Power 8 Restructuring Plan
February 28, 2007
Attention will be focused on how the burden is shared between French and German plants, after five months of political wrangling has delayed implementation of the restructuring plan.
The program has caused major tensions between Paris and Berlin as the French and German shareholders who control Airbus negotiated over where cuts were to be made and new work allocated.
The European manufacturer had planned to unveil the details of its "Power 8" restructuring plan last week, but delayed the statement at the last minute owing to deadlock between its French and German owners.
Late on Monday, Airbus's parent company EADS approved a plan and said management would inform employees of its strategy on Wednesday before making the details public.
How many job cuts?
French Prime Minister Dominique de Villepin said last week that the plan would lead to about 10,000 job losses at Airbus's 16 factories, but without forced redundancies.
This way of cutting jobs, which depends on early retirement, voluntary departures and job transfers, was requested by French President Jacques Chirac and German Chancellor Angela Merkel at a meeting last Friday.
The figure of 10,000 was later described as premature by the German government, and the German newspaper Die Welt reported on Tuesday that job losses would total 7,700: 4,200 in France and 3,500 in Germany.
But the European Metalworkers' Federation predicted in Brussels Tuesday that up to 10,000 jobs could go.
"We have received signals that up to 10,000 jobs could be cut back," EMF General Secretary Peter Scherrer said after meeting representatives of Airbus staff. He said a day of action would be announced to take place over the next three weeks.
French unions give warning
French trade unions have threatened to take industrial action if they are not satisfied with the cuts.
"If we do not like the way the production is shared out among the various (Airbus) sites or if sites are sold, we will provoke veritable fireworks," Airbus works council co-president Jean-Francois Knepper told the French daily Le Parisien.
Some 1,280 staff at the Meaulte plant in northern France, which is seen as a likely candidate for sale, downed tools Tuesday.
German unions have taken a less confrontational approach, calling instead for a clear announcement from management to halt speculation in the press regarding the cuts.
Airbus employs 56,000 people, including 22,000 in France and 21,000 in Germany.
Work distribution
The rescue plan will also include details of how new work is to be shared out among different factories, notably regarding the much-delayed A380 superjumbo airliner, the A350 XWB mid-sized airliner and future versions of the small A320 carrier.
The A380 is expected to remain shared between French and German factories, while the A350 is set to be made principally in France and the A320 in Germany.
Die Welt reported on Tuesday that the fuselage of the A350, one of the parts requiring the most complex manufacturing, was to be made in Germany.
Analysts said the Airbus plan will bring the strategy of the company into line with that of its main competitor Boeing, which overtook Airbus for new orders in 2006 for the first time in five years.
Outsourcing at Boeing
Since 2000, Boeing has focused on doing only the most important assembly and commercial work and has outsourced much of its manufacturing to sub-contractors.
The US group "has sold practically all of its aero structure manufacturing plants to focus only on its core activities, which are the designing, assembling and marketing of airliners," said Harald Liberge-Dondoux, an analyst at CM-CIC Securities.
Boeing has outsourced 70 percent of the manufacturing work for its new 787 Dreamliner to industrial partners, which are located all over the world.
The broad outlines of the "Power 8" restructuring plan were first unveiled by Airbus in October. The plan is intended to save the company 5.0 billion euros ($6.6 billion) by 2010 and 2 billion euros per year thereafter.
The finances of the group have been severely strained by a string of production problems with its A380 superjumbo airliner, which have led to two-year delays to deliveries.