Analysis: Learn from Google, Airbus chief warns aerospace industry

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br enders

Bloomberg

Tom Enders, the chief executive of Airbus Group. Photo: Bloomberg

Caen, France - The aerospace industry must embrace competition from technology companies such as Google and SpaceX, which were already having a revolutionary effect on the sector, Airbus said yesterday.

Describing the scale and speed of innovation in Silicon Valley as both “frightening and fascinating”, Airbus chief executive Tom Enders said the increasing digitalisation of the economy was having a profound impact on his company’s business.

“I think that in the future our industry will have to work much more closely with these new hi-tech companies… if only because these guys are increasingly intruding on our territory,” Enders said.

He cited SpaceX, the space transport company founded by former PayPal entrepreneur Elon Musk, whose Falcon launch vehicles are taking on the market-leading Airbus-built Ariane in the commercial satellite launch market.

SpaceX has also mounted a legal challenge to the monopoly held by Boeing and Lockheed Martin for the launch of US government satellites.

In April Google acquired drone start-up Titan Aerospace, which aims to compete with Airbus to make high-altitude unmanned planes that can take on tasks traditionally done by more expensive satellites.

“Aerospace is still a rather young industry but these people are even younger. And I think there is no debate as to which of us is the more vibrant industry. They are. The speed of decision and risk taking and all that is amazing,” Enders said.

Enders also complained that the EU was stifling innovation and said it must cut red tape.

“It should make us think as we look at the software industry, at the Microsofts, Amazons, Facebooks, SpaceXs, Yahoos. It is all coming from the US.”

Many successful entrepreneurs in the US were “bright young Frenchmen and bright young Germans” who had been forced to leave Europe to seek venture capital and a dynamic entrepreneurial environment.

Enders was appointed to head European aerospace giant EADS, the parent of plane maker Airbus, in June 2012 and at once attempted a merger with Britain’s BAE systems.

After Germany blocked the deal, Enders initiated an overhaul of the group’s structure that reduced political influence.

He rebranded EADS into Airbus Group and led a push to expand the group’s business outside of its home base in Europe, notably in Asia, the US and the Middle East.

Airbus decided in 2005 to set up a joint venture in China to assemble the A320 passenger jet and the firm plans to open an assembly line in 2015 in the southern US state of Alabama.

Enders said Airbus considered the project in the Chinese city of Tianjin a success and that it was vital the company developed a local identity as it expanded into foreign markets.

Airbus had allayed reservations from Chinese airlines about taking a China-made plane. “We have demonstrated that they are just as good, some people say even better, as those assembled in Europe.”

Airbus would continue to expand and embed itself abroad through new assembly lines, engineering centres and supply partnerships.

Enders said it was inevitable that the proportion of the Airbus workforce employed in Europe, now 90 percent of the company’s 144 000 staff, would fall as the global expansion gathered pace.

But he added: “If that one day would be 80 percent or 70 percent, we would still be a European company.”

Airbus turnover rose by 5 percent in 2013 to e59 billion (R856bn). That compared with a rise of 6 percent to e63.5bn for rival Boeing. – Sapa-AFP


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