US threatens WTO action on Airbus
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EU subsidies will decrease naturally
Commercial airplane industry has always been and still is an industry that employs many workers. Historically this industry is inside the military-industrial complex. Since this industry generated so much employment, in the past governments have been subsidizing it. Although commercial airplane industry is young, it is now entering maturity. Maturity means cost reduction and rationalization.
New materials, new manufacturing techniques will increase the productivity of aircraft development and production more rapidly than what we have seen in automotive industry. As the industry requires less and less manpower, governments will be less and less interested to subsidy airplane manufacturing. So, the first reason why EU governments will reduce subsidy to commercial airplane manufacturing industry is the fact that the next all new airplane will be developed and built with LESS workers (my first estimate is that there will be a redundancy of 50% in the next five years).
The second reason is that many skilled workers are available worldwide in aerospace industry (Japanese, Russians and so on). Many factories are available worldwide to build parts of aircraft cheaply. Wind tunnels and research facilities are readily available worldwide. Any new aircraft will be without any doubt very international, just like cars are. Airplane parts (lighting, cables, equipment, interior, etc.) will be standardized and built in countries where production costs are lowest. The content of any new European aircraft will be less European than it has been before. EU governments are certainly not interested in subsidizing foreign workers or foreign factories. In other words it is GLOBALIZATION.
The third reason is that European subsidy can be diverted easily to subsidy non-European projects. EU financed research on fuel cell APU in Madrid done by Spanish universities FOR BOEING is a good example. Is this financing for European interest or is it for BOEING ? Research on fuel cell based APU spin off can be interesting for automotive industries as well, but the first who will take benefit of the research organized by Boeing is Boeing itself.
The long term strategy of US aerospace industry is naturally to sip this European financing by establishing Europe based research centers. The second way is to use more and more EU firms to build parts of US product. Let us not forget that these suppliers had developed their capability using indirect EU financing. Is EU interested in subsidizing firms working for foreign interests ? What is the level of benefit EU can get by continuing the subsidy to such firms ?
Commercial airplane industry has always been and still is an industry that employs many workers. Historically this industry is inside the military-industrial complex. Since this industry generated so much employment, in the past governments have been subsidizing it. Although commercial airplane industry is young, it is now entering maturity. Maturity means cost reduction and rationalization.
New materials, new manufacturing techniques will increase the productivity of aircraft development and production more rapidly than what we have seen in automotive industry. As the industry requires less and less manpower, governments will be less and less interested to subsidy airplane manufacturing. So, the first reason why EU governments will reduce subsidy to commercial airplane manufacturing industry is the fact that the next all new airplane will be developed and built with LESS workers (my first estimate is that there will be a redundancy of 50% in the next five years).
The second reason is that many skilled workers are available worldwide in aerospace industry (Japanese, Russians and so on). Many factories are available worldwide to build parts of aircraft cheaply. Wind tunnels and research facilities are readily available worldwide. Any new aircraft will be without any doubt very international, just like cars are. Airplane parts (lighting, cables, equipment, interior, etc.) will be standardized and built in countries where production costs are lowest. The content of any new European aircraft will be less European than it has been before. EU governments are certainly not interested in subsidizing foreign workers or foreign factories. In other words it is GLOBALIZATION.
The third reason is that European subsidy can be diverted easily to subsidy non-European projects. EU financed research on fuel cell APU in Madrid done by Spanish universities FOR BOEING is a good example. Is this financing for European interest or is it for BOEING ? Research on fuel cell based APU spin off can be interesting for automotive industries as well, but the first who will take benefit of the research organized by Boeing is Boeing itself.
The long term strategy of US aerospace industry is naturally to sip this European financing by establishing Europe based research centers. The second way is to use more and more EU firms to build parts of US product. Let us not forget that these suppliers had developed their capability using indirect EU financing. Is EU interested in subsidizing firms working for foreign interests ? What is the level of benefit EU can get by continuing the subsidy to such firms ?
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I propose a sub-discussion for those interested.
Rules:
1) No "arrogant yanks" or "cheating euros" dumb#$@(ery.
2) No off topic "yeah but (steel/Boosh is Bad/Joysticks are dum) garbage, either.
Simply this:
Is Airbus accorded greater and more meaningful government subsidies (through whatever means) than Boeing? Financial analyses welcomed, whingeing about how immature the other side is will be discarded as unintentional ironic hilarity.
Rules:
1) No "arrogant yanks" or "cheating euros" dumb#$@(ery.
2) No off topic "yeah but (steel/Boosh is Bad/Joysticks are dum) garbage, either.
Simply this:
Is Airbus accorded greater and more meaningful government subsidies (through whatever means) than Boeing? Financial analyses welcomed, whingeing about how immature the other side is will be discarded as unintentional ironic hilarity.
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you just need to look at how Australian farmers are penalised when trying to export to the good old US of A. With large tariffs making it not worthwhile exporting. America throws its weight around often enough and gets its own way its nice to see that sometimes the playing field isnt always slanted in their favour. Open skies, yeah right that just means that US airlines get third right access to world markets. You have just got to look at how Branson is having to finance his new american airline to realised just how closed shop the US is!!
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Real battle of the Wits here is isn't it!!??!!
Fact is BOTH sides subsidize up the ying yang. If it is not steal it is agriculture.....yadda yadda yadda.
THe Europeans are as bad as the Americans and vice versa.
Fact is BOTH sides subsidize up the ying yang. If it is not steal it is agriculture.....yadda yadda yadda.
THe Europeans are as bad as the Americans and vice versa.
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Gotta agree with trader. The only diffirenece between the two sides is that europe openly admits that it subsidises many areas of the economy (and in many respects subsidies are vital to an economy). However a republican government could not admit to that, as since the beginning of the last century the repubicans have always claimed not to get involved in business (uhum cough cough wink wink).
Oh and air-hag , personally i wouldn't want to see either "win" but if you wanna go patriotic, seeing as the wings of many airbus a/c are made in the UK, then give me the garlic-breathed, surrender-monkey frog-leg eaters, as you so eloquently put it, any day of the week. Just another thing, tend to read D&G alot. You seem to have alot of pent up anger and frustration. Or as cloud cutter puts it It must be fun being so bitter and twisted. Get a life.
(puts on freudian accent) "he seems o have issues Jah. Pahaps it is variationof the oedipus complex. Jah"
Oh and air-hag , personally i wouldn't want to see either "win" but if you wanna go patriotic, seeing as the wings of many airbus a/c are made in the UK, then give me the garlic-breathed, surrender-monkey frog-leg eaters, as you so eloquently put it, any day of the week. Just another thing, tend to read D&G alot. You seem to have alot of pent up anger and frustration. Or as cloud cutter puts it It must be fun being so bitter and twisted. Get a life.
(puts on freudian accent) "he seems o have issues Jah. Pahaps it is variationof the oedipus complex. Jah"
Last edited by cortilla; 16th Aug 2004 at 02:19.
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Air Hag, sorry but my IQ and level of common sense and respect obviously aren't as high as yours, but who are the "garlic-breathed, surrender-monkey frog-leg eaters"?
Just read a topic on a.net about the possibility of an A380 becoming an "Air Force I"-use aircraft, and the rubbish published them had me so angered I switched to pprune, and what do I find, more of the same AvB and US v EU/rest of the world rubbish.
When will people ever COP ON?????
Just read a topic on a.net about the possibility of an A380 becoming an "Air Force I"-use aircraft, and the rubbish published them had me so angered I switched to pprune, and what do I find, more of the same AvB and US v EU/rest of the world rubbish.
When will people ever COP ON?????
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Basically,
Airbus produces products for the civil market.
Boeing has a substantial market in the warfare business.
Warfare is a government sponsored and in the long term a (self) destructive business, to start blaming others that you have shot yourself in the foot is a bit silly.
Airbus produces products for the civil market.
Boeing has a substantial market in the warfare business.
Warfare is a government sponsored and in the long term a (self) destructive business, to start blaming others that you have shot yourself in the foot is a bit silly.
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Airbus military is gaining ground (A400M, A310/A330MRTT...)
In any case, I read in the Toronto Star this weekend that the EU's reaction was "you give up yours and we'll give up ours..."
In any case, I read in the Toronto Star this weekend that the EU's reaction was "you give up yours and we'll give up ours..."
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So Airbus do get some start-up subsidies from the governments. But all are repaid usually at a higher rate of interest than those loans you could pick up at your average high street bank.
If things do change I get the feeling that Boeing may end up shooting itself in the foot when the enormity of its subsidies are fully visible to all!
Let's just get on with building airplanes......it's been said before there needs to be several good manufacturers competing to drive technology forward, not one that is dominant.
If things do change I get the feeling that Boeing may end up shooting itself in the foot when the enormity of its subsidies are fully visible to all!
Let's just get on with building airplanes......it's been said before there needs to be several good manufacturers competing to drive technology forward, not one that is dominant.
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I think air-hag would be better off giving us further insight into his "plastic aeroplanes are bad" theory, ensuring he uses the Boeing Dreamliner in his answer.
Mind you, that's going to involve some thought and intellect, so don't hold yer breath!
Mind you, that's going to involve some thought and intellect, so don't hold yer breath!
Union Goon
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cejekovich
Only one airbus product has ever repaid its state aid. That is the A320 series. Every other aircraft has most certainly not repaid its aid.
The terms of airbus's aid are something akin to going out and picking yourself out a house, and then saying to the bank, if I happen to get a job, maybe I will repay you.
Airbus does not have to make a commercial decision on whether or not developing an aircraft is viable. They don't have any risk, because they don't have to repay if it doesn't sell. That is flat out ludicrous, and there is no reason for that to exist anymore.
Furthermore for CAP56, the companies that make up the airbus consortium to more defense work than boeing does according to flight international and aviation week, so that doesn't hold any water either (aside from the fact that amercian accounting laws would forbid the kind of cash diversions you are hinting at)
To compare to the American steel tarriffs are not fair either because those are meant to be a temporary measure while an industry reorganizes, not a 30 year long thing to continue should steel happen to take the lead. Furthermore I am against that tarriff because it hurt every other manufacturer that uses steel in America, so what you lost in your steel mills you gained in your auto production and other steel using industries.
So Yes, Airbus is accorded greater aid than any other industry because they don't have to base their product developement decisions on whether or not a product is actually commercially viable (strangely like the concorde as it turns out) and that allows airbus to put out a whole line of aircraft that it could not have put out.
If you want to know why boeing is complaining, its because they are about to sink a lot of money into the 7e7, and when the competition to it comes out (and it will) they want to make sure that they are competing with Airbus on equal grounds and not the whole European aid largess...
Cheers
Wino
Only one airbus product has ever repaid its state aid. That is the A320 series. Every other aircraft has most certainly not repaid its aid.
The terms of airbus's aid are something akin to going out and picking yourself out a house, and then saying to the bank, if I happen to get a job, maybe I will repay you.
Airbus does not have to make a commercial decision on whether or not developing an aircraft is viable. They don't have any risk, because they don't have to repay if it doesn't sell. That is flat out ludicrous, and there is no reason for that to exist anymore.
Furthermore for CAP56, the companies that make up the airbus consortium to more defense work than boeing does according to flight international and aviation week, so that doesn't hold any water either (aside from the fact that amercian accounting laws would forbid the kind of cash diversions you are hinting at)
To compare to the American steel tarriffs are not fair either because those are meant to be a temporary measure while an industry reorganizes, not a 30 year long thing to continue should steel happen to take the lead. Furthermore I am against that tarriff because it hurt every other manufacturer that uses steel in America, so what you lost in your steel mills you gained in your auto production and other steel using industries.
So Yes, Airbus is accorded greater aid than any other industry because they don't have to base their product developement decisions on whether or not a product is actually commercially viable (strangely like the concorde as it turns out) and that allows airbus to put out a whole line of aircraft that it could not have put out.
If you want to know why boeing is complaining, its because they are about to sink a lot of money into the 7e7, and when the competition to it comes out (and it will) they want to make sure that they are competing with Airbus on equal grounds and not the whole European aid largess...
Cheers
Wino
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....but it's not just Boeing that are "sinking money" into the 7e7 is it? Didn't Washington state offer some very generous tax incentives to locate production there? And aren't the Japanese government "risk sharing" partners in the 7e7 through their own aerospace industries? (Kind of like the UK govt. being a risk sharing partner in Airbus?)
Or are these things that Dubya forgot to tell you?
Or are these things that Dubya forgot to tell you?
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The small matter of the other $6.6 billion
OK - If only one third of the funding for new build aircraft can come via state aid / loans, the other two thirds has got to come from other investors, who might just be a bit more financialy diligent on the money they loan.
As the total development bill for the A380 runs in at over $10 billion, more than likely some of this will be from American owned financial institutions, who see merit in investing in Airbus.
Bet these guys will have a thing or two to say about prospective WTO intervention, should the Bush administration push the issue
Or does the other $6.6 billion all come from European banks, I rather think not!
(Great insight humble_dor)
As the total development bill for the A380 runs in at over $10 billion, more than likely some of this will be from American owned financial institutions, who see merit in investing in Airbus.
Bet these guys will have a thing or two to say about prospective WTO intervention, should the Bush administration push the issue
Or does the other $6.6 billion all come from European banks, I rather think not!
(Great insight humble_dor)
Last edited by colossus; 16th Aug 2004 at 16:39.
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Boeing military program provided support to its Civil Aviation business
The parent companies of Airbus (EADS and BAe Systems) have massive defense activities too. Nobody has any objection that EADS or BAe Systems provide massive financing to Airbus.
Another thing that may iritate Boeing is probably this:
http://europa.eu.int/comm/research/a...on2020_en.html
The parent companies of Airbus (EADS and BAe Systems) have massive defense activities too. Nobody has any objection that EADS or BAe Systems provide massive financing to Airbus.
Another thing that may iritate Boeing is probably this:
http://europa.eu.int/comm/research/a...on2020_en.html
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Bahrainlad
The tax incentives to keep the production in the state of washington were to bring the state into line with other states and are available to anyone participating in aircaft production in the state of washington, including any work Airbus might choose to do there. Sooooo, If the EU governments are willing to give boeing 1/3 the developement costs on the same basis that they gave to airbus then I have no problems.
The risk sharers are taking there end of the production at their risk. No one is offering the same loans to BOEING for boeing's share of the production.
So if the EU government will cut boeing a check for 3 billion, to be paid back as "licenses" on production as they do for Airbus, then there is no problem.
Cheers
Wino
The tax incentives to keep the production in the state of washington were to bring the state into line with other states and are available to anyone participating in aircaft production in the state of washington, including any work Airbus might choose to do there. Sooooo, If the EU governments are willing to give boeing 1/3 the developement costs on the same basis that they gave to airbus then I have no problems.
The risk sharers are taking there end of the production at their risk. No one is offering the same loans to BOEING for boeing's share of the production.
So if the EU government will cut boeing a check for 3 billion, to be paid back as "licenses" on production as they do for Airbus, then there is no problem.
Cheers
Wino
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Looking at the effect of globalization in this market, I think that this may no longer be an issue for the WTO at all, since it may no longer be a question of a single sovereign state being wronged.
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What is this extraordinary belief that the building of aircraft by competing Companies in different countries should be fair?
If Boeing's influence on its country's government is sufficient to ensure that said government makes it easier for Boeing to design/develop product, then the solution that Airbus has to persue must recognise that this is happening and act accordingly.
If that behaviour causes, or threatens to cause, 'subsidy escalation' as each tries to outdo the other, then the opportunity exists to rein that in, under the direct influence of the market, as each of the governments and companies recognise that their subsidy gearing is becoming, or will become, less and less favorable (i.e. smaller and smaller benefit from larger and larger subsidy).
So economics drive the change: not a strange view that "it isn't fair".
A smart view of economics says that the subsidy race/spin/obfustication need not lead to collapse of either producer in order to demonstrate the fallacy of over subsidising - and that is the basis upon which discussions to resolve the difficulties must be held. But going into such discussions you do your credibility no good by claiming that the current position isn't fair - fairness doesn't figure in the economics unless it can produce a measurable benefit for all the major players.
If Boeing's influence on its country's government is sufficient to ensure that said government makes it easier for Boeing to design/develop product, then the solution that Airbus has to persue must recognise that this is happening and act accordingly.
If that behaviour causes, or threatens to cause, 'subsidy escalation' as each tries to outdo the other, then the opportunity exists to rein that in, under the direct influence of the market, as each of the governments and companies recognise that their subsidy gearing is becoming, or will become, less and less favorable (i.e. smaller and smaller benefit from larger and larger subsidy).
So economics drive the change: not a strange view that "it isn't fair".
A smart view of economics says that the subsidy race/spin/obfustication need not lead to collapse of either producer in order to demonstrate the fallacy of over subsidising - and that is the basis upon which discussions to resolve the difficulties must be held. But going into such discussions you do your credibility no good by claiming that the current position isn't fair - fairness doesn't figure in the economics unless it can produce a measurable benefit for all the major players.