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Airbus SE is courting China with its first wide-body jet facility outside Europe, positioning the company to chase billions of dollars in potential orders from an aviation market that’s set to become the world’s biggest within a decade.
On Wednesday, Chief Operating Officer Fabrice Bregier inaugurated the $200 million completion center in Tianjin, a site designed to give finishing touches such as painting and cabin installation to A330 aircraft. The city, near Beijing, is already home to an assembly plant that produces single-aisle A319s and A320s.
The A330 for Tianjin Airlines at the Airbus completion center in Tianjin.
Photographer: Dong Lyu/Bloomberg
In a race to earn Chinese goodwill, Airbus and Boeing Co. are moving parts of their manufacturing and supply chains to a country the U.S. company estimates will need $1.1 trillion of aircraft over two decades and where the government still makes key purchasing decisions. For China, which has its own aviation ambitions, the A330 center is a coup of sorts in its chase to build its own commercial planes.
“China naturally wants to capture back some of the value in its purchases,” said Will Horton, a senior analyst at Capa - Centre for Aviation in Hong Kong. “Assembly and outfitting are a small portion of an aircraft’s total value, and something Airbus and Boeing can part with in order to build their relationships in China.”
Besides the political decision to woo China, where policy makers want companies to manufacture locally under a “Made in China 2025” blueprint, the two aerospace giants are also moving delivery closer to customers in Asia to help ease the strain on the planemakers’ existing facilities. The first A330 off the new line will go to Tianjin Airlines. The facility aims to roll out two planes a month in a year.
Boeing Too
Airbus is also building a helicopter plant in the coastal city of Qingdao while Boeing has started construction of a finishing center for its 737 narrow-body jets on Zhoushan island south of Shanghai. Besides these facilities, the two are also in joint ventures with units of state-owned Aviation Industry Corp. of China, or AVIC, to supply aircraft parts.
After their investment in the narrow-body assembly line in China, the market share improved, Bregier told Bloomberg Television’s Tom Mackenzie on Wednesday. “So, there’s a direct connection between your investment, your capabilities to demonstrate that you care about the Chinese industry and at the same time your market access,” he said after the inauguration.
Returning the favor, China has placed billions of dollars in orders with the companies. In July, Airbus won contracts worth $22 billion to supply state-owned China Aviation Supplies Holding Co. with 100 of the A320-series jets and 40 of its latest twin-aisle A350s. In 2015, planemakers won orders valued at $102 billion for some 780 aircraft.
Not Much
“A completion center doesn’t cost very much compared with a final-assembly line,” said Richard Aboulafia, an aerospace consultant at Teal Group in Fairfax, Virginia. “So, if it results in a modest number of additional Chinese orders, it’s worth the investment.”
But competition is brewing slowly in China. State-owned Commercial Aircraft Corp. of China, which tested its home-built single-aisle C919 jet in May, said Tuesday that it won orders for as many as 130 of the aircraft while it still waits for certifications from regulators. The company, known locally as Comac, says its order book is now at 730 planes. It has also teamed up with Russia’s United Aircraft Corp. to develop a wide-body model which it aims to deliver by 2027.
“The new facility is undoubtedly going to help with advanced manufacturing for China, considering this is the first facility for wide-bodies,” said Wang Guangqiu, deputy director of Beijing Skyrizon Aviation Industry Investment Co. “However, be it Airbus or Boeing, none of them will be willing to transfer their core technologies and create a competitor. Moving part of the manufacturing facility here is just for reducing cost and being close to the market.”
Will ‘Made in China’ threaten Boeing and Airbus? Click here to read more
In March last year, Bregier said that Comac is seen as “a very real competitor” that could become formidable sooner than the 20 years once envisaged.
The choice of A330 for the completion center may help limit leaks of advanced technology as it is a relatively older plane, but will still keep Beijing happy. The order backlog for the plane in Asia Pacific was 594 at the end of August, according to the company’s website. Among wide-bodies, the latest A350 model and Boeing’s 787 Dreamliner are gaining in popularity.
Meanwhile in China, narrow-body aircraft are in vogue more than larger types. Single-aisle models are expected to account for 75 percent of the 7,240 new planes estimated to be delivered to the country in the 20 years through 2036, according to Boeing.
While China remains the world’s biggest source of outbound travelers, a lot more mainlanders are also taking to the skies to explore domestic destinations, making it a lucrative market for planes that can fly short and long haul. The number of people flying to, from and within China will almost double to 927 million by 2025, and reach 1.3 billion by 2035, according to the International Air Transport Association.
“China has always been thinking about being involved in all aspects of the aviation industry,” said Mohshin Aziz, an analyst at Maybank Investment Bank Bhd. in Kuala Lumpur. “Manufacturing is the last part they need to build on, but it’s also the most difficult part. Having a center for both wide- and narrow-body aircraft will be good for China.”
— With assistance by Dong Lyu, and Kyunghee Park
https://www.bloomberg.com/news/arti...paign=headline&cmpId=yhoo.headline&yptr=yahoo
On Wednesday, Chief Operating Officer Fabrice Bregier inaugurated the $200 million completion center in Tianjin, a site designed to give finishing touches such as painting and cabin installation to A330 aircraft. The city, near Beijing, is already home to an assembly plant that produces single-aisle A319s and A320s.
The A330 for Tianjin Airlines at the Airbus completion center in Tianjin.
Photographer: Dong Lyu/Bloomberg
In a race to earn Chinese goodwill, Airbus and Boeing Co. are moving parts of their manufacturing and supply chains to a country the U.S. company estimates will need $1.1 trillion of aircraft over two decades and where the government still makes key purchasing decisions. For China, which has its own aviation ambitions, the A330 center is a coup of sorts in its chase to build its own commercial planes.
“China naturally wants to capture back some of the value in its purchases,” said Will Horton, a senior analyst at Capa - Centre for Aviation in Hong Kong. “Assembly and outfitting are a small portion of an aircraft’s total value, and something Airbus and Boeing can part with in order to build their relationships in China.”
Besides the political decision to woo China, where policy makers want companies to manufacture locally under a “Made in China 2025” blueprint, the two aerospace giants are also moving delivery closer to customers in Asia to help ease the strain on the planemakers’ existing facilities. The first A330 off the new line will go to Tianjin Airlines. The facility aims to roll out two planes a month in a year.
Boeing Too
Airbus is also building a helicopter plant in the coastal city of Qingdao while Boeing has started construction of a finishing center for its 737 narrow-body jets on Zhoushan island south of Shanghai. Besides these facilities, the two are also in joint ventures with units of state-owned Aviation Industry Corp. of China, or AVIC, to supply aircraft parts.
After their investment in the narrow-body assembly line in China, the market share improved, Bregier told Bloomberg Television’s Tom Mackenzie on Wednesday. “So, there’s a direct connection between your investment, your capabilities to demonstrate that you care about the Chinese industry and at the same time your market access,” he said after the inauguration.
Returning the favor, China has placed billions of dollars in orders with the companies. In July, Airbus won contracts worth $22 billion to supply state-owned China Aviation Supplies Holding Co. with 100 of the A320-series jets and 40 of its latest twin-aisle A350s. In 2015, planemakers won orders valued at $102 billion for some 780 aircraft.
Not Much
“A completion center doesn’t cost very much compared with a final-assembly line,” said Richard Aboulafia, an aerospace consultant at Teal Group in Fairfax, Virginia. “So, if it results in a modest number of additional Chinese orders, it’s worth the investment.”
But competition is brewing slowly in China. State-owned Commercial Aircraft Corp. of China, which tested its home-built single-aisle C919 jet in May, said Tuesday that it won orders for as many as 130 of the aircraft while it still waits for certifications from regulators. The company, known locally as Comac, says its order book is now at 730 planes. It has also teamed up with Russia’s United Aircraft Corp. to develop a wide-body model which it aims to deliver by 2027.
“The new facility is undoubtedly going to help with advanced manufacturing for China, considering this is the first facility for wide-bodies,” said Wang Guangqiu, deputy director of Beijing Skyrizon Aviation Industry Investment Co. “However, be it Airbus or Boeing, none of them will be willing to transfer their core technologies and create a competitor. Moving part of the manufacturing facility here is just for reducing cost and being close to the market.”
Will ‘Made in China’ threaten Boeing and Airbus? Click here to read more
In March last year, Bregier said that Comac is seen as “a very real competitor” that could become formidable sooner than the 20 years once envisaged.
The choice of A330 for the completion center may help limit leaks of advanced technology as it is a relatively older plane, but will still keep Beijing happy. The order backlog for the plane in Asia Pacific was 594 at the end of August, according to the company’s website. Among wide-bodies, the latest A350 model and Boeing’s 787 Dreamliner are gaining in popularity.
Meanwhile in China, narrow-body aircraft are in vogue more than larger types. Single-aisle models are expected to account for 75 percent of the 7,240 new planes estimated to be delivered to the country in the 20 years through 2036, according to Boeing.
While China remains the world’s biggest source of outbound travelers, a lot more mainlanders are also taking to the skies to explore domestic destinations, making it a lucrative market for planes that can fly short and long haul. The number of people flying to, from and within China will almost double to 927 million by 2025, and reach 1.3 billion by 2035, according to the International Air Transport Association.
“China has always been thinking about being involved in all aspects of the aviation industry,” said Mohshin Aziz, an analyst at Maybank Investment Bank Bhd. in Kuala Lumpur. “Manufacturing is the last part they need to build on, but it’s also the most difficult part. Having a center for both wide- and narrow-body aircraft will be good for China.”
— With assistance by Dong Lyu, and Kyunghee Park
https://www.bloomberg.com/news/arti...paign=headline&cmpId=yhoo.headline&yptr=yahoo
