trimmed.

 

91 Comments on “Airbus, Boeing cost-cutting

  1. There’s nothing rally newsworthy to that FT piece. I’d suggest this one is more newsworthy: 🙂

    Slovakia says Europe will make Brexit ‘very painful’ for UK.
    https://www.ft.com/content/858a3fbc-7cf3-11e6-8e50-8ec15fb462f4

    “You never exclude anything when you’re talking about efficiency and synergy but we’re in the process of thinking it all through, how we can make our corporate structures leaner and more efficient,” Enders told AFP, when asked if cost-cutting could hit staff.

    Enders declined to confirm that any restructuring plan was imminent.

    However, he said “cost is always an element in any normal company, competition is relentless, competition is always increasing.

    “All we’re doing is thinking of how we can make this company faster, more efficient, more successful, in tomorrow’s business world.”

    https://www.yahoo.com/news/airbus-chief-refuses-rule-job-cuts-004342041.html

    • Europe will make Brexit “very painful” and ensure Britain is worse off outside the EU, Slovakia’s premier has said, as he dismissed the UK’s confidence about divorce talks as “bluff”.

      Robert Fico gave voice to the truculent mood in eastern Europe over Britain’s post-Brexit privileges, saying Britain would not be allowed to make EU workers “second class citizens” while continuing to enjoy the benefits of Europe’s single market.

      “It will be very difficult for the UK, very difficult,” he said in an interview with the Financial Times, “The EU will take this opportunity to show the public: ‘listen guys, now you will see why it is important to stay in the EU’. This will be the position.”

      • Extremely silly talk, you expect it from the French (they’ve been at it as well). The bluff works both ways. In the end, everything finds its own level, life will go on.

        • The most effective strategy for the EU would be to put tariffs on exported food. That way they could starve us into submission.

          • The answer to that is 20% of all cars made in Germany are exported to Britain. Then you could look at plenty of other items to see the EU needs UK more than the other way round. Slovakia views will be ignored by the big boys.
            Apart from agriculture EU tariffs for outside countries are very low anyway, under 5%, and less if not zero for those with a trade deal, which is with a surprising number of countries.

          • Never! We’ll organize a new C5/C17 aerial armada (oops, “sky-train”) bringing you endless cheese, biscuits, Spam, Oreos, milk, and tea! (LOL) You can gather on your west coast to sing “The Yanks are coming”, and “They’ll always be an England” as our planes fly overhead! (Maybe your Canadian cousins will help out too…Oh, cancel that. Trudeau’s not going to back it, with the new European trade deal on the line!)

          • @dukeofurl

            Quote: “Then you could look at plenty of other items to see the EU needs UK more than the other way round.”

            Is that what they’re saying at Faux News?

          • So after saying they would have a big economic shock after exit vote was announced, ( and were wrong) they are now saying the exit negotiations will bring them down .

            This just out today:
            “In a damning assessment of the scaremongering by the Remain camp, the Office for National Statistics declared that there had been no post-referendum economic shock.
            It even pointed to ‘indicators of strength’ – such as rising house prices, record levels of employment and soaring high street sales.”

            Slovakia has only been a nation for around 25 years , not 1000 like UK/England so we cant take them seriously.

          • @dukeofurl

            Despite your “hunky dory” assessment, determinants of long-run growth include A); growth of productivity, B); demographic changes, and C); labour force participation.

            On the UK and point A):

            Britain has a huge challenge. In the fractious lead-up to the Brexit referendum on the 23rd of June 2016, almost everything imaginable is being use for or against the European Union (EU), but on this occasion I am not referring to the EU challenge. I am alluding to the title of this post, namely the productivity of the UK, as this has direct implications for economic growth, wages and ultimately living standards. Given its importance, it should be the No 1 issue in the debate about the future of the UK, except that it is barely touched upon. This is a mistake.

            Although economic growth has resumed quite strongly since 2013, this is mainly the result of an increase in the total number of hours worked in the UK, rather than rising productivity. What this means is that Britons are working harder to produce the same amount of goods and services than was the case prior to 2007, and much harder than if productivity growth had continued at its 2% annual trend rate. The feeble productivity level leads directly to the stagnation in UK wages and living standards. This is already having significant effects in terms of the on-going package of austerity in Britain, which is being felt across the whole country and is, if anything intensifying. People´s economic pain is much more a consequence of low productivity than of the costs of the EU or the freedom of movement of people (EU immigration).

            http://anglodeutsch.eu/britains-productivity-puzzle-brexit/

            On the UK and point B) and C):

            “The elephant in the room is the actual causes of rising inequality: Our recent research shows that inequality in the UK increased not because of migration, i.e. the mobility of labour, but because of the increased fallback options of capital related to increased capital mobility in the form of FDI and financialisation; declining fallback options of labour related to the decline in collective bargaining power, deregulation of the labour market, zero hours contracts and false self-employed contracts, austerity, housing crisis and rising household debt, which itself is linked to financialisation and inequality (Guschanski and Onaran, 2016, forthcoming). As our data shows this is not a new phenomenon but a process that gained momentum since the 1980s, when increased globalisation and Thatcherism initiated a poisonous mix of austerity, deregulation of product and labour markets and slashing of workers’ rights. The irony is that in fact, according to our research results migration does not have a negative impact on either the share of wages in total income or real wages even in the service sectors predominantly hiring low-skilled labour, which also employ a large share of migrants, as we discuss in more detail below. The quick conclusions related to the impact of immigration on inequality, without adequately decomposing the impact of all other factors, misses the point that correlation is not causation. The simultaneous rise in immigration and inequality does not mean that the former causes the latter. This debate on migration based on myths also misses how migrants contribute to overcoming the care deficit in an ageing society, an especially striking fact given that a majority of voters over 65 years voted to leave (Ashcroft, 2016), and that migrants are net contributors to the social security system.

            http://www.feps-europe.eu/assets/c029ed91-8e62-4eeb-a7f3-35cb2c5d2672/ed-brexit-inequality-policy-brief-onaran-guschanki-v4pdf.pdf

      • EU has a hugely negative balance of trade with the UK. A lot of EU exports to UK will be labour as well, so no reason to make it easy and plenty of reasons to kill the lamb and eat the carcass.

        The problem wasn’t the GFC not Brussels, but Westminster.

        Median wages have gone down 10% since the GFC, second only to Greece, to the average pom decided he was sick of it and burnt the house as it doesn’t shelter him.

          • Their unemployment rate is half that of the big EU countries and a fraction of that of Greece. Numbers like that mean nothing when you dont have a job or poor prospects even after leaving university – they used to go to the UK for that!

          • Thats what I was saying , the educated youg people in France, Italy Spain, Poland flock to the UK for ” a job” and a foot on the ladder of prosperity.

            OECD ?
            “The Bank of England also admitted yesterday that business sentiment had improved about Britain’s post-Brexit prospects, and said the fall in the pound had boosted tourism.
            And, in a significant U-turn, the OECD was forced to raise its growth forecasts for the UK economy, having been among the many international forecasters to predict economic catastrophe”.

            Economic catastrophe ? That would the stagnant rest of Europe under the EU’s harsh austerity measures

          • @dukeofurl

            OECD?

            Yes, the OECD data was from all of the 35 OECD member countries, including the US, Japan, Australia etc.

            Thats what I was saying , the educated youg people in France, Italy Spain, Poland flock to the UK for ” a job” and a foot on the ladder of prosperity.

            Most of the EU Citizens that have come to work in the UK are of working age, are healthy, and have been educated in their home countries – countries that have bourne the expenses of their healthcare, education, etc only to see them leave at precisely the time they are able to pay back into the system.

            HMRC figures* also show that EU migrants more than pay their way. Those who arrived in the UK in the last four years paid £2.54bn more in income tax and national insurance than they received in tax credits or child benefit in 2013-14. The UK Office of Budget Responsibility has estimated that their labour contribution is helping to grow the UK economy by an additional 0.6 percent a year.

            * https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/522811/HMRC-Ad_Hoc_Stats_Release-EEA_Nationals_net_contribution_2013-2014.pdf

            Meanwhile, 1.2 million people born in the UK live in other EU countries – 300,000 in Spain.

            “The Bank of England also admitted yesterday that business sentiment had improved about Britain’s post-Brexit prospects, and said the fall in the pound had boosted tourism. And, in a significant U-turn, the OECD was forced to raise its growth forecasts for the UK economy, having been among the many international forecasters to predict economic catastrophe”.

            Really?

            Brexit latest: OECD halves UK growth forecast due to EU referendum vote

            The OECD has slashed its 2017 growth forecast for the UK in half as a result of the Brexit vote and warned of “very high” uncertainty ahead.

            The multilateral economics institution had projected UK GDP growth next year of 2 per cent in June, but today reduced that to just 1 per cent in its latest Interim Economic Outlook.

            That was easily the largest downgrade for any major advanced economy.

            The OECD acknowledged that financial markets had stabilised since the immediate volatility in the wake of the referendum and that swift action by the Bank of England had helped.

            The UK’s 2016 forecast, however, was revised up from 1.7 per cent to 1.8 per cent.

            http://www.independent.co.uk/news/business/news/brexit-latest-oecd-halves-uk-growth-forecast-due-to-eu-referendum-vote-a7320191.html

            Now, the UK is still a full EU member – the UK government hasn’t even triggered Article 50. What you saw in the immediate aftermath of the Brexit referendum was the jittery global market reactions to the uncertainty regarding the future status of the UK vis-à-vis the single market. Come back in 5 years.

            For the UK to “keep the privileges” of access to the single market, it would have to accept basic EU values such as the free movement of people – just as Norway does – something the hard core brexiters would loathe.

            We’ll probably not see an immediate exodus of multinationals from the UK following Brexit, but the long-term effects could be quite severe for the UK economy – as I’ve already outlined.

          • @dukeofurl

            “Thats what I was saying , the educated youg people in France, Italy Spain, Poland flock to the UK for ” a job” and a foot on the ladder of prosperity”

            Reminds me of a friend of mine who flocked to London for a job and once she had a few years on her CV flocked out of there again and a Bulgarian work mate who said that if you are paid 150 EUr a month to work really you are unemployed.

            Then again how many unpaid internships are there in London? Sometimes a job isn’t really a job.

          • Does this actually go beyond anecdotal?

            IMU the UK has a majority of Commonwealth qualified immigration and from historic connections a lot of Polish people ( bridging PL entry into the EU )

        • I think that a lot of leavers thought the exact opposite. Time to live in the real world,I promise you nothing but blood. Sweat and tears, that sort of thing. All the nasty threats whether true or not are counter productive and have just confirmed people’s feelings about the EU and destroyed any possibility of a second vote. Those remaining inside the EU would do well to focus on the price the UK has to pay, it’s the same for the remaining countries, they just haven’t been presented with the bill.

    • Dear Sir / Madam,

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      1. Install big huge parachute over the plane which is fully covered over the roof means about 1 feet.
      2.Power of parachute is not link with power of the plane means separate batter or Power generator.
      3.install auto system or manual system to activate parachute during any circumstances failure like electrical fault, hydrolic fault, engine failure & etc….
      If This safety install every flight might be in future we save live.
      because now a days too many plane crash & lost of human live.

  2. It is interesting to see the responses of those countries who have benefited massively from the free movement of people’s in Europe. A high proportion of staff I employ are just those people, Romanians, Bulgarians and others, I welcome them. Many have already got UK citizenship which says something I think.

    The problem comes with the volume. You have to remember that the UK opened its borders to free movement 5 years before other original members and I foresee the same issues in France, Netherlands and Germany to name a few.

    I do not like the thought but I believe the EU is going to have more issues of the same and this bluster from the central and Eastern European countries has to be tempered with realism. Otherwise other countries may decide to exit in similar manner to Britain.

    The EU gives major benefits but the scale of migration upsets the local population and they are the ones who put the X in the box. Brexit is where we are going like it or not, I think it will force government to address long-term problems in the UK, there is no excuse any more.

    Back to the topic, the UK is going for a weak currency strategy it appears which immediately makes it more competitive as a supplier in such a global market.

    • In Germany we have had a so called “Wirtschaftswunder” after the country lay in ruins, which would have been completely impossible without American financing AND massive immigration from East Germany, Italy, Greece, Spain, and later Turkey etc. In my company 1/3 are immigrants (from the former USSR and Poland) and without them we would be hard pressed. One reason for the strong German economy is constant immigration, just like in the US.
      With the Brexit the UK are shooting themselfs in both feet by loosing a good portions of highly valuable immigration and by excluding themselves from the common market.
      Yes, voters have made that decision. I believe a very stupid decision, which was not driven by rationale but by fear and anger and the feeling to be left behind and alone by their elites. (See a pattern here with Trump?)
      The wise men that wrote the new German constitution new exactly why plebiscites should only be allowed on matter of local politics.
      Back to the A380: The Brexit might very well make business for Airbus more difficult. If it goes the bad and ugly way, the wing production might one day have to move from Wales to some EU country.

      • Stop it. Nothing has really changed immigration levels remain high and there is no way any of the EU immigrants are going to be sent back. Obviously the UK can’t say this until they know that their ex pats are OK.
        The company that I do most work for employs lots of Poles, they are needed. Actually visit the UK and stop reading the Guardian.

        • Also, did you know that the referendum actually has no legal force, this is why we only get one every 20years or so.

          • We’re going to be told off by Scott if we’re not careful! Obviously the immediate effect of the falling pound has been in Airbuses favour.

          • I don’t think the immigration issue is a matter of debate for this forum, please.

            Hamilton

          • Before he does, while Birth rates in the EU play a big part, that is not true of the US.

            I do read the contention we are a nation of Immigrants (US) but I do question if that is really true for a developed nation with a birth rate that is not too low?

            I have seen the carpenters, plumbing and electrical (and paint ) trades go way down with cheap and often undocumented (Illegal) labor.

            Big issue over here as well.

        • @Grubbie,
          just been to England for summer holidays, which we enjoyed tremendously. I am doing very good business with the UK for the past 15 years and of course made lots of business trips during these years, so I think I am in touch.
          We all don’t know how this Brexit will turn out, but if the hard-core Brexiteers get it their way I assume there will be lots of trouble with tight joint-ventures like Airbus Industries which might easily result in moving production from the UK.
          Still, in my own best interest I am hoping for a much better solution and I have actually not even given up hope that the UK might stay inside the UK, but I think chances are only 50% for the first and 10% for the latter.

      • Dear gundolf

        How would Brexit ‘going bad’ impact materially on wing production in Broughton any more than fuselage build in Hamburg or final assembly in Toulouse?

        If you believe the level of immigration in the UK is materially lower than in Europe then you are deluded. Britain has enjoyed substantial immigration for many years from many countries. Critically it opened its borders 5 years earlier than Schengen to EU immigration and as such has had considerably greater proportionate immigration in recent years.

        I believe you have completely missed the point. The issue is growth, I have lived in London (an immigrant from the north!!) for 23 years in which time the population has grown by 20%. That level of growth is unsustainable to any community. I believe London is more international than any city and I applaud it but the basics of life, housing, transport, health etc are definitely creaking at the seams.

        (And sir grub I enjoy reading the Manchester guardian, being northern….)

        • How would Brexit ‘going bad’ impact materially on wing production in Broughton any more than fuselage build in Hamburg or final assembly in Toulouse?

          It wouldn’t impact materially on Airbus’s existing Product lines. For all future projects, though, I’d be very careful to assume that with a “bad Brexit”, Airbus would just continue doing business as usual in Britain.

          • A mayor problem for Airbus and other companies will be the free movement of engineers or workers. Today Airbus can send its employees around the EU to fix problems or find new solutions without thinking much about immigration laws.

            The UK wants a free financial market. Why should the EU offer this privilege in case the UK did not offer a free labour market? In the end the UK will accept like Switzerland the EU rules without a vote.

    • @Sowerbob

      IMJ, Britain’s is likely to be offered just three options by the remaining 27 EU members: The Norwegian model of the European Economic Area (EEA); the Canadian model of a free trade agreement (FTA); and the rules of the WTO.

      If Britain will choose not to accept an EEA “degradation” and opt for either a FTA model or just playing by the rules of the WTO, IMJ the last all new Airbus wing being manufactured at Broughton will be the A350 wing. The next one will then probably be oroduced at a final assembly in Germany (i.e. lower composite wing cover would be manufactured in Illescas, Spain and upper composite wing cover would be manufactured at Stade, Germany etc.). However, it’s highly unlikely that Airbus would move the existing A320/A330/A350/A380 wing manufacturing center out of Broughton.

      As for the “volume” of Eastern Europeans in the UK, perhaps Brexiters should get some perspective on how it is in the “promised land” – across the North Sea. 😉

      Picture a scene familiar to many who live in the English countryside. Armies of eastern European farm workers are toiling in the fields. In nearby towns and cities, Latvians are serving lattes in cafes, Lithuanians are cleaning homes, and thousands of Poles are on building sites.

      But this is not Britain. It is Norway, the Scandinavian nation that twice refused to join the EU and is held out by Brexiteers as some kind of Brussels-free nirvana that we should emulate. Yet the reality was rather different when I visited last week.

      Yes, the country’s immigration levels are different to Britain – but not in the way Farage and his friends might have you believe.

      Less than five per cent of the British population comes from EU and EEA member countries – but such migrants make up almost seven per cent of the population of Norway. Edith Stylo, president of Norway’s Polish Club, said there are 200,000 of her fellow Poles alone in this country of five million people, with 16,000 more arriving this year.

      ‘It makes no difference being inside or outside the EU,’ said author and analyst Sylo Taraku. ‘Migrants from EU countries can come here for three months to find work, then stay if they find a job.’

      In one regard, Norway is closer to the core EU members than Britain. While Britain accepted only a handful of asylum applications following last year’s Middle East meltdown, Norway received more than 31,000.

      http://www.ianbirrell.com/should-we-follow-norway-to-the-eu-exit-nei/

      • I never thought about Norway as a promised land, beautiful though it no doubt is. The issue for Britain is that it is a ‘big’ country (no offence intended) and as such the talk of a Norway or Swiss model is always going to be a bit pie in the sky. We are a different category of ‘problem’ to th EU and our leaving casts doubt both within and without UK and the EU that we could all do without. What will be will probably surprise us all both positively and negatively.

        Not sure how that conflates to a desire to strip production from the UK. I would suggest given existing differences in currency will continue that in terms of currency hedge it is positive to Airbus to continue as well as the in situ expertise and infrastructure. The one thing that works against it would be a desire to concentrate manufacture, something that could easily happen to cut unnecessary Beluga XL trips amongst other costs.

        I am not

        • @Sowerbob

          With all due respect, but IMHO it’s borderline self-delusion, and rather arrogant, to assume that Britain is still regarded as a “great” power and thus entitled to “special treatment” by the remaining 27 EU countries – with all of whom deciding they would go out of the way in order to accommodate Britain and placate Brexiters.

          As for Airbus – what I’m talking about is the future and not the present Airbus footprint in the UK. Again, a “hard Brexit” would IMJ lead to Airbus gradually moving their wing centre of excellence away from Broughton to Germany, as <b<all future Airbus wings would be destined to be produced in Germany.

          https://www.youtube.com/watch?v=7Rn9tzirks4

          • No delusions, solely big in population so can’t play at the margins or ever expect specific concessions is what I meant, also big in consequence to the EU as a trading partner, I am the last to play the nationalist card

            Apologies Scott, just a clarification 🙂

          • OV-99: So what you are saying is that Airbus is not a separate European company but a creature of the EU?

            Its not allowed to make its decisions based on economic grounds such as Britain having a wing factory the expertise there.

            Isn’t that the same revisionist non running dog capitalistic thinking that has saddled the supposedly commercially produced A400 with a horrible engine?

            Is Airbus going to pull the Alabama and China assembly lines back, neither one is remotely EU!

            EU issues aside, has not Britain throwing in its fair share of Free Lunch money as well as local subsides aka Washington state on a lesser scale?

            I am shocked, I say, shocked.

          • @ Sowerbob

            Big in population doesn’t mean that the remaining 27 EU countries would want to be doing the UK any favours. First, they would not want to encourage any other members to try to emulate Brexit. 2nd, the EU’s bargaining position is much better than that of the UK’s; 6%-7% of total exports of other EU countries going to the UK vs. 45% of the UK’s exports going to the EU, while the UK accounts for only 4%-5% of all other EU countries’ imports. Third, Germany exports cars all over the world so if there is a temporary stop of BMWs going to the UK, who will squeal first? People in the UK will continue to buy German products because of the quality of German products – not because they are cheap.

          • @TransWorld

            There’s no need to be shocked – that is, if you know the facts. 😉

            Airbus is like any other multinational company operating large manufacturing plants connected to operations all over the EU. All of the the automotive manufacturing plants as well as most other larger manufacturing facilities will have a problem if extra work and costs (i.e. tariffs) will be added to their UK activities when the UK leaves the EU. For example, the Ford Motor Company Limited, manufactures around two million engines in the UK for engines that are installed in cars that are produced in plants located in other EU countries – and a significant amount of the parts for those engines come in to the UK from all over the EU as well.

            Again, with apologies to grubbie for quoting from the Guardian:

            Britain cannot easily dismiss Japanese Brexit warning letter

            If non-EU countries’ economic interests continue to be threatened, 15-page report may well be the first of many warning shots.

            The Japanese government’s letter setting out its Brexit demands is deeply troubling to the UK since it is clear Japanese companies want Theresa May to negotiate a deal that leaves Britain not just in the EU customs union, and single market, but also retains a free flow of workers between the EU and the UK.

            The British government could not possibly accede to these demands if May’s mantra that Brexit means Brexit is to mean anything. Yet the Japanese requests – set out in a 15-page memo – are likely to become the benchmark by which many countries with strong economic ties to the UK will judge the outcome of the talks.

            Above all, the Japanese memo underlines that the UK is not only negotiating bilaterally with the EU commission and council of ministers, but with many other foreign firms that have invested in the UK, each of which is quite capable of upping sticks in the next phase of their investment cycle.

            http://www.theguardian.com/politics/2016/sep/04/britain-japanese-brexit-letter-eu

          • At ov-099

            I am essentially arguing the same as you. You seem to want to be antagonistic but I agree with almost all you say. What I was getting at is that if the country was smaller in population and economic significance then the EU might be inclined to fudge a few matters and the negotiations would be a relatively minor and administrative affair. The issue as I see it is that the negotiations will be highly charged because Britain is the 3rd/4th largest economy and it will have major ramifications for the EU as well as Britain. Further the whole process will be highly politicised which makes any sort of agreement subject to whim from all sides in a manner I am sure any Norwegian agreement was not.

            I am not saying anything will be easy but the fact is Brexit will happen whether we like it or not and it is an issue for both Britain and the EU. I don’t think Scott want this diversion and I trust I have covered all points to your satisfaction. Let’s get back to things with wings 🙂

          • @Sowerbob

            You seem to want to be antagonistic.

            No, I don’t. However, if that’s your impression – my apologies.

            Further the whole process will be highly politicised which makes any sort of agreement subject to whim from all sides in a manner I am sure any Norwegian agreement was not.

            First, please do note that the UK was a founding member of the European Free Trade Association (EFTA). The UK, of course, left EFTA in 1973, in favour of the EEC.

            2nd, the EEA agreement was negotiated between the European Economic Community (EEC – now EU) and the then seven states of EFTA – Austria, Finland, Iceland, Liechtenstein, Norway, Sweden and Switzerland. FWIW, these seven countries have a combined total population about 60 percent that of the UK, while their combined nominal GDP in 2016 is about 76 percent that of the GDP of the UK (NB: 2016 data).

            3rd, the EEA agreement required that these seven countries had to accept the same “four freedoms” as the then European Economic Community: the free movement of goods, persons, services, and capital among the EEA countries.

            4th, Believing, therefore, that the UK – with a population that’s only two thirds larger than the 7 EFTA countries that negotiated the EEA agreement with the EEC, but having an economy that’s just 30 percent larger (i.e. 2016 data), will have the clout to negotiate an agreement that will more or less exempt the UK from the “four freedoms”, is IMHO nothing but delusional.

            https://en.wikipedia.org/wiki/European_Free_Trade_Association#Relationship_with_the_European_Union

            https://en.wikipedia.org/wiki/European_Economic_Area

            Let’s get back to things with wings

            Well, in my first comment in this thread I quoted Tom Enders saying that “cost is always an element in any normal company, competition is relentless, competition is always increasing. All we’re doing is thinking of how we can make this company faster, more efficient, more successful, in tomorrow’s business world.”

            When we compare that statement with that of
            seven senior Airbus executives, one shouldn’t be too surprised that Airbus, Ford, Nissan are quite capable of “upping sticks” in the next phase of their investment cycle.

            Our business model is entirely based on our ability to move products, people and ideas around Europe without any restriction,” they wrote. “And we do not believe leaving will increase the competitiveness of our British-based operations.” The executives — who include Tom Williams, the company’s chief operating officer, and Paul Kahn, the president of Airbus Group UK — said Airbus would not end its activities in the UK in the event of a vote to leave the EU. But they warned that future investments depended “very much on the economic environment in which the company operates”.

            http://www.ft.com/cms/s/0/a433d6f6-fa69-11e5-b3f6-11d5706b613b.html#axzz4Ktm50crW

        • “I never thought about Norway as a promised land, beautiful though it no doubt is. ”

          Actually similar to Switzerland.
          25 .. 15 years ago qualified people from Germany were drawn as expats into the Swiss labor market. Today Swiss ambivalence to those expat workers has increased quite a bit.
          In the recent decade or two this stream has been redirected to Norway. I regularly meet people here that are packing with a satisfactory to juicy job offer in their pocket.

          But:
          current media highlights detract from established background information.
          Germany tended to have about a million people “churn” every year with much smaller net gains/losses. Large international “transplantions” are not that uncommon. Just look at forex the “*sky” prevalence of family names in German industiral regions ( transplants from Poland a century ago ) . Economic migration has been the norm.

      • The A350 wing comes in parts from places like Spirit in South Carolina.

        This is not like 1985 when the raw materials came in one end and the product came out the other. Major structural sections have parts or sub assemblies from all over the world.
        Airbus is a rational business it looks to the highest quality at the best price, they arent like low productivity EU farmers who want to keep out product because it doesnt come from EU.

        • Ah, having lived in South Carolina a few years ago, there are NO significant Spirit operations in South Carolina. There’s Spirit operations in Kinston, NORTH Carolina–over 100 miles from South Carolina!

          • That would probably be RLI to RR for an all new UltraFan engine optimsed for a next generation A380 – i.e. not merely a “neo”, but a 777X-type development with a re-designed wing with folding wingtips, outfitted with new composite wing covers manufactured in Spain and Germany. 😉

          • That comment was supposed to be in response to sowerbob downthread.

        • @dukeofurl

          Airbus is still a predominantly European company with a massive industrial footprint within the European single market – just like Boeing is still a predominantly American company with a massive industrial footprint within the US single market (i.e. Boeing does not have to pay tariffs for parts being produced in Wichita).

          The reasons behind moving production out of Europe, though, are not what might be expected. They were made not because it is cheaper or easier but because of the difficulties of breaking into certain markets and the lure of government support. Production of the C295 military aircraft was moved to Indonesia because its government provided financial and regulatory incentives to foreign aircraft manufacturers to shift its domestic industry up the value chain. In China, it would also have been difficult to increase sales without a joint venture.

          The long-term threat is that those countries will develop competitive aircraft manufacturing industries of their own. China, Russia, India and Brazil all have aspirations to become global players.

          Similarly, Airbus’s decision to open a facility in the US last year was to help it compete for government and commercial contracts. In 2008, for example, the federal government’s decision to acquire its military tanker plane, the MRTT, was overturned on political grounds. “When we can offer American Airlines an American-built plane, it will make a difference,” says Williams wryly.

          But the company’s decision to stay predominantly European is not just political or the result of its history. It is also because by doing so it can benefit from one of the region’s main competitive advantages in the 21st century: its ability to innovate, particularly in technology. “Innovation is not sudden,” says Jesús Portillo, who manages the A400M programme in Seville.

          http://www.ft.com/cms/s/2/c9a9a77c-db07-11e3-8273-00144feabdc0.html

          • The last time I looked the UK was still geographically in Europe. I am sure that when the next round of RLI is required Theresa will be somewhere near the front of the queue.

  3. I am confused about the learning curve percentage quoted by UTX, 60% sounds wrong and a move from 60% to 85% would suggest that the learning curve is getting worse.

    A lower percentage suggests that the learning effect is higher and the cumulative average time taken to produce units is falling at a quicker rate. I have no idea of the expected learning curves for engine manufacturers but for OEMs the typical value (quoted for b777 I think but representative of the industry over many years) is in the region of 83-84%

  4. The cost of manufacture of the A380 is always going to be its major impediment to success. The manner in which they are produced is fundamentally different to all other Airbuses even just in FAL. Add in the labyrinthine process by which the parts get there and the painting is done ‘a short hop away’ and there is little chance of major improvement. Is there scope to push more A320 production to Hamburg and bring some of the big items (fuselage, wings perhaps) into Toulouse. Without drastic action the unit price will always struggle against WB aircraft produced in higher numbers on more automated processes.

    • Ahh but then the Free Lunch aid gets shaky as everyone puts in to that pool so they get a piece of the pie. No pie, no aid.

      Price that gets paid for that sort of state aid.

      Boeing did it much better, no strings attached!

    • IMJ, there’s no reason to do anything to the A380 manufacturing architecture before Airbus decides to launch a second generation A380 – (i.e. EIS: 2025; one-generation-beyond-GE9X-engines, composite wings etc.). In fact, the current set-up probably works quite well as they’re essentially manufacturing airframes for only one customer.

  5. Whats most interesting about P&W is that its the simple part at issue (low cost fan blades).

    Maybe they should make them in the US!

    Other suppliers not perfuming as well and you have to wonder if they are not hiding behind the fan blades.

    Zodiak issue was masking other supply issues on the A350, that’s getting corrected and now they are seeing the other laggards.

    Ahh the fun of industrialized production.

    There was some question on it for the A350 after the initial fist 17 were done and then shifted to the updated model.

    That looks to have validity.

    • “Maybe they should make them in the US!”

      Having worked at a huge aerospace company (and now a division) that UTC bought in recent years, I much suspected the same when this topic of out-sourcing came up under an earlier LeeHamNews story’s comments. As a long time contract worker, I would hear managers complain about having to send work to LCCs (Low Cost Countries.) In my area, they had to set up an area to redo work done in a faraway land.

      • While this is not true of all products, it is true of many.

        You have to wonder how that applies to critical aircraft parts. If an F-35 supplier can slip in stuff that is not fuel resistant, when it resides in a fuel tank?

        Many years back I worked on the AK Pipeline.

        The main line was sourced from Japan, it developed severe corrosion issues.

        The vertical pipes that hold the cross beam above ground came from Japan and the US.

        US pipe never split when they dropped the ring shank torpedo thing down it (to give it grip in the ground and not pop out)

        All the Japan made pipe split.

        16 Penny Sinkers the same. US made and you could hit at any reasonable angle, they did not bend.

        Korean made, perfect blow or they bent.

        As a small operation we would go to the store and sort through the boxes to get US made ones.

        Bigger operations just took what they were given.

        Point being, on what was money savers, you paid a price for cheap (not lower cost, cheap)

        Interesting though, the Sinkers were the same price, someone pocketed the difference and it was not the carpenters doing the pocketing.

        I long came to the conclusion that the low cost countries could not make anything (for the most part) of good quality that was less costly than a US made tool. Cheap tools, yep, good tools, no. Seemed to hold true for bearings which I work with a lot.

        I suppose Scott will talk to me sternly , sigh. (there is some airplane content on the top though!)

  6. I can’t see any particular reason why Airbus would want to move wing production from the UK. Airbus components come from all over the world. There has always been a massive amount of squabbling both inside the EU and the Airbus consortium, and that won’t change. Germany has made frequent attempts at grabbing wing production, particularly composites.
    Britain was not a member of the EEC when Airbus was founded and interestingly the German government lent Hawker Sydney the money to tool up as the British government had lost faith after investing in countless similar projects. A excellent example of politicians not being any good at picking winners.
    I’m just going to try on my brown shirt for tomorrow’s big march………
    .

    • Well put on the wings.

      Please do not even jest about Brown shirts, that hits all to close to home in our current election situation .

      • The A350 wing spars come from the US! Other parts for Airbus planes come from Korea or China. The worldwide supply chain is just a fact of life and wont change for large civil aircraft
        “Spirit Europe (Prestwick, U.K.), the U.K. based European Headquarters of Spirit AeroSystems Inc. (Wichita, Kan.) announced on July 7 [2008] that it has signed a contract with Airbus Industrie (Toulouse, France) to design and produce a major wing structure for the A350 XWB commercial airplane. Spirit will design and assemble the wing leading edge structure primarily at its European facility in Prestwick, Scotland. The composite front spar will be built at Spirit’s recently announced facility in Kinston, N.C., while composite subassemblies are manufactured at the Spirit Malaysia facility in Subang, near Kuala Lumpur, Malaysia.

        North Carolina, Prestwick, Malaysia- and thats just one US supplier

  7. P&W fan blade problem seems to be quite serious. It sounds as though it’s an additive process followed by some machining, how could this go wrong at this late stage and what can be done to correct it? The only explanation I can think of is that there’s a high level of rejected parts
    It is all a bit secretive, anyone know anything about how they’re made?

    • “The only explanation I can think of is that there’s a high level of rejected parts.”

      Yes, I also believe that there is a high level of rejected parts. But it is not clear for me why they have a quality issue. In fact there seems to be two separate issues to consider. One is a quality control issue and the other is the slow production rate. And I think one is related to the other.

      My understanding is that P&W are working on an automated process to manufacture the blades. But this process is not working properly and they are still trying to find a solution. In the meantime they have to do the work by hand. But because the process requires specialized skills the output remains relatively low. And because the parts are made by hand they probably lack consistency, and this may be where the quality issue stems from. An alternate explanation is that because the automated precess is not working properly the quality of the parts is not consistent and they have to be reworked by hand. I don’t really know, I am just speculating.

      It is difficult to get a clear picture because there is a high level of secrecy surrounding the type of blades they have developed for the GTF engine. Understandably P&W do not want to reveal too many details about their proprietary design. They refer to the technique they have developed as “hybrid-metallic”, which makes use essentially of some kind of aluminium alloy.

      • I have seen some additive parts at trade shows where two different metals are used fused together all in one go. So for example aluminium blade meshed together with a titanium leading edge. I think its bleeding edge though, maybe this is what they’re doing.

      • P&Ws own plant in Singapore. Seems I misread additive, it’s actually adaptive machining, whatever that is. Aalco talks of high tech forgings.

        • I have now researched a bit. Adaptive machining basically seems to mean that it scans the surface while machining. This seems to imply that the problem is with blending and smoothing. So I’m guessing that this would be a highly skilled manual job and they are trying to automate the process to cope with the massive ramp up.Maybe they are already implementing a solution or maybe this could be very tricky.

        • My understanding is that the GTF fan blades are manufactured in two different locations, like the engines are. The latter are manufactured in the US for the A320neo, while the C Series, E-Jet E2 and MRJ engines are manufactured in Canada.

          • That would the two locations for final assembly of the engines.

            The IAE partners are P&W , MTU, Jaeco, GKN – Volvo engines and of course GE Avio in Italy for the gearbox
            eg
            GKN Aerospace has full responsibility for design, development and manufacture of the intermediate case and turbine exhaust case as well as manufacturing the LP shaft

            MTU Aero Engine, a Risk-Revenue Sharing Collaborator, holds a 15-percent stake in the PW1000G engine. The company is responsible for manufacturing forward stages of the high-pressure compressor and for the high-speed low-pressure turbine (LPT)

            Rolls Royce -ITP is a Risk-Revenue Sharing Collaborator for the PurePower® family of engines. ITP is responsible for the manufacture of structures and tubes for the engine family.

            The originally Spanish owned ITP is interesting:
            “ITP Engines UK Ltd, member of the ITP since 2009, comes from Power Jets. The company was founded in 1941 in Whetstone, Leicester, United Kingdom site by Sir Frank Whittle, internationally recognized as the father of the jet engine.”

            Its a tricky thing to locate the German successors to their early jet engine makers ( Jumo and BMW) because of the mergers and splitting ( the current BMW cars split from BMW aero before WW2) but it is nice to think that Power Jets and BMW aero engines are connected to the IAE- P&W GTF ?

          • Further checks does show that MTU is connected to the jet engine BMW
            In 1934, BMW Flugmotorenbau GmbH was founded, based in Munich-Allach. It is the legal predecessor of MTU Aero Engines, with the location remaining the same to this day.” Global Security.

            BMW and Power Jets ( their sucessors at least) working with P&W on the GTF, how cool is that

          • MTU was instantiated from MAN Turbo and Daimler Benz.

            The continuity from JUMO onwards is more obscure. Postwar JUMO top brass set up engine production for GE in the US.
            French jet engines seem to provide continuity ( design, people ) from JUMO as do a range of soviet/russian engines.
            The Diesel people at MTU Friedrichshafen have a direct connection to Maybach .

            All the German aerospace remnants have continued as strong “partners in the background” in the psst war era.

  8. Hard to believe Airbus and its partners have royally screwed up the first mover advantage vs. Boeing with the NEO. It should have been a huge asset but is increasingly looking like a liability. Perhaps Airbus was not skeptical enough of the ability to ramp up.

    • Let’s see how CFM get on, Boeing only has one supplier. If you read aeroturbopower its clear that they have problems as well, although I think that they will probably handle the ramp up much better.

      • Why would you think that.?
        GE is a first class company, but the LEAP series are completly new engines with development shared around its partners. So its in the same boat as P&W and IAE partners. We may be having this same conversation in 1 years time but with more information.

        • Just that they are used to building larger numbers of engines. They are not going to have the same problem with the fan blades. As you say they have the same problem that they can’t start mass production until it’s certified and huge ramp up with new production techniques.
          Although things don’t seem as bad as the 787, Airbus is now going through similar experiences to Boeing. Airbuses PR is much better, get the bad news out early, it lowers expectations.
          Incidentally, I have been reading that the rotor bow /start up issue has always been a bit of an annoyance with the V2500 as well.

        • The CFM56 was derived as a SNECMA idea from the M55. GE was taken into the boat for having a bigger commercial presence expecially in the US market.
          GE’s Gerhard Neumann had a “fitting” background.

          How is the creative partnership distribution with the LEAP today?

          • “How is the creative partnership distribution with the LEAP today?”

            Safran takes care of the Fan, LPC and LPT. GE looks after the core. Each has an final assembly line in its own country.

  9. They’ve all gotten recent “black eyes”! (P & W, GE, and, wait for it, RR!) And in RR’s case, there’s a shameless lack of regulatory concern. (Is the FAA turning into the Alfred E. Neuman of federal agencies? “What me worry?” Smirk.) 787’s going to Malaysia and India from Japan, with engine shutdowns that should raise ETOPS concerns. No problem apparently, till someone “drops one in”. (Hey, let’s see if someone can do an open ocean “Sully”!)

    • @ MontanaOsprey

      Tend to agree. Similar to the GenX icing issue, there seems a reticence for the regulatory bodies to take such problems seriously and require anything more than an advisory notice. The difference today is that ramp up is so quick that we have well north of 400 B787s (as an example) flying in a short space of time with either engine and if there is potential for a serious systemic problem with either engine or the airframe. As these problems occur in operation it is possible that multiple closely related failures could occur in a short space of time. I am sure all regulators model this matter extensively but at the same time are under considerable pressure from airlines and other parties to apply a light touch.

      • From my days in D.C, it’s called “regulatory capture”. The regulated becomes so important to the regulating agency (for reasons of the regulator’s importance, pecking order in D.C., pride, budget, etc.) that the regulated’s issues and concerns become those of the agency.

        • So very true, I suppose that they have covered themselves by making ETOPS provisions extend to all aircraft and not just twins. In the case of the new tech on engines and the potential for a sequence of related failures to arise in quick succession this will be cold comfort for those affected. Unfortunately I am of the view that some such event or sequence of events is very possible. The unk/unk problem.

      • I’m not too concerned about these problems, as long as they are known about they can be managed. The delay in grounding the 787 after the first battery problems was scary and the FAA seemed to be unduly reluctant.

        • Just like reporters in the 3rd Gulf war and Afghanistan the FAA had been embedded at Boeing for a lockstep view on certification issues.
          I don’t think that has been changed under the hood.
          ( if the nearly new everything 777x grandfathered on the 777 design is any indication.)

        • Agree with you re the specifics, I was making a broader point about potential for catastrophic loss. The volumes produced to the same iterative design over a short period of time at this complexity suggests a cluster of related problems will occur. I always assumed if this was why AF447 was investigated at such expense to all parties.

  10. @grubie

    “Adaptive machining basically seems to mean that it scans the surface while machining.”

    Here is what P&W’s own literature says: “Singapore uses adaptive machining and cutting-edge automated inspection systems.” Now, is the problem with automated inspection or with the machining itself? My answer is that the problem likely comes from P&W’s current inability to… adapt the machining. Here is a definition of adaptive machining taken from Modern Machine Shop:

    “The term “adaptive machining” is widely used these days. In general, it describes a technology that adapts manufacturing data to suit changing conditions. Adaptive machining is typically used when individual components in a batch have slight geometric differences. These components often require blending and/or polishing operations that count on the skill and dexterity of the human hand.”

    My understanding is that P&W are trying to automate these blending and polishing operations. But having been unsuccessful so far they still rely on “the skill and dexterity of the human hand”. That would explain why the production rates are so low.

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