Planemaker To Shuffle Production Between Hamburg And Toulouse

As part of its restructuring plan to help it deal with production delays, European aircraft manufacturing giant Airbus is to build its next-generation A320 aircraft in Hamburg, Germany, while production for A350 and A380 will move to Toulouse, France.

Airbus currently has two assembly lines for the A320 at both Hamburg and Toulouse. Hamburg is to take over all production except for a future facility planned for a site in China.

According to French paper La Tribune, Airbus CEO Louis Gallois told the company's trade unions the production shuffling is part of a larger restructuring plan he called "Power 8," set to be unveiled next month.

The restructuring plan is the company's answer to major program delays with its A380 superjumbo program. The jet is now two years behind schedule for first deliveries -- a delay cutting into Airbus profits in a big way. The loss of those profits prompted former CEO Christian Streiff to offer his own take-it-or-leave-it restructuring plan to the board last October. The board rejected Streiff's recommendation leading to his resignation, and the subsequent appointment of Gallois as CEO.

Moving production of the A350 and A380 away from Hamburg is sure to cause controversy. Airbus is a pan-European company supposedly benefiting the entire continent, but national rivalries still play a big role in major company decisions such as this one. Workers at Hamburg would be especially sensitive to moving A380 production to Toulouse after former Airbus CEO Noel Forgeard appeared to partially blame Hamburg workers last summer for delays with the superjumbo's development.

Additionally, Hamburg's state government is one of several in negotiation to purchase a 7.5 percent stake in Airbus' parent company EADS from current shareholder Daimler Chrysler. The purchase bid by Hamburg is seen by many as an attempt to guarantee the city's involvement in A380 production.

Viewing it strictly from a management position, industry observers say the decision would make sense; eliminating the current duplication of production between the two plants would generate significant savings for Airbus.

FMI: www.airbus.com