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The Airbus Program as an example of innovation, strategic and risk management of trans-national cooperation in technology
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AIRBUS From the National Champions and the European Project to the Global Player
Human Resources and Organization
Prof. Dr. Edgar Bellow
13th March 2012Reims - France
Dr. Daniel Stanislaus Martel
Lecturer at University of Management, Economics and Finance, Geneva, Dunya Institute of Higher Education, and AKAD Banking & Finance, Zurich and Berne
Aerospace Journalist & Editor/Consultant
2
AIRBUS? You said Airbus?
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
© Dr. Daniel Stanislaus Martel [email protected]
Source: Skyward.ch
3
AIRBUS?You said Airbus?
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
© Dr. Daniel Stanislaus Martel [email protected]
Source: Skyward.ch
4
AIRBUS?You said Airbus?
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
© Dr. Daniel Stanislaus Martel [email protected]
Source: Skyward.ch
What do You Know About Airbus?
Please help Discuss for five minutes in groups
Nominate a representative
Report to your colleagues in one minute
The floor is yours5
AIRBUS?You said Airbus?
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
© Dr. Daniel Stanislaus Martel [email protected]
6
Airbus? You said Airbus?
Facts about Airbus
Airbus is… Number one in civil airframe orders (1419) and delivies (524) in 2012
Known as an economic venture with market share of 64 % in 2012
Considered a prime technology driver
Presented as a European success story with 11.570 orders and 7079 del.
Renown as a Global Player with 6659 aircraft in service
… yours to learn from7
AIRBUS?That’s Airbus!
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Agenda
Airbus in it’s world The world of air transport (demand: operators / supply: airframers)
Aerospace as a strategic industry
The Airbus Case
A changing framework: European integration (optional)
The world around everything: Globalization and Neoliberalism
Looks into the future
Many case studies8
AIRBUS?That’s Airbus!
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Learning Objectives
After our course, you are able to…… outline the historical agenda of the Airbus programme
… explain at least three major influences on the Airbus programme
… apply at least three concepts to your own operations
… it is up to you! 9
AIRBUS?That’s Airbus!
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Why is this Important for You?
As a future Reims Management School Graduate, You… … need to be aware of possible roles of stakeholders in
economics
… need to be aware of the importance of a long term vision translated into decisions
… need to be aware of the role of technology in economics
… it is up to you!10
AIRBUS?That’s Airbus!
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
Human Resources and Organization
Prof. Dr. Edgar Bellow
13th March 2012Reims - France
Dr. Daniel Stanislaus Martel
Lecturer at University of Management, Economics and Finance, Geneva, Dunya Institute of Higher Education, and AKAD Banking & Finance, Zurich and Berne
Aerospace Journalist & Editor/Consultant
The World of Air Transport
Three clusters of actorsAircraft operators in demand for airframes
Airports / ground facilities which serve aircraft operators
Airframe constructors which supply airframes
Perfectly complementary… and highly regarded / regulated12
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Aircraft Operators (1)
An industry set for growth (source IATA)Annual USD 425 billion turnover (2010)
5.5 million direct jobs, adding up to 33 millions (2010)
Some 2.5 billion customers (2010)
Relevant for everybody13© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
Aircraft Operators (2)
A highly fragile industry with high risk operations Pressure on margins and cost at any step
Highly know how, and experience sensitive
High political exposure, positive and negative (ecologism)
Vulnerable to externalities (recession, fuel price…)
Gigants on argyle feet14© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
Airports / Ground Facilities
Interface air transport Technical/functional monopoly at served destination
Next to perfect competition for transfer / transit passengers
Facilitator / focus of local economic development
Entry / exit door for national economy
Essential for the country15© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
Airframe manufacturers (1)
Economic actors supplying the hardware High value adding industry attracting the best brains
High cost for R & D and overheads
High drive for innovation in a prospective perspective
High concentration owing to competition
Essential for the country16© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
Airframe manufacturers (2)
Their product: airframesNumerous physical, mathematical, functional constraints
Maximum drive for economic efficiency
Maximum need for Risk Management at any level
Very little space for product differentiation17© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
Airframe manufacturers (3)
Fundamentals of airframes Product life cycles of 20 to 40 years (second hand market)
High degree of technological and contractual lock-ins
Sensitive to « correct » timing of market entry
Each programme is high risk owing to competitor’s life cycle
A high risk business!18© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
Airframe manufacturers (4)
Technology drive behind airframes Attempt to « leapfrog » competitor
Attempt to override locked-in competitors
Race for early commitments
High degree of customer lock-in (change of supplier)
A high stake business19© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
Airframe manufacturers (5)
New products… Anticipate market need and foreseeable competitor’s reactions
Use currently available technologies
Always major compromises in technology and functionality
Focused on as many customers as possible
… always have a wider economic, technological, social context20© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
Airframe manufacturers (6)
Launch of new airframesGain of productivity for current and future customers
Maximize difficulties for competitors to catch up
Maximize barriers for market entry for new competitor
Response to expected tomorrows21© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
Airframe manufacturers (7)
Strategic partnership with operatorsComplex financial operations
Standalone airframe or first member of aircraft family
Stepstone to further aircraft models
Look into the future every day22© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
Classroom Incubation 1
What government policies are adequate for air transport Conceptualize such a policy in groups for 10 minutes
Elaborate a global national air transport policy
Nominate a group representative
Share your findings with your colleagues
Build your own air transport future23© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
24
Airbus? You said Airbus?
AIRBUS Aerospace as a
Strategic Industry
Human Resources and Organization
Prof. Dr. Edgar Bellow
13th March 2012Reims - France
Dr. Daniel Stanislaus Martel
Lecturer at University of Management, Economics and Finance, Geneva, Dunya Institute of Higher Education, and AKAD Banking & Finance, Zurich and Berne
Aerospace Journalist & Editor/Consultant
What is Industry?
Industry is a value-adding economic activitySupply of physical goods
Contributing to local development
Strengthening national economy
Raising standard of living of producers and customers26© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Aerospace as a
Strategic Industry
Attitudes of Industrial Actors
Best possible factor allocationProviding responses to felt and anticipated needs
Drive to outpace competition
Making best possible use of factors of production
Inventions and expected innovation processes27© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Aerospace as a
Strategic Industry
The Product Cycle
28© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Aerospace as a
Strategic Industry
Integration into society
Mar
ket
pen
etra
tio
n
Invention of product or
service
Approval by decision makers
Convince pioneers
Advantages felt by others
Invention generalizes in market
Invention becomes part
of society
Response to a need felt
Win promotors
for the «cause»
Target customers sharing the same need
as the inventors
Solution responds to or exceeds
expectations
Solution offers real
gain in productivity
Solution leads to new
attitudes
Author based on Alter (2002), 15-40
The Two Types of Innovation
Proactive invention and reactive learning by experienceVoluntary innovation: ambition to optimize
Involuntary innovation: attempt to correct failure
In both cases: accepted or rejected by society
In any case there are multiple changes29© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Aerospace as a
Strategic Industry
The State in the Economy
Management of territory under its jurisdictionFormal institutions governing population and activities
Elites try to optimize situation for re-election
Elites promote their interest within and outside state
Role of state has not ended with globalization30© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Aerospace as a
Strategic Industry
The Two Level Game (Putnam)
31© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Aerospace as a
Strategic Industry
Author based on Putnam (1993), 431-468
GOVERNMENT
National Territory International System
Supreme Authority Legal entity/actor
National policies, among them economic policies including application of international agreements, compliance with international regimes…
Objective: Optimize national territory as a production site
International relations through diplomacy, international governmental organizations (WTO), trade agreements, regional integration (EU)…
Objective: Maximize trade-offs for national economy
Strategic Industries
Crucial for state and economy as a whole Worldwide demand (pharmaceuticals, energy systems…)
Unsubstituable, therefore inelastic demand
Complex and specialized know-how intensive processes
Necessary for economy (energy) and state (security)
Strategic suppliers are in a situation of monopoly32© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Aerospace as a
Strategic Industry
Sensitivity and Vulnernability (Keohane and Nye)
33© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Aerospace as a
Strategic Industry
Author based on Keohane and Nye (1989)
G O V
National Territory
E C O
G O V
E C OE C O
G O V
Other CountryOther Country
EconomicPolicies
EconomicPolicies
EconomicPolicies
Strategic Trade Policies (Krugman)
Prevent vulnerabilities – lower sensitivities Policies target already strong strategic industries
Mixture of national economic and technology policies
Mixture of international initiatives in favour of national industries
Related policies (higher education, research, immigration)
Not to be confused with classical protectionism34© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Aerospace as a
Strategic Industry
The Technology Leap (Mokyr)
35© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Aerospace as a
Strategic Industry
Author based on Krugman (Mokyr (1993), 431-468
The Challenge: Path Dependence (Krugman)
Heritage, present and future of a production site Site configuration result of all past decision’s outcomes
Each decision cost-benefit based on site configuration at its time
Strengths depend on commitments by decision makers
The stronger Path Dependence, the higher lock-in
Chance or risk36© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Aerospace as a
Strategic Industry
The Chance: The Technology Leap (Mokyr)
Revolutionary invention leading to fundamental change Innovation creates a disruption (plastics, mobile phone…)
Opportunity to establish new Micro- / Macro-Path Dependences
Strategic Trade Policies seize opportunities (Silicon Valley)
High Risk versus High Reward (Question Mark in BCG Portfolio)
Breaking the lock-in37© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Aerospace as a
Strategic Industry
STP and P.D. in Practice: Site Optimization
Past, present and future focus on Strategic IndustriesClose cooperation between all involved actors
National policies focused on R & D, S & T, higher education…
International policies targeted at maximized trade offs
Objective: strenghten Strategic Industries38© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Aerospace as a
Strategic Industry
Site Optimization (Keohane and Nye)
39© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Aerospace as a
Strategic Industry
Author based on Keohane and Nye (1989), Krugman (1996), Krugman (1994)
G O V
National Territory
E C O
G O V
E C OE C O
G O V
Other CountryOther Country
EconomicPolicies
EconomicPolicies
EconomicPolicies
The International Product Life Cycle (Vernon)
40© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Aerospace as a
Strategic Industry
Author based on www.provenmodels.com
Time
Ben
efit
s
Exp
ort
s /
Infl
uen
ce
Lo
sses
/In
vest
Imp
ort
s /
R &
D
New Prod Mature Product Standardized Product
Competing similar country
STPs
Inventor’s country
Technologically leading country
Emerging country STPs
Technological emancipation
Rising cost of production
Classroom Incubation 2
What do you think about Site Optimization Discuss one sector per group for 10 minutes
Elaborate a coherent Site Optimization policy or decide against
Nominate a group representative
Share your findings with your colleagues
Be your own site optimizer41© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
42
Airbus? You said Airbus?
AIRBUS The Airbus
Case
Human Resources and Organization
Prof. Dr. Edgar Bellow
13th March 2012Reims - France
Dr. Daniel Stanislaus Martel
Lecturer at University of Management, Economics and Finance, Geneva, Dunya Institute of Higher Education, and AKAD Banking & Finance, Zurich and Berne
Aerospace Journalist & Editor/Consultant
Stages of Airbus History
A long, international history from the beginning 1920 – 1965: Setting the stage
1965 – 1970: The National Champions
1970 – 1986: The dedicated entrepreneurs
1986 – 1992: The audacious innovators
1992 – 2001: The visionary strategists
2001 – 2006: The scared money makers
2004 – 2012: The new hard workers
What does this mean?44
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1920 – 1965: Setting the Stage (1)
Europe: Site Optimizations for Strategic Industries Europe until 1939: Airframers are national programmes
After 1945: Competition between France and United Kingdom continued
1949: United Kingdom delivers first jet aircraft Comet 1 which fails owing to overstretched technology leaps
1955: France launches Caravelle jet which fails on the market
Technology is not everything45
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1920 – 1965: Setting the Stage (2)
United States: Free enterprise United States until 1939: Airframers are private corporations
After 1945: Eased market entry through mass production and Marshall Plan
1958: Monopolies through large quadrijets Boeing 707 and Douglas DC-8
1964: First of a series of smaller jets Boeing 727 to swamp the world market
Market strategy is everything46
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1920 – 1965: Setting the Stage (3)
World air transport: towards unlimited growth 1965: Boeing announces quantum leap with Boeing 747 Jumbo Jet widebody
1966 - 1967: Lockheed and McDonnell-Douglas announce smaller widebodies Tristar and DC-10
Common characteristics (two aisles, containerized cargo) leading to technological disruption (technology leap)
Revolution in air transport announced for 1970 - 1972
Market strategy is everything47
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1920 – 1965: Setting the Stage (4)
Europe: Cooperation to protect strategic industry of aerospace 1959: France / West Germany: State treaty for the Transall transporter
1962: Industrial cooperation Netherlands, U.K., West Germany for the Fokker F-28
1965: Industrial and commercial cooperation West Germany, U.K., Netherlands for the VFW-614
All programmes remain marginal in the world market
New idea: enable economies of scale48
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1920 – 1965: Setting the Stage (5)
The political breakthrough: the Concorde 1962: State treaty between France and the U.K. for supersonic aircraft
French motivations: Additional resources for national leadership programme
U.K. motivations: Maintain strategic industry, obtaining adhesion to EEC despite Charles de Gaulle’s veto
National motivations around common denominator
1969: Maiden flight, 1975 commercial service, 2006 withdrawn from use
Concorde: masterpiece of technology, commercial disaster49
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1920 – 1965: Setting the Stage
Analysis Lacking economies of scale put European airframers at
disadvantage despite technological superiority
Transnational programmes as new way to sustain national Strategic Trade Policies
U.S. dominate world market through mass production
The American Challenge / Le défi américain
50
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1965 – 1970: The National Champions (1)
The wake up call 1965: Colloquium of London on future of airframing in Europe
Window of opportunity following new category of widebody aircraft
Only chance: transnational cooperation for economies of scale
20th July 1967: Governmental treaty between France, Western Germany and the U.K. on the Airbus A300
Defend national aerospace through transnational cooperation51
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1965 – 1970: The National Champions (2)
National Strategic Trade Policies France: new large-scale national high tech project
United Kingdom: preserve remaining Strategic Industries
West Germany: Opportunity to show European commitment and to relaunch aerospace industry
Common denominators – different orientations52
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1965 – 1970: The National Champions (3)
Common denominator remains minimal March 1969: U.K. withdraws from state treaty while remaining a subcontractor
29th May 1969: State treaty between France and West Germany launching the multinational Airbus programme
18th December 1970: Groupement d’intérêt économique (GIE) Airbus established for programme coordination
Partners of GIE Airbus: French Aérospatiale 46,7 %, Deutsche Airbus 46,7 %, West Germany/Netherlands VFW-Fokker 4,2 %, joined by Spanish CASA 4.2 %
European Investment Bank grants launch aids ; financing and manufacturing remains the full responsibility of the partners
Increased economies of scale53
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1965 – 1970: The National Champions (4)
Maximized opportunities Aircraft A300 widebody complementary to U.S. competitors
Aircraft compatible with other widebodies being marketed, thus joining a new category of aircraft
Proven technologies in new combinations
National facilities specialized in one component, integration in Toulouse
Airbus enables to join the U.S. competitors54
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
The Transnational Airbus System
55© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Aerospace as a
Strategic Industry
Source: Kracht (1994), p.56
1965 - 1970: The National Champions
Analysis Focus on coming technology leap as the last chance for national
aerospace industries
Complementary product for same market
Economies of scale through specialization of facilities
Transition of the U.S. competitors exploited
56
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1970 - 1986: The Dedicated Entrepreneurs (1)
Modest beginnings 9th November 1971: First firm order by Air France for 6
28th October 1972: Maiden flight of the A300, 33 days before contractual date
Performance and cost of operation exceeded expectations
Sales very difficult owing to lack of trust and experience
Supported by pioneers and early adopters57
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1970 - 1986: The Dedicated Entrepreneurs (2)
Chances, threats and renewed chances Main chance: Complementary to U.S. widebodies
1974 – 1975: Recession, not one sale
Tensions between France and West Germany regarding action
After 1975: Argument of low fuel consumption decisive
Stakeholders believe in project58
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1970 - 1986: The Dedicated Entrepreneurs (3)
Airbus becomes a political issue 1975: EEC Commissioner Altiero Spinelli suggests European
aerospace policy
1976: Professionals within GIE structure launch prospective studies for complementary Airbus aircraft
1977: France prefers narrowbody for 150 pax, Germany a shorter widebody for 220
Airbus becomes a landmark59
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1970 - 1986: The Dedicated Entrepreneurs (4)
Airbus grows mature 1978: Launch of smaller A310 decided by partners
1978: Order of 23 A300 by U.S. operator enables international breakthrough
Immediate protective action (import tax) by the U.S. government
Mandate by EEC Council of foreign ministers to EEC Commissioner for Industrial Affairs Etienne Davignon to obtain cancellation of tax, failure
1979: international Aircraft Agreement within GATT framework
Airbus becomes a global issue60
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1970 - 1986: The Dedicated Entrepreneurs (5)
Airbus grows into a risk for U.S. competitors 1978: Boeing launches the B767 competitor to the A310
A310 maximises technology leaps (IT, CRT screens, manufacturing…)
September 1981: maiden flight of B767, 3rd April 1982 of A310
Both aircraft superior in different areas and representing two different mission profiles
Airbus changes competitor’s behaviour61
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1970 - 1986: The Dedicated Entrepreneurs (6)
New Airbus success despite U.S. Strategic Trade Policy favouring Boeing 1983: longer-range A310-300 launched, 9th June 1983: Updated A300, A300-600
maiden flight
2nd May 1984: Launch of A320 narrowbody for 150 passengers
Technology leaps and disruptions maximized
1985: New U.S. safety regulation allows transatlantic twin operations (ETOPS)
Boeing 767 with longer range favoured (financial instead of safety aspects)
Airbus takes the technology leadership62
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1970 - 1986: The Dedicated Entrepreneurs (7)
In the meantime in the U.S. … Neoliberalism emerges New economic paradigm emerges (Reagonomics, Thatcherism)
Focus on financial and no longer technological performance
Expenditure cutting at any price, including long-term R & D
Boeing adopts this paradigm under new management in 1985
All prospective programmes ended with exception of B777 widebody
Airbus takes the technology leadership63
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1970 - 1986: The Dedicated Entrepreneurs
AnalysisDifficulties to penetrate market since few early adopters
Programme portfolio aligned on future market needs
Despite opposed interests, governments find consensus
Focus on technological superiority64
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1986 - 1992: The Audacious Innovators (1)
New attacks and successes 1986: U.S. claim Airbus subsidies violate 1979 Aircraft Agreement
1987: EEC Commissioner for Trade, Willy de Clerq, defends the Airbus programme
Transatlantic tensions, EEC claiming U.S. subsidies through military programmes
26th February 1988: Joint A320 certification by Dutch, French, West German and U.K. national certification bodies, world premiere
Attacks through technology and replies through politics65
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1986 - 1992: The Audacious Innovators (2)
Steps to future successes 5th July 1987: Launch of A330 (2 engines) and A340 (four)
Maximized micro-Path Dependence (both aircraft 94 % compatible)
Maximized technology leaps for both
Airbus « Family Concept » through commonality (Cross Crew Qualification)
Both aircraft launched through reimbursable aids from member states
Long-term attack on U.S. competition66
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1986 - 1992: The Audacious Innovators (3)
Airbus grows European March 1988: European Parliament discusses Airbus
November 1989: launch of longer A321 narrowbody without subsidies
New production facility in Hamburg to complete Toulouse
7th October 1991: Roll-out of A340 quadrijet with European anthem
7th November 1992: Roll-out of A330 twinjet
Long-term attack on U.S. competition67
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1986 - 1992: The Audacious Innovators (4)
The battle of the reports September 1990: Gellman report compiled for U.S. Department of Commerce
Over 19 years, Airbus has received subsidies for USD 19 billion
No Airbus programme is economically viable
November 1991: Arnold & Porter report compiled for Airbus Industrie
Disproves Gellman report, U.S. manufacturers not commercial enterprises
From 1976-1990 (14 years) USD 15.24 billion through military and NASA research
It seems a matter of interpretation68
AIRBUSThe Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1986 - 1992: The Audacious Innovators (5)
The 1992 EEC – U.S. Airbus Accord (1) Agreement negotiated between Brussels and Washington
Mutual exchange of financial statements to competent authority of other signatory entity (GIE Airbus member states for Boeing, U.S. government for Airbus)
Clause of exception: Saving a manufacturer from bankruptcy allowed
Clause of limitation: Financial support to new programmes not allowed
Again, a matter of interpretation and cheating69
AIRBUSThe Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1986 - 1992: The Audacious Innovators (6)
The 1992 EEC – U.S. Airbus Accord (2) Both sides make concessions on subsidies
Europe – Airbus: Limitation of public launch aids to 33 % of global budget of programme; official current interest rate on first 25 % of global amount; interest rate raised by 1 % on remaining 75 %, integral reimbursement by Airbus in 17 years maximum
U.S. – Boeing / McDonnell-Douglas: Limitation of indirect subsidies such as military and scientific programmes (NASA) to 4 % of global turnover of targeted manufacturer
Again, a matter of cheating and interpretation70
AIRBUSThe Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1986 - 1992: The Audacious Innovators
Analysis Pro-active attitude sets foundations for the future through
systematic extension of portfolio
Competition gets nervous and obtains governmental support
All involved parties have no interest to escalate the conflict
Focus on technological superiority
71
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1992 - 2001: The Visionary Strategists (1)
New Airbus successes despite threat March 1993: Maiden flight of A321 narrowbody
May 1993: Launch of smaller version of A320 for 130 passengers named A319
Assembled in Hamburg-Finkenwerder
June 1994: Boeing 777 Triple Seven twinjet maiden flight
U.S. ETOPS regulation extended to transpacific routes, leading to loss of comparative advantage of A340 qudrijet
U.S. Strategic Trade Policies in favour of own manufacturer72
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1992 - 2001: The Visionary Strategists (2)
Airbus replies to threats November 1995: launch of smaller A330-200 derivative
August 1996: Maiden flight, performance exceeds expectations
Boeing replies with inferior B767-400 derivative
Airbus outwits Boeing locked-in on the B777
Both A330 models become the reference in their category73
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1992 - 2001: The Visionary Strategists (3)
1996: Beginning of global duopoly 15th December 1996: Boeing purchases McDonnell-Douglas
30th June 1997: European Commission accepts merger under conditions (civil activities of MDC kept independent for 10 years; annual report of civil activities to European Commission (97/816/EC)
1997: During French-German summit, decision to transform Airbus into full corporation
Boeing and Airbus switch to neoliberalism and privatization74
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1992 - 2001: The Visionary Strategists (4)
Airbus reacts to intensified competition December 1997: Boeing 777 Triple Seven countered by A340-600, larger
derivative, and A340-500, quadrijet with longest range ever (18.000 km)
1999: Airbus Military subsidiary for military transporter A400M launched
NATO members Belgium, France, Germany, Italy, Spain, Turkey and U.K. order 180 for delivery after 2009; South Africa and Malaysia another 12
April 1999: Launch of A318 for 100 passengers without launch aids
Airbus consolidated technology leadership75
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1992 - 2001: The Visionary Strategists (5)
The road to Airbus, Inc. 1999: Widespread discussion about Airbus as a private company
June 1999: French-German government preliminary agreement to establish European Defence and Space Company (EADS)
U.K. partner British Aerospace rejects integration
14th October 1999: Aérospatiale-Matra and Deutsche Aerospace (DASA), the Airbus partners of the time, merge into EADS
EADS remains a political issue76
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1992 - 2001: The Visionary Strategists (6)
European Defence and Space Company (EADS) Negotiated by parent companies of Airbus partners Largadère (Aérospatiale-
Matra since 1998) and DaimlerChrysler (Deutsche Aerospace/DASA)
Largadère and DaimlerChrysler hold each 30 % of EADS (total 60 %)
Small corporate headquarters in the Netherlands for fiscal reasons
Two equivalent headquarters in Paris (strategic management) and Munich (operational management)
EADS becomes number two aerospace company after Boeing worldwide77
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1992 - 2001: The Visionary Strategists (7)
Airbus Integrated Company Established 23rd June 2000 as a subsidiary of EADS
80 % held by EADS; 20 % by British Aerospace (BAE)
EADS obliged to buy back BAE share at any time after 2003 (put option)
Production facilities, procedures and processes unchanged
Airbus followed the wave of privatizations78
AIRBUSThe Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1992 - 2001: The Visionary Strategists (8)
Renewed vigor of Airbus Summer 2000: The very large A380 attracts 95 initial orders
Airbus governments respect the Airbus Accord of 1992 and grand launch aids of USD 2.5 billion out of estimated USD 10.7 billion
U.S. government announces a World Trade Organization (WTO) complaint
April 2001: A340-600 maiden flight, February 2001: A340-500 maiden flight
January 2002: A318 maiden flight
Airbus followed the wave of privatizations79
AIRBUSThe Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
1992 - 2001: The Visionary Strategists
Analysis Victory of Airbus over one competitor (McDonnell-Douglas) thanks
to aircraft family concept
Boeing remains successful despite lower commitment for its future owing to lower prices and existing customer base
EEC substitutes itself for the individual member states in Strategic Trade Policy formulation and implementation
Focus on technological superiority80
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2001 - 2006: The Scared Money Cumulators (1)
The shock of the decade: Nine Eleven Air transport hurt everywhere (recession and security procedures)
Boeing lays off 30.000 workers
Airbus reacts in a shortsighted way… und cuts prospective R & D expenditure
A380 complexity exceeds expectations by far
New Airbus attitude: short term focus81
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2001 - 2006: The Scared Money Cumulators (2)
The situation of Boeing Boeing 737 narrowbody outdated but cheaper than A320 series
Boeing 767 outperformed by A330-300 and A330-200
Boeing 747 Jumbo Jet challenged by A380
B777 Triple Seven with two engines outperforms A340 with four following U.S. Strategic Trade Policies in its favour (ETOPS)
Airbus remained confident in its Path Dependence82
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2001 - 2006: The Scared Money Cumulators (3)
Boeing returns New management ends short-term financial priorities and seizes « last chance
for successful turnaround »
Boeing analyses potential for superiority over A330 and A340
Disruptive new aircraft B787 Dreamliner
Boeing maximizes technology leaps and disruptions (composites, comfort…)
Boeing copies decentralized Airbus system but outsources core competences
Airbus downplays the risk83
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2001 - 2006: The Scared Money Cumulators (4)
Airbus imitates Boeing 2002: Airbus sets up engineering centre in Wichita/USA
2003: Airbus sets up engineering joint venture in Russia
2003: Airbus officially not worried about new bestselling competitor
September 2004: Airbus announces an optimized A330-300 as a reply
Airbus widely criticised for loss of strategic vision
Airbus management replies that customers are satisfied with A330 series
Airbus gets inert84
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2001 - 2006: The Scared Money Cumulators (5)
2005: the tide turns 15th February: B777-200LR roll-out, range similar to A340-500 but lower cost of
operation… enabled by further U.S. ETOPS regulation for twinjets
18th February: Reveal of A380 and announcement of three months delay
April: A380 and A350 launch aids incompatible with WTO for U.S.
27th April: A380 maiden flight with worldwide maximum coverage
May: new A380 delays announced
Airbus weakened – Boeing boosted85
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2001 - 2006: The Scared Money Cumulators (6)
Airbus in difficulties 6th October 2005: formal launch of A350 with 140 orders against 174 for the B787
November 2005: Boeing launches new B747-8 update which wins substantial orders
December 2005: Airbus sets up engineering facility in China
29th March 2006: International Society of Transport Aircraft Trading bashes the A350
April 2006: BAE sells its stake in Airbus – EADS is obliged to divert funds for it
July 2006: Scandal with alleged insider deals braks Airbus leadership
Airbus weakened – Boeing boosted86
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2001 - 2006: The Scared Money Cumulators
Analysis Airbus copied Boeing’s short-term focus – and pays the price
in full
Boeing wins back a long-term operational and strategic vision
Revolutionary A380 affected by management problems
Focus on technological superiority
87
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2006 - 2012: The New Hard Workers (1)
Turnaround in sight? 17th July 2006: New A350XWB design presented at Farnborough
Airshow
Wider fuselage than B787 and earlier Airbus widebodies
First reactions not too enthusiastic
Widespread scepticism whether Airbus is able to launch programme
Can Airbus recover?88
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2006 - 2012: The New Hard Workers (2)
Turnaround in sight? 4th September 2006: A380 test passengers enthusiastic
11th September 2006: Russian stake of 5.02 % in EADS
3rd October 2006: another 10 months delay for the A380 announced
10th October 2006: Christian Streiff, CEO of Airbus Integrated Company resigns
7th November 2006: Fedex order for ten A380 freighters cancelled
Can Airbus rise up again?89
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2006 - 2012: The New Hard Workers (3)
New worries or new opportunities 10th December 2006: launch of yet reworked A350XWB (materials…)
Market entry pushted back to 2013, 5 years behind B787 Dreamliner
Budget of at least USD 15 billion, making subsidies unavoidable
Main design freeze pushed back to 2008 to learn from the B787
12th December 2006: A380 certified by EU and U.S. agencies
The question remains open90
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2006 - 2012: The New Hard Workers (4)
New worries or new opportunities January 2007: Boeing outsold Airbus for the first time in 5 years with 1044 against 790 net
orders
10th January 2007: U.S. open a WTO case on subsidies to Airbus
9th February 2007: the EU files a WTO claim on indirect subsidies to Boeing
May 2007: the new joint Airbus/AVIC A320 plant in Tianjin/China is opened
Summer 2007: Airbus sets up engineering facility in Mobile/Alabama for the A350XWB
15th October 2007: first A380 delivered to Singapore Airlines
The question remains open91
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2006 - 2012: The New Hard Workers (5)
Will it never end? 28th February 2007: EADS Power 8 restructuration programme
launched
4300 jobs cut in France, 3700 in Germany, 1600 in U.K., 400 in Spain
Summer 2007: Airbus is hit by the weak US Dollar
A350XWB to be assembled in Toulouse
Still, the question remains open92
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2006 - 2012: The New Hard Workers (6)
Towards a new beginning? 2009: Research on « Sharklet » wing extension for the narrowbodies launched
2010: Major narrowbody update rumoured
April 2010: A330-200 Freighter certified
Summer 2010: Airbus launches the Terminal Aerosave initiative for dismantling aircraft at the end of their life cycle
December 2010: Airbus A320 New Engine Option (NEO) combining sharklets, new engines and other optimizations launched for 2015
Still, the question remains open93
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2006 - 2012: The New Hard Workers (7)
Diversification into military activities 2009: Roll out of the A400M
2009: Multi Role Transport & Tanker (MRTT) becomes new standard in aerorefueling
2009: EADS / Martin/Marietta wins Pentagon contract over 179 tankers
After Boeing claim, final contract awarded to Boeing in 2010
Aerospace remains a political issue94
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2006 - 2012: The New Hard Workers (8)
In the meantime… Boeing runs into difficulties with the B787 « Delayedliner »
Lack of know how for complex project after decade-long cuts
Delay over delay... budget overruns of several billions
Airbus A350XWB runs into difficulties as well and gets delayed
Customers still criticise Airbus for not having « pushed the envelope » far enough
Meanwhile… composites are targeted for their long-term environmental damage
Are composites the quantum leap too much?95
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2006 - 2012: The New Hard Workers (9)
Outcomes January 2011: 10.000th order (an A320 NEO)
June 2011: 667 gross orders for the A320 NEO at the Aérosalon de Paris representing USD 60.9 billion
July 2011: Sharklet devices tested for the first time
15th July: Lufthansa opens first experimental Airbus A320 biofuels service
2012: Beoing responds A320 NEO with B737 MAX
A new stalemate96
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2006 - 2012: The New Hard Workers (11)
Current situation A320 NEO: The fastest selling aircraft programme in history
A330 twinjet: Continues to sell very well – major update for late 2012 rumoured
A340 quadrijet: End of production cycle earlier than expected
A380: sells slowly but permanently
A400M still plagued by problems
A330 MRTT remains niche product
New opportunities or old chances97
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
2006 - 2012: The Hard Workers
AnalysisAirbus slowly recovers but remains affected
Boeing underestimated complexities with B787
Airbus remains trapped in cost saving… and finds partially back to long term prospecting
Focus on technological superiority partially redeployed98
AIRBUS The Airbus
Case
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Classroom Incubation 3
What can corporations learn from Airbus Discuss one type of corporation in groups for 10 minutes
Elaborate a coherent Site Optimization policy or decide against
Nominate a group representative
Share your findings with your colleagues
Be your own site optimizer99© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
100
Airbus? You said Airbus?
AIRBUS A Changing Framework:
European Integration
Human Resources and Organization
Prof. Dr. Edgar Bellow
13th March 2012Reims - France
Dr. Daniel Stanislaus Martel
Lecturer at University of Management, Economics and Finance, Geneva, Dunya Institute of Higher Education, and AKAD Banking & Finance, Zurich and Berne
Aerospace Journalist & Editor/Consultant
Basics of territorial / geographical convergence
Economies of scale Static gains owing to increased factor allocation
Dynamic gains owing to increased resource availability
Collateral gains such as leverage in negociations
Personal gains such as prestige
… yours to learn from 102
AIRBUS A Changing Framework:
European Integration
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
The Road to the European Union
Economic integration first, political convergence second 1948: Organization for European Economic Cooperation (OEEC) for Marshall Plan
1949: Council of Europe for scientific and political resource pooling
1950: Association of European Aircraft Manufacturers established
1951: European Coal and Steel Community (ECSC) to « denationalize » strategic industries
1955: European Civil Aviation Conference (ECAC)
Common challenges in several key fields103
AIRBUS A Changing Framework:
European Integration
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
The Road to European Institutions
The European Communities 1957: European Economic Communities (EEC)
1959: European Investment Bank (EIB)
1960: Eurocontrol for transeuropean air traffic control
1962: EEC becomes supranational in agriculture
1965: European Commission establishes the Politique de recherche scientifique et technique (PREST)
1966: EEC negociates the GATT Kennedy Round in its own right
From association to delegation104
AIRBUS A Changing Framework:
European Integration
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
The Road to European Policies
A new international actor emerges 1972: EEC and EFTA establish Committee on Scientific and Technological Cooperation
(COST)
1972: Joint Aviation Authorities (JAA) for parallel aerospace and air transport certification
1974: EEC obtains UN Observer status
1974: The EEC contributes to the European Science Foundation (ESF)
1975: The Directorate General XII Research carries out the « Europe + 30 » research to to predict the future of Science & Technology in Europe
From delegation to adoption105
AIRBUS A Changing Framework:
European Integration
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
The Road to European Politics
A new international authority readies itself 1978: Common monetary policy
1979: First direct election of European Parliament
1980: Council Directive 80/1266 rules Air Accident Investigation
1984: First Framework Programme for scientific research
1985: French President Mitterrand launches the Eurêka technology initiative
From adoption to integration106
AIRBUS A Changing Framework:
European Integration
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
The Road to European Visions
A new international actor enters the scene 1985: White Paper on Single European Market by 1992
1986: Single European Act aligns national foreign policies
1987: European Airworthiness Authorities standardize air operations
1990: Joint Aviation Authorities (JAA) established
1990: Schengen Agreement abolishes frontiers
From integration to takeover107
AIRBUS A Changing Framework:
European Integration
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
The Road to European Programmes
A new international actor enters the scene 1992: Maastricht Treaty transfers national political prerogatives to the European Union (EU)
1993: Single European Market launched
1996: Beginnings of the Single European Sky initiative
1996: European Commission suggets to consolidate the European aerospace industry as the only way to resist U.S. competition (Com(97) 466 final)
1997: European Association of Aerospace Industries (AECMA) launches the European Integrated Aeronautics Programme (EIAP)
2001: Euro introduced as the European currency
From takeover to association108
AIRBUS A Changing Framework:
European Integration
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
The Road to European Leadership
A new supranational entity gets active 2001: Experts claim in « Vision 2020 » as an answer to the European Commissioner for
Research that Europe can take the lead in aerospace
2001: Aerospace actors establish the Advisory Council for Aeronautics Research in Europe (ACARE)
2002: European Air Safety Agency (EASA) established (EC Regulation 1592/2002)
2003: Commission Regulation on aircraft certification (CR 1702/2002
2004: European Commission launches Single European Sky ATM (SESAR) to merge aerospace technology and air traffic management and procedures
From assimilation to responsibility109
AIRBUS A Changing Framework:
European Integration
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Towards a European Crisis?
A new supranational entity gets active 2004: European Constitution rejected by referendum
2005: European Union Emissions Trade Scheme (EU ETS) targets air transport
2007: Europe hit by financial crisis
2009: Recession and beginnings of the Euro crisis
2011: European Financial Stabilization Mechanism and European Financial Stability Facility
2012: European Union Emissions Trade Scheme (EU ETS) launched
From responsibilities to burden110
AIRBUS A Changing Framework:
European Integration
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Classroom Incubation 4
What do you think about the European integration Compare three influences in groups for 10 minutes
Elaborate a coherent profile for one sector
Nominate a group representative
Share your findings with your colleagues
Be your own integrator111© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
112
Airbus? You said Airbus?
AIRBUS The World Around Everything:
Globalization and Neoliberalism
Human Resources and Organization
Prof. Dr. Edgar Bellow
13th March 2012Reims - France
Dr. Daniel Stanislaus Martel
Lecturer at University of Management, Economics and Finance, Geneva, Dunya Institute of Higher Education, and AKAD Banking & Finance, Zurich and Berne
Aerospace Journalist & Editor/Consultant
Examples
Four representative projects How Airbus fights competitors
A business strategy
How the Airbus A380 came into being Example of a complex project management
The ongoing match Airbus A320 Neo versus Boeing 737
The open next round The Boeing B787 versus the Airbus A350 XWB
… yours to learn from114
AIRBUS The World Around Everything:
Globalization and Neoliberalism
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
How Airbus Fights Competitors (1)
An integral strategy… Maximize technology leaps as long as adequate
Right timing in respect to futured air transport demand
Product differentiation through complementarity
Long term vision in technology and customer response
Customer lock-in through Path Dependence
… based on superiority115
AIRBUS The World Around Everything:
Globalization and Neoliberalism
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
The Airbus Challenges based on Porter
116© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Source: Author based on Cortez (2010), p.76
Strategic Risks
for AIRBUS
Industry CompetitorsRivalry among
existing firms (Boeing)
Potential EntrantsThreat of new
competitors (RU, BR, TJ)
BuyersBargaining power of customers (airlines)
SubstitutesThreat of substitute
products (ICE…)
SuppliersBargaining power of suppliers (engines)
AIRBUS The World Around Everything:
Globalization and Neoliberalism
Statistics of a Success Story
117© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Source: Author based on Cortez (2010), p.76
AIRBUS The World Around Everything:
Globalization and Neoliberalism
The Airbus Challenges based on Porter
118© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Source: Author based on Cortez (2010), p.76
AIRBUS The World Around Everything:
Globalization and Neoliberalism
How the A380 came into being (1)
Maximized disruptions without « ripping the envelope »… Product elaboration with all aspects in mind
Maximized innovations within existing Path Dependence
Creating a new product category
Maximized Marketing Hype
Customer lock-in through Path Dependence
… as a way to minimize risks119
AIRBUS The World Around Everything:
Globalization and Neoliberalism
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
A380 implementation and Risk Centered Approach
120© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Source: Author based on Cortez (2010), p.76
AIRBUS The World Around Everything:
Globalization and Neoliberalism
A380 implementation and Risk Centered Approach
121© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Source: Author based on Cortez (2010), p.76
AIRBUS The World Around Everything:
Globalization and Neoliberalism
How the A380 came into being (2)
Challenges encountered and overcome Exponential complexity of product, manufacturing and
development
Budget overflows in times of expenditure cutting
Management problems unrelated to properties of aircraft
Negative dynamics of management problems
… yours to learn from exponential complexity122
AIRBUS The World Around Everything:
Globalization and Neoliberalism
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
The Open Next Round: B787 versus A350 XWB (1)
Challenges overcome and pushed aside? Boeing 787 posed challenge
Airbus hit by recession and during short-term economies
Minimized response in the A350 based on A330 family
Customers wanted a strong Airbus to avoid Boeing monopoly
Airbus half heatedly yielded to customers (situation of monopoly)
Airbus has to learn again123
AIRBUS The World Around Everything:
Globalization and Neoliberalism
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Risk Taking In Innovation
124© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Source: Author based on Cortez (2010), p.278-291, Murdick, et.al. (1989), p.177-201, and Hampton (2009), p.81-94
New ProductB787 / A350 XWB
New way of Distribution
Disruptive MarketingN
ew t
ech
no
log
yM
any
dis
rup
tio
ns
New
way o
f M
anu
facturin
gC
om
po
sites
R I S K
AIRBUS The World Around Everything:
Globalization and Neoliberalism
The Open Next Round: B787 versus A350 XWB (2)
Challenges still underestimated Airbus A350XWB attempts to leapfrog the B787
Programme attempts to learn from technology leap
Airbus still wants to minimize cost
Customers are deceived and try to obtain more
Boeing has chance to « shoot down » A350 XWB through B777 upgrade
Will Airbus learn the lesson?125
AIRBUS The World Around Everything:
Globalization and Neoliberalism
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
The Successful Match A320 NEO versus B737 MAX (1)
Airbus dominates the upcoming cycle Fastest selling aircraft family in history with 1400 orders in 1.5 years
Extrapolation of proven existing design
Technological updates
No disruption, therefore Micro-Path Dependence fully maintained
First major product overhaul
Boeing has difficulties to follow
… yours to learn from126
AIRBUS The World Around Everything:
Globalization and Neoliberalism
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
The BCG Product Portfolio applied to Airbus
127© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Source: Author based on Krogerus et al. (2008), pp.14-15
RelativeMarketshare
Gro
wth
in M
arke
t
High
Hig
h
Low
Lo
w
Dogs (A350 XWB) Cash Cows (A330)
Question Marks (A380) Stars (Airbus Narrowbodies)
AIRBUS The World Around Everything:
Globalization and Neoliberalism
The Successful Match A320 NEO versus B737 MAX (2)
Airbus dominates the upcoming cycle Fastest selling aircraft family in history with 1400 orders in 1.5 years
Extrapolation of proven existing design
Technological updates
No disruption, therefore Micro-Path Dependence fully maintained
First major product overhaul
… yours to learn from128
AIRBUS The World Around Everything:
Globalization and Neoliberalism
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
The Successful Match A320 NEO versus B737 MAX (3)
Boeing in the meantime B737 far older than A320
B737 far more difficult to upgrade – but no monopoly wanted
Other constraints (landing gear lower than A320), limiting engine options
Pressure on cost of R & D
May run into difficulties129
AIRBUS The World Around Everything:
Globalization and Neoliberalism
© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Classroom Incubation 5
What do you think about these programmes Adopt one of them for your industry
Elaborate a coherent Site Optimization policy or decide against
Nominate a group representative
Share your findings with your colleagues
Be your own programme manager130© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World Around Everything:
Globalization and Neoliberalism
131
Airbus? You said Airbus?
AIRBUS Looks into the
Future as a Conclusion
Human Resources and Organization
Prof. Dr. Edgar Bellow
13th February 2012
Dr. Daniel Stanislaus Martel
Lecturer at University of Management, Economics and Finance, Geneva, Dunya Institute of Higher Education, and AKAD Banking & Finance, Zurich and Berne
Aerospace Journalist & Editor/Consultant
Open Questions (1)
Some examples New competitors
Technology leaps and disruptions
Alternative fuels
Future raw materials demand and supply
Yours to think about them133© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Looks into the
Future for a Conclusion
Open Questions (2)
New Competitors Russia and China make efforts in Strategic Trade Policies
Massive investments
Winning trust by customers
Airbus and Boeing well-established (common interest)
Fundamental disruptions impossible
… yours to learn from134© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Looks into the
Future for a Conclusion
The Vernon International Product Life Cyce
135© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Source: Author based on Graf (2002), p.23
AIRBUS Looks into the
Future for a Conclusion
Open Questions (2)
Technology leaps and disruptions Widebodies: ongoing potential for optimizations
Narrowbodies: disruptive potential limited owing to operational constraints
New materials and technologies of limited impact on short haul aircraft
Aircraft remain compromises following systemic lock-ins (infrastructure!)
From reality to dream
136© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Looks into the
Future for a Conclusion
Open Questions (3)
Alternative fuels Global air transport fuel demand counts for 3.4 % of world oil consumption
Efficiency gains of jet engines some 40 % over the last 50 years
Leverage gains (ATC, flight management, ground procedures…) largely untapped (potential at least another 40 % savings)
On-board storage, refueling and safety issues
… yours to learn from
137© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Looks into the
Future for a Conclusion
Open Questions (4)
Alternative fuels Hydrogen too disruptive
Biofuels more promising but energy yield lower
Biofuels not more ecological if overall picture in mind
Solar energy and electricity out of the question
Integral research to be continued
Beware of illusions138© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Looks into the
Future for a Conclusion
Open Questions (6)
Future raw materials demand and supply Ecological approaches do not reduce demand for critical raw materials
Quantities lowered owing to better engineering
Depending on technologies adopted (LED diodes, displays, materials…)
Air transport remains marginal in overall resource use
… yours to learn from
139© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS Looks into the
Future for a Conclusion
The Look into the Future
140© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Source: Author based on Graf (2002), p.23Distance into the FutureShort Long
Lo
wH
igh
Current Trend
Certainty of forecast
Struct
ural
/
Fund
amen
tal c
hang
eCertainty of new developments
Prognoses Pro-jections Scenarios Expectations
WishesHope
Rel
iab
ility
AIRBUS Looks into the
Future for a Conclusion
The Future As It Will Most Probably Be
141© Dr. Daniel Stanislaus Martel [email protected]
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
Source: Author based on Graf (2002), p.23Distance into the FutureShort Long
Lo
wH
igh
Current Trend
Forecast?Structu
ral /
Fundamenta
l
change
New developments?
Prognoses Pro-jections
Scenarios ExpectationsWishesHope
Wild-card
Wild-card
Wild-card
Wild-card
Wild-card
Black Swan
Black Swan
Rel
iab
ility
AIRBUS Looks into the
Future for a Conclusion
Classroom Incubation 6
What do you think about the Airbus case Discuss in groups for 10 minutes
Elaborate an overall conclusions
Nominate a group representative
Share your findings with your colleagues
The floor is yours142© Dr. Daniel Stanislaus Martel
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
AIRBUS The World of Air Transport
Demand: Operators / Supply: Airframers
143
Airbus? You said Airbus?
144
Qs and attempts of As
« ? » « !! »
Human Resources and OrganizationProfesseur Dr. Edgar Bellow
13th February 2012
© Dr. Daniel Stanislaus Martel [email protected]