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Flying united

By XIAO LU (China Daily)
Updated: 2008-08-18 07:09

From supplying components, to hosting the site of an aircraft final assembly line, the Chinese aviation industry is increasingly being integrated into Airbus' industrial organization and vying to become a risk-sharing industrial partner of the European aircraft manufacturer.

The Airbus (Beijing) Engineering Center recently received a business license as a Sino-foreign joint venture and held its first board meeting. Airbus controls 70 percent of the center, while Hafei Aviation Industry Co Ltd takes the second biggest share with 18 percent and Jiangxi Hongdu Aviation Industry Co Ltd holds 7 percent. China Aviation Industry Corp I (AVIC I) holds the rest of the shares. Hafei and Hongdu are both affiliated to AVIC II.

AVIC I and AVIC II are China's leading aviation manufacturers and have been supplying components to Airbus and Boeing.

The joint venture will carry out 5 percent of Airbus' outsourced airframe design work of the A350XWB.

The A350XWB is Airbus' answer to the runaway success of US rival Boeing's B787 in the lucrative market for long-range, mid-sized, twin-aisle planes.

"It will design the components that later on might be manufactured in the different factories of AVIC I and AVIC II. We are giving them the possibility to be full risk sharing partners of Airbus," says Jose Cataluna, general manager of the center.

The center has recruited 140 Chinese engineers, including 26 engineers from AVIC II and 14 from AVIC I. The rest are fresh graduates from leading Chinese universities. The center is expected to employ 200 Chinese engineers by the end of this year.

"AVIC I and AVIC II have sent the best manufacturing engineers of their plants and the center will train them to become design engineers," Cataluna says.

"Our main task is to develop the capability for designing a specific component for an aircraft."

The Beijing joint venture is one of Airbus' five outsourced engineering centers around the world. The others are in Wichita, Kansas, and Mobile, Alabama in the United States; Moscow and Bangalore. They are closely linked with Airbus' design offices in Europe. For example, the center in Russia supports Airbus engineering people in Hamburg and Toulouse, focusing primarily on fuselage structure, stress and systems installation. The Wichita center is involved in wing design for the A380 and other long-range aircraft and has real-time communication links with their British colleagues in Filton.

"Airbus is trying to become a more and more global company. The way to develop that philosophy is to use the capacity we can develop in each country," Cataluna says.

The Toulouse-based aviation manufacturer launched a restructuring plan at the beginning of last year to face challenges such as the US dollar weakness, increased competitive pressure and the financial burden related to the A380 delays. A highlight of the restructuring plan is a new operational model for Airbus to outsource half of A350XWB's aerostructure work to development partners as the aircraft maker seeks better distribution of development costs and risks. This is about twice as much as in the company's earlier programs.

Airbus will offer 5 percent of its outsourced work to China. The work packages being proposed are likely to include a high proportion of composite parts, mainly moveable parts on the wing surfaces and the horizontal and vertical tails, flaps and rudders.

Airbus will set up a joint venture with Harbin Aircraft Industry Group Co (HAIG), a company affiliated to AVIC II, early next year to produce aircraft composite material parts and components for the A350XWB. The two companies signed a framework contract in July during the 2008 Farnborough International Airshow. Airbus will control 80 percent, while HAIG owns the rest of the shares.

Airbus has been increasing its industrial footprint in China. Before 2004 it purchased less than $20 million of its aircraft components per annum from Chinese factories. But by the end of 2007, its subcontracting volume to China exceeded $70 million. The company plans to increase that number to $120 million per annum in 2010 and $450 million per year in 2015, Laurence Barron, Airbus China president, told China Business Weekly earlier this year.

"As we look to achieve that target, a very important issue for us is to create a solid team in China for design," Cataluna says.

(China Daily 08/18/2008 page6)