BAE Systems sells stake in Airbus [Archive]

Final 3 Greens

7th Apr 2006, 05:17

Phileas Fogg

It hasnt been called BAe for years, just shows your level of commercial awareness.

Weather Jinx

A BAE Systems shareholder, I back the judgement of the board to make the right commercial and worry more about the impact on my pension fund than about the impact on the UK civil aviation sector.

Why do you have a government and a Department of Trade and Industry?

Don't blame business for making a profit for the shareholders, that's what they are there to do and that's what keeps the shareholders happy.

WeatherJinx

7th Apr 2006, 06:18

A BAE Systems shareholder, I back the judgement of the board to make the right commercial and worry more about the impact on my pension fund than about the impact on the UK civil aviation sector.
How magnanimous of you. Some things are a little more 'bigger picture' than 'I'm alright, Jack'...

WHBM

7th Apr 2006, 08:02

It is a disappointment because Airbus/EADS is very much a political creation with French (in particular) and German political influence. And this political influence is all about getting advantage for their own electorate. Pan-European ideals be buggered.

So doubtless there are parts of EADS in France and Germany who are this morning planning for the wing design and assembly to move over to plants under their direct control.

You just have to look at the history of comparable UK industrial organisations sold to French multi-nationals. GEC who built railway locomotives and carriages in the UK at various large plants were merged with Alsthom in France. This lasted just a few years before all the work in UK plants had finally been moved to France. Other examples too. None the other way.

Desert Diner

7th Apr 2006, 08:09

So why did they stop making the 146, aka Avro RJX. Boeing didn't stop production of the 737, Airbus didn't stop production of the A320 and Embraer, Bombardier etc. seem to be doing very well with their regional jets.

Maybe because it had 4 engines while the rest of them have only 2 and the airlines didn't want to buy them because of this fact.

Phileas Fogg

7th Apr 2006, 08:27

Final 3 Greens,
Having worked for BAE Systems I am fully aware of it's full name however BAe is a recognised abbreviation, I don't notice people referring to airlines by their full name and commonly refer to them by their first name rather than in full.

Being picky or what, get a life!

MEON VALLEY FLYER

7th Apr 2006, 08:29

Lets face it. A business is in business to make money. I know us British have a hard time dealing with that fact and seem to put poeple down who make money. If you want the sociological model, then all the labour party members can put their hand in their pocket and buy it to keep the jobs.

Besides there ain't much money to be made it civil aircraft, especially when you strip out all the government aid. Hell if there was, everyone would be doing it.

taffman

7th Apr 2006, 08:40

Don’t use Alstom as an example please. After the take overs their products became so bad they were almost thrown out of the country. Go before being pushed me thinks.

John Farley

7th Apr 2006, 08:47

To be accurate the company to which y'all refer is called BAE SYSTEMS

MEON VALLEY FLYER

7th Apr 2006, 08:51

Second thoughts.

What is this leading up to. They must know the backlash this would receive.

Does this mean a deal with a US partner is waiting in the wings.
Lockhead Martin UK Ltd, Warton, the place for Europe to buy it's JSF.:zzz:

WeatherJinx

7th Apr 2006, 09:09

Lockhead Martin UK Ltd, Warton, the place for Europe to buy it's JSFWith added Uncle Sam's 'Technology-Sharing Lite™' :rolleyes:

wombat13

7th Apr 2006, 09:11

I hope the shareholders are happy :rolleyes:

Delighted

The Wombat

heebeegb

7th Apr 2006, 09:12

A very disappointing move. The latest in a long history now of the UK's move away from airliner production.

WeatherJinx

7th Apr 2006, 09:21

DelightedYes you must be...share price is a soaraway 0.17% down on open this morning - you must be raking it in. Obviously the market's delirious about it too. Cheers! :ok:

Andy_S

7th Apr 2006, 09:24

A very disappointing move. The latest in a long history now of the UK's move away from airliner production.

And so what? Is the world going to end as a result? Will society collapse because we're not building airliners any more?

Rainboe

7th Apr 2006, 09:46

What we're worried about is UK plc, not just BAE Systems or whatever they're called. Maybe there is another stunning deal waiting in the background, but whatever, BAE will be even more of a minority partner than in Airbus and could lose whatever work comes its way in a few years.
Whatever its problems, and the 747 originally went through just as bad in its early days and nearly did for Boeing, the A380 IS going to be a long term success because there is no other equipment on that scale, and the world will need a monster long range carrier. Hate to say it, but I think there is short-termism afoot here, and in the long run, BAE will lose out heavily, unless they know something we don't.......

RVR800

7th Apr 2006, 09:51

Airbus is a well known and successful brand for many in the world;

Owning it should be important for companies who value europe aerospace engineering...

Shame that they no longer regard this as 'core' to their operation....

Short sighted..

Andy_S

7th Apr 2006, 09:58

the A380 IS going to be a long term success because there is no other equipment on that scale

Oh, right. That's that, then. It's big, so it's going to be a success - end of story......

I'm sorry, but nothing is guaranteed. There is certainly a market for a "monster long range carrier", but whether that market is really big enough for Airbus to recover the development costs is very much open to debate.

kuningan

7th Apr 2006, 10:00

.....imagine for a moment that the FRENCH were selling their stake in EADS to BAE Systems.....and the foaming at the mouth that would be happening across the board from Politicians to Press across the Channel.......so I guess if the French think its a bad idea.....we may think its not?

In the short term this will likely have no impact on UK jobs or skills. Sadly in the long term because of the way EADS is beholden to French or German politicians, when the time comes to trim or cut.....it will happen in the UK, not in France or Germany. I liked the earlier theory that BAe has seen some of the 380 numbers and reckons now is the time to get out while on a high.....feels kinda plausible......

We either believe in free markets, or we don't, and if the other guy doesn't believe in them, in the short term, while thats partly our problem too....in the long term its a bigger problem for him.......

banewboi

7th Apr 2006, 10:35

if airbus would be so financially up the creek if the a380 rollout when tits up, surely they aren't goin to add to it's costs by shifting the satelite facilitys closer to the final assembly line just so they are in a certain country?

surely bae have sold it's stake for their business future direction (which may not be in actual hairy planes) rather than to throw a spanner in the old international cooperation machine,

i think everyone should just step back and stop bein so motivated by conspiracy theories and look for a common sense answer, bae systems is a systems designer right? so after getting airbus off the ground so to speak surely they just want to go back to systems and leave airbus to making planes?

parabellum

7th Apr 2006, 10:39

Rainboe said: " the A380 IS going to be a long term success because there is no other equipment on that scale, and the world will need a monster long range carrier."

Errr.. maybe, but not in numbers that will make it commercial for Airbus. The major carriers, (excluding Emirates), are ordering them in the penny packets they need to fill a niche market, everything else can be catered for by aircraft already on the market or, like the B787 and B747-800, about to arrive.
That takes care of the American market and those that follow it, (Japan etc. etc).

I think Airbus thought they were producing a B747 replacement but scaled up to cater for increased loads, well those loads are on fairly thin routes and only require a small number of mega type airframes, everything else will go on the real B747 replacement, the B777-200 & -300 +ER etc. and the A330/340-500 & -600 that can offer greater flexibility to the travelling public. I suspect that Airbus are heading for some really serious trouble with the A380 and BAE Systems will be well shot of them.

qsyenroute

7th Apr 2006, 10:46

You just have to look at the history of comparable UK industrial organisations sold to French multi-nationals. GEC who built railway locomotives and carriages in the UK at various large plants were merged with Alsthom in France. This lasted just a few years before all the work in UK plants had finally been moved to France. Other examples too. None the other way.
Here's another: Plessey Radar, (via Siemens) was sold to Thales. Asset stripped. Result: no UK capability to produce large centre Air Traffic Management Systems. Five hundred employees in 1998 now reduced to 50. All the highly qualified and experienced ATC engineers made redundant. Thales France now has UK expertise and control a large sector of the ATM market. But, at least the shareholders are happy...

WeatherJinx

7th Apr 2006, 11:42

All the A380 doomsayers (listening to whom makes it appear that they already have the inside track on the project's inevitable failure) might like to be reminded that the 747 itself was a huge gamble at the time - the development costs greatly exceeding the then net worth of Boeing.

Good businesses necessarily take long-range investment risks sometimes (as opposed to cashing in their chips for short-term gains). This isn't some reducto ad absurdum argument about whether we're free marketeers or not - this is about one of the greatest aviation nations on the planet losing pretty much all its influence in what should be an area of national excellence. There are some things that shouldn't be left to free markets alone.

kuningan

7th Apr 2006, 12:01

There are some things that shouldn't be left to free markets alone.

So what exactly should be done? The British were once among the greatest car makers on the planet......and the problem, in the end, was not the 'labour' - but the capital - mismanagement compounded by Government 'help'. The British are still pretty good car makers - and if the badges are foreign, so what? If foreigners are better at manageing these things, then we should do what we are best at....or have we become the world's fourth largest economy by accident....?

DesignerChappie

7th Apr 2006, 12:21

The whole thing is part of a plan put together by BAe in the early 1990's to exit commercial aircraft building. The first to go was the HS 125 because it was a going concern and had a marketable value, bear in mind that the HS 125-800 is still alive and well as the Hawker 800XP.

It was more difficult for BAE SYSTEMS to extract itself from it's Regional Aircraft business as the whole thing was an albatross circling the BAE HQ. In the mid 90's the asset value of the regional aircraft parked up was more than the value of the company, it was saved by auntie Maggie allowing companies to take pension holidays and selling the head leases to an insurance company. The events of 911 gave BAE the excuse it needed to bin the 146/RJ and of course the company was awash with money. Selling the Airbus stake is the final part of the plan, which was first talked about in 2001.

Mike Turner is a hard nosed business man and has worked for HSA/BAe/BAE all his life. He will be out on the golf course in Surrey tomorrow and he won't give a toss what the workforce or sentimentalists think. There is no sentiment on the board, even when the set up the heritage unit the main purpose was to generate revenue from all the old photos etc. that where held in archives all over the UK. As agenerator of 'shareholder value' MJT has delivered and the shareholders, well the ones that matter like banks and pension funds, will be delighted because you cannot lose money on a military contract.

DC

Irish Steve

7th Apr 2006, 12:32

BAE will lose out heavily, unless they know something we don't.......

And another possible issue, very close to home, was the failure under test of the A380 wing, which is assembled by .................

Maybe, and this is of course a rumour network, they perhaps do know a LOT more than the rest of us, and don't want to have to deal with the financial implications of a delay or other problem with the 380 project. It's all about spin, smoke and mirrors, and many other ways to make things look as good or as bad as they can be made to, depending on which side of the equation you are standing.

WeatherJinx

7th Apr 2006, 12:33

Kuningan
So you're suggesting we throw our hand in, admit that we're crap managers and continue to allow foreign capital to repatriate profits whilst we empty the cupboards of all our assets?

The (debatable) '4th largest economy' epithet is unsustainable on this 'client state' model (and in any case is largely bloated by overinflated and largely theoretical real-estate values), as you'll begin to see over the next few years.

I'm not suggesting we become protectionist and insular, just that we should nurture and sustain our 'national champions' a little better, not just whore everything out to the highest bidder all the time.

panda-k-bear

7th Apr 2006, 13:05

Who used to be one of Europe's leading manufacturers of cars?
And one of the world's leading manufacturers of locomotives and rolling stock?
And textiles?
And now we see the end of commercial aviation, too?

Somebody asked if it's the end of civilisation. Well, no actually, it's not. Not in and of itself. But it may be one more brick in the wall - the U.K. is simply not able to MAKE anything any more. And that's very, very sad for a nation that brought about the Industrial Revolution.

The question is, if we can't MAKE things, what CAN we do?

MEON VALLEY FLYER

7th Apr 2006, 13:20

What can we do ?

Hand over all past generations legacy of tax payment to pure economic migrants, posing under the asylum banner.

Why the hell else do they risk life and limb to travel half way round the work to get here (passing through most of the free european world on the way.)

Phileas Fogg

7th Apr 2006, 13:41

John Farley,
To be accurate the company to which you refer is BAE SYSTEMS plc ..... to be factually correct!

Andy_S

7th Apr 2006, 13:44

Somebody asked if it's the end of civilisation. Well, no actually, it's not. Not in and of itself. But it may be one more brick in the wall - the U.K. is simply not able to MAKE anything any more. And that's very, very sad for a nation that brought about the Industrial Revolution.

Your "very very sad" comment is unintentionally revealing. A great deal of the wailing and gnashing of teeth over this issue is driven more by slushy sentiment than anything else. No, we don't have textile mills any more - possibly because they're simply not viable. The same with large scale commercial shipbuilding. Sometimes you've got to accept you're not a player anymore and move on.

Does that mean we don't make anything anymore? Of course not. As someone pointed out earlier we DO still make cars (does it really matter if it's for a foreign owned company). And we still design and manufacture equipment and systems for commercial airliners. Maybe not as high profile and obvious to the untrained eye as the wings, but so what?

kuningan

7th Apr 2006, 13:47

So you're suggesting we throw our hand in, admit that we're crap managers and continue to allow foreign capital to repatriate profits whilst we empty the cupboards of all our assets?

I'm suggesting we do what Adam Smith suggested we do - focus on what we're best at - manufacturing jobs in the UK have declined, are declining and will continue to decline....unless people are willing to accept Chinese level wages....Financial services, Biotech......there's where we can add more value. In any case, simply because a company is foreign headquartered does not mean that only 'foreigners' benefit - so do shareholders, some of whom are British.....

I'm not suggesting we become protectionist and insular, just that we should nurture and sustain our 'national champions' a little better, not just whore everything out to the highest bidder all the time.

So what, exactly, are you suggesting? Set up 'Strategic Champions' like France - our very own 'strategic yogurt maker'.......?

WeatherJinx

7th Apr 2006, 14:11

So what, exactly, are you suggesting? Set up 'Strategic Champions' like France - our very own 'strategic yogurt maker'.......? Well ask yourself this - who'll still have an (even bigger) aviation industry after BAE sell us out? The joke's certainly not on the French here..

AbeamPoints

7th Apr 2006, 14:48

Oh, come on Muppets. Rolls Royce/GE gets locked out of the JSF alternative engine market and Tony goes Ape. A couple of weeks later BAE wants to raise £3bn so muh that its willing to sell the Airbus wings work...

Why?

Because something is for sale in the US defence market, which is far more juicy, probably as a result of George W's best international buddy spitting his dummy over the RR-GE engine deal. Pratt have got sole maker of the engines for the JSF and the Brits, and RR and GE have lost out bigtime.

BAE Systems suddenly move to raise £3bn.

They need that money to invest in something that GWB and the Pentagon have in their gift. I don't know what it could be, from next generation spy satellites, to Subs to UCAVs.

Bleating about Blighty no longer making airliners is to take a narrow minded, backward looking, little England, sentimental view of the world that thank god does not prevail amongst the people running UK PLC who know that investing globally is far preferable to investing nationally.

AP

MEON VALLEY FLYER

7th Apr 2006, 15:08

What the **** is this thread doing here now.

Do the powers that be think BAE is only fit for the anorak brigade now.:(

panda-k-bear

7th Apr 2006, 15:16

Are you guys for real.

Ever heard that "knowledge is power"?

This is merely a step in the direction of losing the ability to design and manufacture "things" - whatever these "things" may be.

The Chinese are extremely good at making things. But not so hot at designing things indigenously - witness the aircraft they have in production now, mainly copies of Soviet aircraft (for the military) or licence built Western machines. They will learn to design, too. And we will have forgotten.

Maybe you don't like it, but the aerospace industry is a strategic industry. When that knowledge is gone it will take a long time to get back. Selling Britain's industrial base up the river leaves us only with the ability to trade other people's goods. Yes, Britain makes parts for aircraft (some rather major - engines, landing gear, though even the latter is French owned). Oh good. Let's all rest easy knowing that the Chinese are producing weapons with guidance systems designed in Britain, shall we?

It's more than a tad worrying when you look at the long term view. We're certain there'll never be a cause to re-arm, are we? If we had to, would we know how? The world can change overnight - it has before!

dannydick

7th Apr 2006, 16:40

Funny place to find the thread. Sums up the state of Britain's aerospace industry nicely - spotters corner! :}

qsyenroute

7th Apr 2006, 19:12

They need that money to invest in something that GWB and the Pentagon have in their gift. I don't know what it could be, from next generation spy satellites, to Subs to UCAVs.

Its called L3..

saman

8th Apr 2006, 22:26

I am amazed.
BAE Systems does NOT make the wings for Airbus - and has not done so for several years.
EADS has owned 80% of Filton and Chester - sorry Broughton for years. Just like BAE Systems has owned 20% of Bremen, Hamburg, Toulouse, St Nazaire...
The wings for each and every Airbus are designed and made by a company called Airbus - in the UK.
Just like the tailplane and lots of other bits are designed and made in Spain - by a company called Airbus.
And the fuselage, loads of other bits and some final assembly is made or performed in Germany - by a company called Airbus.
And other partners spread all around the globe send very clever hi-tech bits to Europe - to a company called Airbus.
On an emotional level, as an ex-HSA & BAe person, I find it very sad that BAE Systems is selling its share in Airbus.
But why would Airbus 'pull out of the UK' - as much of the UK press and many contributors to this thread would seem to think? Airbus is striving to push technology, innovation and production as far and fast as it can. Can anybody make a business case - and that's really is what drives this industry - to scrap all the skills and facilities that exist in the UK and re-invest in re-generating those skills and re-creating those facilities on the south east side of the ditch? How long would that take and why would anyone do it? Where is the benefit to Airbus? Does anybody really think that having BAE Systems as a sleeping shareholder has had any influence over such decisions in the past?
We live in Europe. We work in Europe. The UK is part, at least within Airbus, of Europe. Its market is worldwide. Airbus is a truly European company that happens to have its dominant shareholder based in the Netherlands with ownership in Germany, France and Spain. Think out the box and put parochialism in its place.
Emotionally I find it very sad indeed, but I do not believe it will change Great Britain's position within Airbus one iota.

Edited to correct a factual error - oops!
l

Fujiflyer

9th Apr 2006, 10:15

Interesting article in todays Observer newspaper:
http://observer.guardian.co.uk/comment/story/0,,1750110,00.html

I must admit I'm a little suprised this thread was moved,

Fuji

MEON VALLEY FLYER

9th Apr 2006, 11:36

But can / would the man Blair put a stop to this. Does UK Plc still have a golden share. Even if so, the only way to stop a private company from this action is to control 50.1 % of the stock and put your own board in place.

And we all know about the Labour promise to re-nationalise the railway in '97. (I always thought this could have been done by just letting the franchises expire, after all they were 7 years to start with, would not have cost the 20 hospitals of 20K police they said it would at the time, not that we ever got those things)

Skylion

9th Apr 2006, 11:50

Never mind, Britain leads the way in creating new jobs in the Social Work, Quango and Traffic Warden industries.
The reality is that once out of Airbus, all will look well for a time until decisions are made on the construction locations for the successor to the A 320 and we can then expect to see the end of heavy aircraft manufacturing processes in the UK. In any US alliances the UK can expect to be subtly, and not so subtly, maginalised as is clear from history stretching back to the original De Havilland/Boeing discussions on a trijet airliner , the reported US insistance on the demise of the TSR 2 in exchange for support of Harold Wilsons " Pound in your pocket" to the current the current US refusal to allow the UK to get into the heart of the JSF computer software and the unilateral Bush termination of the joint RR/GE engine for that aircraft.
The aviation manufacturing future for the UK does not look good, but then there are opportunities for social workers, traffic wardens etc in which we can be the pride ( despair?)of the world.

eal401

9th Apr 2006, 13:14

BAe is a recognised abbreviation
No it isn't. :}

No BAE Systems (let's get it right gents) staff are at risk. All personnel involved with Airbus work for Airbus UK. The plant at Broughton will not suddenly close overnight and if it suddenly isn't UK owned, so what? So long as it continues to employ British workers in Britain.

As for all the "shareholder" cheap jibes, I assume those making them do not own such items?

Oh, and as for this thread being in here, simply see it as a reflection on the seriousness of PPRuNe as an aviation website. Once upon a time, it would have been elsewhere.

BOAC

9th Apr 2006, 14:22

Well guys and girls - as the 'co-receiver' of this thread, I agree with you, but the boss himself has deemed this a 'Spotters' item, so best PM Danny and ask for a move? Alternatively you are more than welcome to carry on this important discussion here.

Mad (Flt) Scientist

9th Apr 2006, 16:55

Surely one of the factors which would induce a "non British owned" Airbus to maintain the existing UK-based Airbus sites is the fact that every major country they operate in is one more they can get launch aid from?

Note the way Bombardier put the squeeze on the UK for Cseries launch aid, on the grounds that it would help the Shorts plant; Bombardier is hardly a UK company but held out the begging bowl - and got some cash chucked in it too, IIRC. As long as Broughton and Filton are there, Airbus can continue the long tradition of "give us cash or the wing design work moves" started by BAe.

tornadoken

10th Apr 2006, 17:57

1. In 1992 EU/US did the Large Transport Aircraft Undertaking to constrain Launch Aid. At that time the sole such machines ever to have recovered their R&D were Viscount, 707 (aided by 820 military),727, 737. Since then add A300B, 747. Airbus Industrie said the narrow- body range did, but persuaded fond Govts. to rollover Levy recovery for A330/340, double-or-quits. You take a long term view and wait for the spares. The purpose of making aeroplanes is to make money. Period. But try to spread the burden.
2.The WTO Case arises due to lapse of the LTAU and will severely embarrass Boeing, because this market is distorted. Watch for Embraer/Bombardier to settle theirs quick. Taxpayers don't want to subsidise anything, now, least of all aeroplanes.
3. BAE see US Defense Budget as where the money is, and have an unprecedented chance of getting a fair go at it, because they have taken time to understand how that game is played. Airbus Industrie's parent EADS' owners DaimlerChrysler and Lagardere would just love to be in that place right now, are trying, but labour under French Protectionism (Danone strategic yoghurt).
4. If you know better than BAE Management how to service capital at rates proper for 20-year new product risk exposure, take your capital (shareholder)/time (employee) to that other 'ole. This is a business that no sane man would enter - ask the ghosts of Convair/S.Diego, Lockheed/Burbank, MDC/LA; nor stay in if a nice man offers a get-out card. The customer for most of BAe.'s last solo civil effort was BAe.(Asset Management): 146/RJ would have taken Prestwick/Chadderton down with it if there had been no military cushion in Nimrod MRA4.
5. EADS presumably believes they will be able to service another few £Bn. capital by bringing open-source into the next wing design, and the next wing production Lot. Airbus SAS will buy from the best source - as they have since about 1995, when harsh winds blew away fixed workshares. Chunks now come from China, Russia, anywhere that wins. Maybe UK sites will win those bids, just as they have won bits of Boeings, open-source. If not, then not...but that would be so, with or without a BAE 20% equity stake. Don't confuse site of best design, with site of best-value supply.

taffman

11th Apr 2006, 05:51

The writing is on the wall for Airbus UK, end of the line for Chester and the wings. With the A350 coming under fire from two big leasing companies and now major customers such as Singapore Airlines, for not coming up to scratch and it being a fudge, Airbus saying that when it has bought Bae’s bit it will simplify the structure of Airbus, A340 not selling because it does not meet the figures, the jobs situation in France and Germany, the likes of Chirac with his obsession with protectionism for France, he will have Chester shut and the whole issue moved to France to make him look good in the next elections due in 2007. He will not be in power but his sidekick will that just lost so much face in the CPE fiasco. They need some thing to make them look good to the people in France. Also a good way to take a swipe at president blair, take that you bounder. How dare you little upstart do things to make us look stupid. Chirac only has to open his mouth to confirm what every body thinks any way. But back to Chester, it will take a while but it will happen. Watch the news guys.

eal401

11th Apr 2006, 08:53

The writing is on the wall for Airbus UK, end of the line for Chester and the wings.
Oh b*ll*cks!! You think Airbus are going to shell out millions of pounds rebuilding an existing facility elsewhere?? Given the scale of the 380 plant and issues with the programme, that is extremely unlikely.

taffman

11th Apr 2006, 09:01

A lot of politics in this and you know how much sense politicians make. The reduction of transportation costs makes a lot of sense. Think how much is tied up in moving all that metal around just to please governments and like. With no direct British intervention, why not. Could save a small fortune and off set over run in development costs now and future projects. Bean counters triumph over common sense mate. Work skills & expertise in North Wales mean nothing to bean counters.

Think back to the issues of dredging the basin where the wings are loaded. Only needs the environmentalist to kick off again and Chester is once again high and dry. Gun to the head in some ways waiting to go off. Not a good way to plan for the long term future. Need the more direct approach the French take, sod you, we are building it and that will be in France.

Final 3 Greens

11th Apr 2006, 10:08

Taffman

Work skills & expertise in North Wales mean nothing to bean counters.

Work skills and expertise can be relocated (if willing to go and if the offer is right.)

The major issue facing many companies in engineering is how to recruit and retain such talent.

I'm not saying that Chester will transfer to anywhere else, but the people who tell the beancounters what to do in a smart business tend, in my experience, to be very aware of the skilled people in the business and their contribution.

taffman

11th Apr 2006, 10:23

The problem is, just how many of those who have worked tirelessly for BAe at Chester would want to relocate, lock stock and barrel to France. Not many me thinks. It’s a permanent job, not a jolly on expenses with a paid trip home every so many weeks. You end up with local wages below may be what you are used to.

As for the skills aspect, it the British system that keeps the standards high and rightly so. The European way is very much different with domestic electricians being allowed into the aviation world to build aeroplanes, garage mechanics to assemble major parts. Give them six days of training and you are in. A lot cheaper as well, bean counter stuff again. Semi skilled staff is the norm now, not the highly trained apprentices of Britain with college courses to back it up.

Curious Pax

11th Apr 2006, 11:15

Oh b*ll*cks!! You think Airbus are going to shell out millions of pounds rebuilding an existing facility elsewhere?? Given the scale of the 380 plant and issues with the programme, that is extremely unlikely.

One word: Raytheon! BAE spent many a long year building the 125 business jet at Chester, then sold it to Raytheon. Didn't take them too long to relocate the production line to Wichita.

airsound

11th Apr 2006, 14:21

The Independent (London) was kind enough to publish this, as their top letter, in bold print, on Monday 10 Apr, under the headline 'BAE's plan to sell Airbus share is betrayal of British aviation ethos'.
http://comment.independent.co.uk/letters/article356845.ece
They had it on Friday, and could have published on saturday, thus getting in before Will Hutton's excellent Observer article. Never mind, at least they published it.
Don't know if Mike Turner (CEO BAE Systems) reads the Indie, but I'm sure his press trawlers will have put it in front of him.
So, standing by for incoming. Although perhaps BAES will adopt the usual big organisation tactic of saying nothing and hoping it'll all go away.
Harrumph.
AirSound

backseatjock

15th Apr 2006, 12:57

Curious Pax: The difference is that with the Airbus wing work, there is a safeguard mechanism to sustain the work in the UK, specifically introduced in 2000/01 when the Airbus single company was created and for implementation as/when BAE sold its shareholding.

This mechanism protects the wing design, development and production work and has no end date. On completion of the sale of BAE's 20% shareholding this legally binding agreement will pass to the UK Government, at its request. Any change can only be made on economic grounds, not political, following analysis by financial institutions appointed by both parties.

Putting emotional arguements to one side, the reality is that since the creation of Airbus as a single business (rather than a collection of assets and employees from around Germany, France and Spain as it had been before) the sale of BAE's minority stake was always a possibility.

After a difficult start Airbus, as a manufacturer of quality commercial aircraft, has 'grown up'. With the A380, A350 and early spadework for an A320 series replacement, it is entering a new phase in its development. You could argue that BAE's divestment of its 20% shareholding is just a natural part of the Airbus story.

With just a 20% shareholding, BAE had limited management control/input and while Airbus has an excellent product line up and a superb market position, built up with the not insignificant support of Mike Turner personally and others at BAE, it is clear that significant and continued financial investment will be needed to keep it there.

You can hardly blame the Board of BAE for feeling that the capital required to support this, could deliver a better return to the company's shareholders if used differently. BAE has been growing steadily by acquisition as well as sales growth, year-on-year and the Company is clear in its ambitions for this to continue, both in the US and elsewhere.

In any case, despite some reports, you could hardly accuse BAE of turning tis back on commercial aviation. It may no longer produce commercial airframes but it does, through a lot of its individual businesses, supply a huge amount of navigation, communications, avionics, flight and engine control systems to both Boeing and Airbus.

airsound

17th Apr 2006, 14:11

I appreciate your considered post to Curious Pax. However, I believe you’re missing the point of the letter in the Independent (post #63) and Will Hutton’s article (Fujiflyer’s post #50). In fact, I suspect that you may be a BAES person yourself, or at least a BAES shareholder. The point that you are missing is that BAES, and its earlier incarnations, has overseen the demise of one of the world’s great aviation industries - for short-term reasons of immediate profitability.
You say “It [BAES] may no longer produce commercial airframes but it does, through a lot of its individual businesses, supply a huge amount of navigation, communications, avionics, flight and engine control systems to both Boeing and Airbus.” But lots of national industries produce all those essential components, big and small. There were not many national industries that, in the second half of the last century, produced whole aeroplanes. Because of the short-term policies of BAES and its predecessors. Britain is no longer amongst that select few. Now, having thrown that inheritance away, and with the beancounters and shareholders in full control, BAES is now going to throw away one of its greatest successes in the part-building world as well - the uniquely successful Airbus wings.
What this does, as the Independent letter suggests, is to remove a source of inspiration for putative future aeronautical engineers and other workers. It turns an industry that people used to be proud to join into just another bunch of widget-makers. And for what? Apparently so that BAES can sever its European links and get further into an American industry that totally dwarfs it - an industry which consistently reveals its hard-nosed unwillingness to share any of its technology with foreigners.
It may be a canny commercial decision in the short term - but I believe it is a thoroughly anti-British decision for the future. Perhaps it’s a good thing BAES took the word ‘British’ out of its company name.

airsound

PAXboy

17th Apr 2006, 15:50

backseatjock ...this legally binding agreement will pass to the UK Government, at its request. Any change can only be made on economic grounds, not political, following analysis by financial institutions appointed by both parties.
In that case, BAES have pulled off a fantastic coup and provided a fine incentive to encourage buyers. That is because, the buyer knows that they can easily relocate the business! In times gone by, it was always the Political case that had to be made and national interests were supported by many. Nowadays, it is always the Financial case that must be made and making a financial case to relocate the plant would be the easiest thing in the world.

Whilst I agree with much of what airsound says, there is no way of stopping it. If you wanted to stop it - then action had to be taken 35/45 years ago. This would have meant accurately projecting the way in which the western stockmarket would become prime and then preventing it from doing so.

Since the stockmarket has gained this position and the financial argument is the only argument that holds sway in Britain, then it is not possible to change the course of action. Within the industry other examples of financial imperatives holding sway are BAA, currently a lousy provider of passenger facilities - but rather good at developing shopping malls!

Recently, when the Rover car plant went into financial melt down, the UK govt attempted to stop it and provided cash to support the staff during negotiations. In one week they burnt several million pounds and no effect. They have been heavily questioned about that.

I suggest that 'economic grounds' will be as robust as the 'agreements and independent observers' that Rupert Murdoch so willingly agreed to when he bought The Times. In due course, all of them were overthrown, as these will be and Airbus will continue to contract towards Toulouse, for the main reason that it will make financial sense to do so. Oh yes, and political sense too for this French (not European) maker of aircraft. By the way, if you want to know how the Stockmarket will lose it's primacy, just wait for the next '1929' big crash.

backseatjock

17th Apr 2006, 16:08

airsound:

Will Hutton's article in the Observer was from a political standpoint - his own very strong political standpoint - which is what most of his writing seems to be. Sean Maffet's letter in the Independent would seem to be written from a rather different persective but, while I agree totally with the emotions he feels, it is a sad fact of life that in today's society no business can stand still.

The fact remains that BAE has had an investment shareholding in Airbus, giving it little management involvement, since 2000. On this basis, the eventual sale of its investment was expected by many industry observers for some time.

In deciding to sell the 20% stake absolutely nothing will change. The BAE shares will be bought by the company which currently owns the other 80%. Workers in Broughton and Filton already work for Airbus, not BAE and so the UK's involvement in the great Airbus success story will continue.

Picking your point about the loss of the British commercial aircraft manufacturing industry. The sad reality is that no matter how proud we feel about those aircraft types (and my old man made a living from flying some of them) latterly they were hardly a resounding global sales success and eventually just about finished off the company which made them or inherited the rights to them through industry consolidation.

No mud slinging from me towards BAE here, this problem was hardly unique to the UK. The commercial aircraft capabilities of McDonnel Douglas, Lockheed, Fokker, Saab and many others have all gone the same way and for the same economic reasons. Look too at the recent struggles for Bombardier.

As I am sure you know, no-one actually designs, develops and manufactures large commercial airliners successfully on their own these days. Even the mighty Boeing is relying heavily on Japanese involvement and investment to make the 787 happen.

Airbus has evolved into a mature business and as it prepares for entry into service of A380, development of both the A350 and eventual A320 series replacement, it is starting a new phase of this evolution.

I think you will find that post the sale of BAE's 20% stake, the UK will continue to have the same level of involvement with wing design, development and production for these new Airbus projects as it did when BAE was a shareholder. This involvement is something we can all continue to be proud of.

BSJ

PS: Re my employment, I have had involvement with campaigns to sell both military and Airbus aircraft, am a patriotic Brit and still have involvement in the industry today.

backseatjock

17th Apr 2006, 19:21

PaxBoy:

I doubt whether it would be easy for anyone to relocate the Airbus UK businesses in Broughton or Filton! Think of the disruption to design and manufacturing work and the knock on effect for Airbus output, the loss of facilities in which some of Europe's most highly skilled engineers work (there is a shortage of such people globally), the loss of access to further repaybale launch investment from the UK Government and the fact that millions of pounds worth of investment in equipment and processes would have to be written off.

Not so sure that would present an economic argument that many, if any, would accept.

And, of course, the buyer will be EADS - which currently has management control over the business anyway.