Cutting A220 costs is an ‘ongoing exercise’ for Airbus

Discussion
No nasty surprises

Airbus did not discover any rotten Easter eggs in the A220 supplier contracts after taking over control from Bombardier, Marcheschi said.

“Their deals were structured a little different than we would structure them,” mostly due to different compliance requirements and company cultures, he said.

He reiterated Airbus’ pitch for taking over the CSeries line from Bombardier: The European plane maker brings greater expertise in aerospace mass production and supplier contract negotiations and is able to bundle supplier deals across its commercial aircraft catalog to cut costs.

To put that last bit cynically: Airbus can use its weight to lean on suppliers for price concessions.

There is no timeline for announcing any cost reductions, Marcheschi said. “It’s an ongoing exercise.”

It won’t always be an easy one. Last summer, Italian aerospace supplier Leonardo’s chief executive said the company was losing money on its A220 contracts.

Upwardly Mobile

Airbus has started work on adding and A220 final assembly line (FAL) at its plant in Mobile (AL), where it assembles A320s. The aerospace giant’s presence has drawn a wave of suppliers to the area. That was always Airbus’ intention when it selected the site for a new A320 FAL, Marcheschi noted.

Airbus’ new neighbors are there to support final assembly, not produce parts. For example, Safran has a facility a short distance from Airbus where it combines CFM International engines with nacelles, a step known as ‘podding.’

“If there’s a problem, we just call them in, and in five minutes, they’re at the plant,” Marcheschi said.

Proximity to support and related businesses is a key advantage well established in economic literature. Mobile’s aerospace sector has grown since Airbus put the A320 line there, but Marcheschi acknowledged that a single assembly line cannot draw the deep aerospace cluster that has grown up around Boeing in the Puget Sound or around Airbus in Toulouse and Hamburg.

Pratt & Whitney, Hutchinson Aerospace, MAAS, Messier-Bugatti-Dowty, and Zodiac Aerospace are among the aerospace suppliers that have set up shop or expanded their presence at Mobile largely or wholly due to Airbus’s arrival at the Mobile Aeroplex at Brookley, just outside the city.

Airbus continues to encourage key suppliers to be on the ground in Mobile. The company is focused on “key strategic elements on the FAL where we see incidents where we would need support,” Marcheschi said.

MRO: ‘M’ is for Mobile

Airbus wants to use Mobile to expand its MRO presence in North America. The company already has military MRO facilities at Mobile Regional Airport, less than 10 miles west of the Brookley Aeroplex. In addition to commercial air service, the regional airport is home to a U.S. Coast Guard pilot training operation and part of a helicopter battalion attached to the Alabama Army National Guard.

In mid-2018, airport officials in Mobile announced plans to move commercial traffic to Brookley and some business flights to Mobile Regional Airport. The swap is expected to draw more carriers to Mobile. It also could give Airbus room to expand its MRO activity at the current regional airport.

“We are looking at expanding our (MRO) capabilities to commercial aircraft in North America. We are in the early stages,” and there is “no fixed timeline,” Marcheschi said.

Airbus already has substantial MRO presence in Europe and Asia but is not in the North American market. However, with hundreds of Airbus jetliners overhead in American skies, “we have to have some support locally,” he said.

“We don’t fully have the MRO agreements in place for North America. We have some outfits that we have approved, but not a lot,” he said.

With an eye toward expanding its MRO activity in Mobile, the company wants suppliers that can support both final assembly and MRO.

Tell us a story

At the Pacific Northwest Aerospace Alliance conference in February, Marcheschi told suppliers in the audience that Airbus needs to know why they would be a good match for the European plane maker. Working together is more than specs and financials; it is also about values and culture, he said.

“A lot of times the problems we have in a (supplier) relationship are because the cultures are so different,” and suppliers “don’t make the effort” to bridge the gap, he told LNA during an interview.

Marcheschi has a stock question for suppliers seeking to work with Airbus: “Why do you want to do business with us?”

It is a simple question, but “none of them have a really good answer,” he said. “If they call me up and say, ‘I have 1000 machine hours available.’ So what? I have a bunch of suppliers that have machine time available. Why do I need to come to you?”

Airbus needs suppliers that can offer something more than simply capacity, and that will build a relationship worth investing in, he said.

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