Airbus is forging ahead with an integrated plan to cut more than $1.83 billion from its costs between 2003 and 2006 — even if that means outsourcing work from its European plants to competitive subcontractors, according to evp Karl-Heinz Hartmann. The company’s target includes a $403 million saving over the course of this year. “We’ll do it,” says Hartmann. “No question.”
Meeting the cost-cutting targets is the task of the eight “centers of excellence” that Airbus formed in mid-2004. Each of these deals with one part of the aircraft: wings in Broughton and Filton, aft fuselages in Hamburg and Bremen, forward fuselages in St Nazaire and so on. Trans-national centers of excellence focus on electrics and cargo systems.
Airbus’ principle is that the centers of excellence have to be the best in their class in order for their work to be considered a “core competency” for Airbus as a whole. “The have to actively prove that they fulfill that requirement or they risk that the work will be subcontracted,” says Hartmann.
One major focus of Hartmann’s job has been to bring the centers together to compare their costs and trade money-saving ideas. “It wasn’t an easy step,” he says, because under the old Airbus structure “nationally, the plants were all competitors.” But, he says, “when you talk to people in St Nazaire or Bremen, or wherever they are, they’ll say that they’re top of the class.” Bring them together, give them a common motivation, he says, and they share ideas and learn from one another: “Aha! There’s something I can use.”
Changes have already been made: before 2004, for example, A340 wings were first assembled in Broughton, and then stripped of their movable surfaces before being shipped to Toulouse. Eliminating that step reduced costs by 40% per ship-set. In Bremen, a redesigned inner flap for the single-aisle family has saved 28% in cost and 40% in lead time.
Overall, Airbus has several basic rules for cost control, says Hartmann. “We want to keep our staff numbers stable, regardless of production rate, and only do what is unavoidable” to add people. In turn, this means investing in the skills and competence of the staff. “We are convinced that this is a requisite for high performance,” Hartmann notes. The company also wants its labor force to be flexible — including the hiring of temporary workers and extensive use of overtime – to meet production peaks. The company’s long-term goal is to reduce its unit cost by at least two per cent per year, inclusive of inflation — which means an annual five per cent productivity improvement. — Bill Sweetman
