Deal for Airbus assembly plant in China due to be signed

By Andreas Landwehr Jun 27, 2007, 19:55 GMT

Beijing - Europe's aircraft manufacturer Airbus is set to earn itself a place in aviation history with China's help.

As the first international manufacturer, Airbus will shift the final assembly of modern commercial airliners to China to secure itself a larger share of the country's rapidly growing and already worldwide second-largest air traffic market.

After detailed negotiations that spanned several months, a joint venture agreement is due to be signed this Thursday in Beijing's Great Hall of the People with Germany's Minister of Economy, Michael Glos in attendance.

The largest challenge for Airbus will be the training of local workers for the company's first final assembly plant outside of Europe, which is currently being built in the port city of Tianjin, about 100 kilometres south-east of Beijing.

'Technically, we are starting out at ground zero,' said a project manager.

Some 500 Chinese employees will have to be selected, primarily mechanics, electricians, spray painters and logistics personnel.

About 200 of them have already begun their training including intensive English-language lessons.

Lufthansa's technical department will later expose the new employees to aeronautics-specific training, which is to be conducted at Tianjin's German-Chinese Vocational Training Centre, among other locations.

The time schedule is demanding as the Chinese workers also will have to spend between 6 months and a whole year at the Airbus plants in Hamburg and Toulouse to gain practical experience alongside their European colleagues.

Production in Tianjin is planned to start a little more than one year from now, in August 2008, and 120 European employees will temporarily move to China to facilitate that launch.

The plant, adjacent to Tianjin's airport, will be an exact replica of Hamburg's modern final assembly facility, which specializes in short- and medium-range aircraft.

The first plane is not expected to roll off the assembly line before mid-2009, but commencing from 2011, four aircraft of the model A320 are planned to be finished each month, half the current output of the Hamburg plant.

The facility plays an important role for China in its efforts to develop its aviation industry.

In March, the government announced ambitious plans for its own large-bodied jet to compete with Airbus and Boeing in the future, but local experts have said that the realization of this plan was still far off.

Informed sources said the transfer of technical know-how for the new Airbus plant would be 'limited', although possible worries about technology theft were rejected as groundless.

If that danger materialised, special security measures could still be implemented.

In any case, Chinese airlines buying aircraft from abroad would automatically receive large amounts of technological documentation, so technology theft would in that respect not pose any imminent concern, the sources said.

Apart from that, technology transfer of a certain magnitude also already happened through operation, maintenance and repair training for newly-purchased aircraft.

Airbus parts will continue to be entirely produced in Hamburg, then shipped to China where only the final assembly will take place, which accounts for only 5 per cent of the total value in terms of material and man hours.

No jobs in Hamburg will be in danger; on the contrary. Airbus expected through the assembly in Tianjin a 'significant market share increase' in China, which is predicted to rise from 35 per cent in 2006 to about 50 per cent in the near future.

Orders for the purchase of 150 Airbus A320, to which China already agreed in principle October 2006, also are scheduled to be signed on Thursday, which proved that Airbus continued to remain the preferred choice over Boeing in the country.

'We are on a solid path,' the sources said.