Airbus to announce controversial overhaul

19th February 2007, Comments 0 comments

PARIS, Feb 18, 2007 (AFP) - Troubled European aircraft manufacturer Airbus is to lift the veil Tuesday on a long-awaited restructuring plan that has already unsettled labor leaders and politicians in France and Germany.

PARIS, Feb 18, 2007 (AFP) - Troubled European aircraft manufacturer Airbus is to lift the veil Tuesday on a long-awaited restructuring plan that has already unsettled labor leaders and politicians in France and Germany.

An Airbus works committee, which allows for consultations between company management and European labor unions, is to convene Tuesday on the plan, dubbed Power 8.

The initiative will then be unveiled at a press conference by Airbus chief executive Louis Gallois.

Power 8 aims to secure savings of 5.0 billion euros (6.6 billion dollars) between now and 2010 and 2.0 billion euros a year after that in order to compensate for cost overruns stemming from delays to its A380 superjumbo program.

Airbus has also been plagued by persistent weakness in the dollar in relation to the euro, which has tended to hamper the manufacturer's competitiveness.

Airbus management announced the broad outlines of the plan in early October and has taken four months to work out details, which call for cost cuts and an indusrtrial reorganisation.

"The atmosphere is becoming more and more tense," a union source said Friday as the release of the plan approached.

The CGT union at Airbus parent company EADS has called for workers to mobilize on Tuesday to denounce what it called a "gigantic transnational reorganisation" that has unnerved workers in both France and Germany, which hold major stakes in EADS.

Airbus, employing about 56,000 people, has said the restructuring will entail job losses, carried out according to age considerations as well as through a reduction in part-time and short-term employment.

The manufacturer hopes to save 30 percent in operating costs. It is expected to tighten the management structure of subsidiaries in France, Germany, Spain and Britain and to streamline certain administrative functions.

A greater reliance is also foreseen on sub-contractors for activities that are not part of the core Airbus operation. Sources have said the plan would reduce internal production from 65 to 50 percent.

In addition, some of the 16 European sites could be closed or sold under changes in the distribution of production tasks in Europe.

German workers, who fear they will bear the brunt of the reorganisation, are especially anxious about the fate of a plant in Hamburg, which has been held partially responsible for production problems with the A380.

Unconfirmed reports have said some of the work done on the A380 could be transferred to Airbus plants in Toulouse, southern France, which would also be responsible for assembling the new A350 long-haul carrier.

In exchange the Hamburg factory would take on assembling the single-aisle A320.

The plan is fraught with delicate political considerations, with German and French national interests bound up in its implementation.

German Economy Minister Michael Glos has vowed to do everthing possible to protect the future of German production sites and has hinted that Germany might consider withdrawing some of its defence contracts with EADS, the Airbus parent.

Gallois has meanwhile had to defend the project in meetings with French Prime Minister Dominique de Villepin and German Chancellor Angela Merkel, who have demanded balanced treatment for all parties.

Copyright AFP

Subject: French news

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