The Hindu : Karnataka News : EADS to move out of Europe

Online edition of India's National Newspaper
Friday, Dec 21, 2007
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Karnataka

Karnataka

EADS to move out of Europe

Ravi Sharma

BANGALORE: As a weakening dollar forces EADS, the large European aerospace corporation that develops and markets military and civil aircraft, missiles, space rockets, satellites and related systems, to shift production outside Europe, one of the beneficiaries could be India. EADS which was formed in 2000 by the merger of Germany’s DaimlerChrysler, France’s Aerospatiale-Matra and Spain’s Construcciones Aeronauticas, and has subsidiaries such as Airbus Industrie, Eurocopter and EADS Astrium recently announced that the dollar’s record lows against the euro would force it to scout for production facilities outside Europe.

Reportedly every 10 U.S. cents rise translates to a one billion euro rise in cost of production in Europe.

Commenting on the dollar’s fall and its dramatic impact on EADS’ cost of production in Europe, EADS’ vice-president Eugen Welte told The Hindu that while it was still too early to predict how much of production facilities would shift to countries such as India, it was the way to go forward. “It is being reviewed very carefully. Extremely tough discussions are currently on in Europe, both within the company and also with suppliers. The goal for EADS is to reduce costs and we have to look for means to do so. Which countries are to be targeted could be finalised by early next year.”

According to Mr. Welte, besides India and of course the U.S., other countries that could benefit from a weaker dollar and the EADS establishing production facilities outside of western Europe are China (where Airbus have recently started a final assembly line), South Korea and some countries in Eastern Europe. “For a country to take advantage of the weakening dollar low labour costs alone won’t be sufficient. It needs a good supplier base for manufacturing, and high skill levels and technologies.”

EADS has already taken advantage of India’s lower production and labour costs, and skill sets by asking the Hindustan Aeronautics Limited to manufacture doors for Airbus aircraft and some panels and structures for the airframe of Eurocopter helicopters; and establishing their industrial footprint by setting up the Airbus Engineering Centre India in Bangalore.

According to Mr. Welte who is also the general manager of the Bangalore Centre, which currently employs 30 engineers, and does high-end aircraft design work including in aerodynamism, aeroelastics and flat management systems, EADS “will continue to ramp up operations at the Centre. “How much higher the ramp up will be has to be decided. We are looking to increase the number of engineers to 300 in three years. In addition by next year we will also have a bank of direct suppliers who will work for us. Other business units will also follow the Airbus example and have captive centres in India.”

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