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Airbus Increase Procurement from China, and Respond to Subsidies

  • Friday, 15th October 2004
  • Reading time: about 3 minutes

Airbus has announced plans to further increase its procurement from China, making it reach $120 million by 2010, double the target for 2007.

Airbus has already committed to increase its industrial procurement from Chinese suppliers from today’s level of $15 million to $60 million by 2007. The contracts to achieve this goal have all been signed.

Airbus’ industrial cooperation with China entered a new stage this year. In June, Airbus reached an agreement with China Aviation Industry Corporation I (AVIC I) on subcontracting projects worth $100 million to Chinese manufacturers. This is the first time for Airbus to involve China in producing A380 components. Meanwhile, Airbus will allocate A330/A340 forward cargo door projects to Shenyang Aircraft Corporation, which is affiliated with AVIC I.

During the year, an A380 Roll-on and Roll-off vessel built by Jinling Shipyard was delivered. Shenyang Aircraft Corporation delivered the 3000th A320 exit emergency door. The Chengdu Aircraft Corporation delivered the company’s first parts made for the nose section of Airbus A320 family aircraft. It also delivered the 400th rear passenger door for the world’s best selling single-aisle aircraft family.

Since 1985, total value of projects subcontracted by Airbus to Chinese manufacturers has exceeded $500 million. Since September 2002, Airbus has intensified cooperation with China, signing contracts worth $350 million with Chinese manufacturers. Today, some 3,500 Airbus aircraft are in operation worldwide, and over a quarter of the Airbus worldwide fleet has components produced in China.

Airbus’ business in China has been steadily expanding since it first entered the country in 1985. The Airbus fleet in service in the Chinese mainland, Hong Kong and Macao has grown to more than 250 today from just 29 in 1995. A world-class training and support centre, which represents an $80 million investment by Airbus, is fully operational in Beijing.

Airbus have also responded to the US Governments request for formal consultations at the WTO by issuing a statement. “Airbus has fully supported all recent actions by the European Commission to engage with the US government in serious discussions on comprehensive new disciplines on government support. The United States decision to terminate the 1992 Agreement and request formal consultations at the WTO is a strong demonstration of our competitor’s unwillingness to enter negotiations to end the massive US federal and state supports for the 7E7 and other programmes.” “The path chosen by the US government today underscores our belief that the 7E7 programme is only viable because of the WTO-inconsistent subsidies granted to it – subsidies which were already prohibited by the 1992 Agreement. The WTO will now be asked to rule on the compatibility of the various governments’ subsidies to this and other programmes. The market will now draw its own conclusions on the viability of the 7E7, a programme which depends vitally on WTO – incompatible subsidies.” “Airbus purchases more than $5 billion per year of goods and services from hundreds of US suppliers in more than 40 states, generating more than 100,000 US jobs. At the same time, our competitor sources more than 50% of the 7E7 programme outside the United States.”

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