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Airbus Consortium

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Turbulence wrecks Airbus Consortium

Airbus Industry is a consortium of European aircraft-manufacturing companies formed in 1970 to meet the demand for short- to medium-range, high-capacity jetliners. Members include the German, French and Spanish-owned European Aeronautic Defense and Space Company EADS (80% stake) and the British owned BAE Systems (20%).

Since its inception, Airbus has become a case study for how a multi-lateral consortium can be a disaster in a market-sensitive industry like Aviation.

Technical and cultural issues

Socio-cultural differences: It is well known throughout Europe that Germans prefer consensus and involving others in decision making, while the French like to have a centralized committee making all major decisions. The Spanish are known to be flexible but not very communicative. All these differences have hugely impacted productivity and working efficiency within Airbus.

Governmental interference: It’s hard to enforce economic efficiency where subsidies are involved. Every time there was a crisis in investment or Opex, the governments of the countries involved jumped in to help out their respective players in the consortium. This led to huge overheads and repeated delays.

Technical oversight: Incompatibility in the versions of CATIA software used by plants in Toulouse, France and Hamburg, Germany resulted in 530 kms of cable wiring throughout the aircraft having to be completely redesigned. This delayed the launch of Airbus A380 for two years, and as much as $6.1 billion in losses and penalties for late-delivery.

A fractured assembly line: Owing to political compulsions, different parts of the aircraft were built at different locations: nose sections in France, fuselages in Germany, wings in UK, tails in Spain, etc, while the final assembly was done in Toulouse (France). All this led to overheads in logistics, not to mention communication gaps, and unforeseen delays.

HR issues: Positions and...