Delays in the vital Airbus 380 project have been identified around complex wiring problems. But the crucial problems may be the cultural hard-wiring of the parent company EADS revealed in the job-equity summit between Chirac and Merkel.
Update: I recently suggested that Airbus was struggling in its efforts to secure its future because of some killer facts noting that:
The killer facts that will pervade the talks are as follows. The mighty and innovative airbus 380 project has been mired in technological challenges (particularly over gigantic wiring problems) at the Toulouse plant. At minimum, these will cause huge compensation payouts to customers. (The financials would be much worse if competitor Boeing were not working to full capacity). The governance of EADS has been an extended story of struggle between French and German interests (in which the Franco-German co-leadership plays a part). British political influence disappeared after UK defense and aviation company BAE Systems announced its plans to sell 20% stake in Airbus to EADS last year.
Over the weekend, an official version of the story has emerged via the news agencies. In it, the discussions between Chirac and Merkel have been described as resulting in a concord (is that really le mot juste?). According to a Times article
Chirac said he expected that “in terms of jobs, in terms of technology, there be perfect equity in the sharing of the consequences but, equally, that there be no straight layoffs.”
Did I get it wrong?
My earlier account was ‘off-message’, if M Chirac’s statement is to be accepted at face-value. However, further reading of the reports in the German press suggests that that ‘perfect equity in the sharing of consequences’ is unlikely, and even less likely is there to be perfect harmony between French and German expectations.
I had misled myself in conflating the company announcement to delay its restructuring plan, with the meeting between Jacques Chirac and Angela Merkel. It turns out that the decision to delay the restructuring of the company, although attributed to the political storm brewing, was announced before the ‘summit’
I had also bought the story from English press reports that the wiring at Toulouse had been a major source of the Airbus 380 problems. In contrast, a German report suggests that their Hamburg plant has been blamed for much of Airbus’s operating loss for 2006 due to the delays, and that some of the A380 production could be transferred to Airbus plants in Toulouse, France, which could also be the assembly site for the new A350.
But these remain issues to be cleared up. More obviously, the political meeting was more about finding a political statement of harmony. This may not be unconnected with electoral campaigning in France at present.
This seems to me to be an example of cultural hard-wiring in the company. I have modified the more familiar terms of hardware and software in cultural theory to suggest that the corporate rigidities, like the wiring of the Airbus 380, may be rather resistant to a quick-fix. The structure is closer to hardware than to software, more hardwired than softwired in nature.
What happens next?
We will learn whether the company will announce steps to address its urgent technological problems which are key to its production difficulties. Or whether the stories will remain focused on the political dimensions of the company’s hard wiring. (No, I still don’t think Concord is the mot juste). Some predictions are still worth offering.
Airbus is not in a position in which traditional ‘strong’ leadership can be expected to make a significant difference in the short term. Louis Gallois was not selected for such actions, and he may as well continue seek a consensus which permits the company to introduce its needed restructuring plan. This suggests that change will be that of the reasonable man rather than the progress which Bernard Shaw argued was achievable only through the efforts of the unreasonable and heroic leader.