How Alabama won Airbus: Bloomberg News has this story detailing how Alabama persuaded Airbus to located an A320 plant in Mobile, after losing the tanker competition.
ANA to conduct 787 test flights: The Japanese airline, which currently has more Boeing 787s than any other carrier, will conduct up to 200 test flights before returning the 787 to service, according to this Reuters report.
Odds and Ends: Air France v Rolls-Royce for A350; Virgin America rejigs; Last A340s sold; Heading South with SPEEA
Air France v Rollsr-Royce: The saga continues-see this Bloomberg story. We understand there is more to it than just maintenance. Rolls wants AF to order the Trent 1000 for the 787 order, too.
Virgin America: This airline, headquartered in San Francisco, has been an airline in search of a business plan. Its operations don’t have a niche and didn’t fill a void (like jetBlue created and filled at NY-JFK). It’s lost hundreds of millions of dollars. And, finally, the losses have caught up. Bloomberg has this story about aircraft order deferrals and cancellations. The deferrals are Airbus A320neos (note to Alabama: VA was going to take the first neos from the new Airbus Mobile plant in 2016).
Virgin is seeking to restructure aircraft leases, according to two industry sources. Failing to do so could lead to a Chapter 11 filing, the sources say.
Last A340s Sold: The remaining two Airbus A340-500s, originally destined for ailing Kingfisher Airlines, have been sold.
SPEEA and Boeing: Things appear to be heading south with SPEEA. This could affect Boeing’s year-end push to deliver as many as 50 787s as well as the other 7-Series.
It’s a slow August for news, but here are two items we’ll bring to your attention:
Airbus and Mobile: This story discusses how the Airbus plant at Mobile (AL) will add to the aerospace cluster there. The comparison with Seattle, which we make, highlights a real challenge we see for Airbus and the aerospace cluster in Mobile. The supply chain here is struggling under the weight of the high demand for airplanes (not just at Boeing, but all the OEMs), both in terms of product and skilled help. As a member of the Board of Pacific Northwest Aerospace Alliance, we hear of the manpower shortage all the time and the efforts by the State and others to boost training and education to meet demand.
The shortage of skilled labor, and of engineers, is a major challenge for Boeing, and (like it or not) one reason for outsourcing. But the impact on the supply chain is equally great. The lower Tier suppliers in effect become the training ground for the upper Tier and Boeing. This means there is a continuous skill-churn that these small businesses really can’t afford.
Washington State is not the only place where this problem exists; it’s a national problem. What we hear at PNAA is story after story of foreign students (notably Chinese) coming to this country for engineering education then taking their skills home rather than emigrating here. Nationally, there is a wide imbalance between education and training and demand. The shortage of our education institutions in graduating the skills in STEM and touch labor is large. Even high schools have cut back on vocational training of all kinds.
In this State, budget cuts have severely impacted the community colleges and high-ed schools. The aerospace industry is but one of those hurt by these cuts.
Randy Tinseth, VPO of Marketing for Boeing, is always fast with the quip–via Flight Global’s Twitter: “Market is about product, people and customers, not the address on your business card.”
Mobile Press-Register: general overview.
Reuters: Unions aren’t happy–but guess what, it’s US unions.
Chicago Tribune: Boeing’s home-town paper has this about Boeing losing a tactical edge–according to Airbus.
The Economist: Slaps Boeing and Airbus for their continued bickering over trade. Hear, hear.
Fabrice Bregier, CEO: Customers were asking, why don’t you come closer to us? Currently more than 200 aircraft a year for US, Canada. Capacity for more than 400. Expect to build A320neo to at least 2030.
Christian Scherer, head of strategy: An assembly line is not just an assembly line but a whole compound. 116 acres of industrial complex. Seven buildings. Shipped to deep sea port of Mobile and trucked to the facility. From shipment to roll-out, about 2 1/2 months. Expansion beyond 116 acres possible. It is pretty much a carbon copy of Europe. Reducing industrial risk by copying it.
Scherer: This is limited to A320. We have negotiated option for land expansion, but no plans for that now. Could have support facilities.
Bregier: This is a strategy move first. We considered that despite procuring $12bn from suppliers in US, we needed to be visible. There is a wave of replacement aircraft needed, and we have the right product in A320neo and producing this in America will be an advantage. Our lines in Europe are competitive [but are costed in Euros]. We avoid transporting suppliers, engines to Europe for reimport to US; these will go directly to Mobile.
Scherer: Proximity to a very, very large market and international footprint for the company are strategic drivers. It is as simple as that.
Airbus official: More than half the value of A320 already comes from America (driven mostly by engines).
Alan McArtor, Chairman Airbus Americas: Typically there is a halo affect that will attract suppliers to the region.
Bregier: Right now struggling to achieve rate 42 in October this year due to supply chain. We need to first stabilize supply chain. First deliveries here in 2016. We know that if we could deliver much more than 42 NEOs a month from 2016, there is a huge potential. It’s premature to say we’ll ramp up beyond 42 a month but with NEO there is huge potential.
Bregier: Already have 220 Airbus engineers in Mobile.
Scherer: Incentives in excess of $100m.
Bregier: Euro-dollar exchange rate not a consideration to a long-term investment. Unions: every9one prefers to have investments in-country but we have invested $14bn Euros in Europe, so it’s time to invest in the US.
McArtor: Having an industrial citizenship in the US can’t hurt for future DOD contracts. It’s not the reason we’re doing it right now but the answer to the potential is yes.
Scherer: There are no plans to convert passenger-to-cargo planes here. If and when [our other facilities] have exhausted their capacity, then it would make sense to consider here.
Separate from the press conference, we asked about CEO and NEO production: CEO will be assembled first at Mobile.