Digitization plans Airbus Reaches for the Stars

After a mediocre year in 2015, Airbus boss Tom Enders is firing up his staff for the new year, with digitization, space technology and major restructuring at the top of the agenda.
Airbus boss Tom Enders has warned staff that the firm faces a tough year.

 

Tranquility and Tom Enders are contradictions. After a generally successful year in 2015, a year of record deliveries, the Airbus chief executive is calling for an even faster pace.

In a new year letter to employees, which Handelsblatt has obtained, he gees up employees with the words: "Time is running away from us! Fast and aggressively operating competitors won't be waiting for us."

The top dog at Airbus, whose contract is likely to be renewed in March, went on to explain the challenge. "If we want to remain one of the world's top aerospace companies in the coming decades, we must define and manifest the future of aviation against the background of faster and faster technological change," Mr. Enders wrote.

These are surprising words for the company, which, when it unveiled its latest financial figures only two days ago, celebrated its position as the global market leader in the sale of civil aircraft.

Mr. Enders explained the reason for his warning, writing that the company's products are aging more quickly and will have to prevail against outside technologies in the future. "We cannot afford to lag behind the next industrial revolution, that of integrated digital development and production," he said.

The company must adapt its "knowledge and competency base" and the entire structure of the organization to the conditions of the digital age.

Mr. Enders, who is nicknamed "Major Tom," believes that the aerospace industry is facing new competition. The traditional barriers to new competitors seeking entry in the market, which are associated with incredibly complex and costly technology, will be eliminated in the future.

Airbus is already feeling the heat in the space travel business, where Elon Musk is hurting Airbus with his Space X firm and Amazon boss Jeff Bezos and Google are also developing new carrier systems and satellites. These competitors have a leg up on Airbus, because they didn’t grow up with rivets and design drawings on paper, but with digital businesses.

Mr. Enders sees a serious risk emerging. The timeframes at Airbus for developing new products and placing them in service are worsening, while the "pace of innovation is getting faster and faster" worldwide.

 

Tom Enders wants to be ready for the challenge posed by Elon Musk of SpaceX and other digital pioneers.

 

The competition for talent will also be waged globally in the future. Airbus has some catching up to do, because its employees are still not international enough and there are too few women in its workforce. For the chief pacesetter, the only possible response is that the company must adapt its "knowledge and competency base" and the entire structure of the organization to the conditions of the digital age. The French-Spanish-German joint venture is likely to face a complete restructuring.

Mr. Enders has long been concerned about the consequences of digitization for Europe's technology leaders. "So far we have seen only 1 percent of the resulting changes," he said in Paris in December. He believes that all aspects are affected: Organization, development and manufacturing processes, employee management and the question of how Airbus can speed up its innovation.

Mr. Enders wants to reshape internal communication within the Toulouse-based group, which builds aircraft in France and Germany, as well as in the United States and China, so that new ideas will circulate more quickly and the company will make better use of its own talent.

The company has not been idle. Last year, Airbus opened an innovation lab in California and launched its own venture capital fund to develop relationships with startups. The changes have also taken hold within the company, which now has a platform for exchanging employees.

Now Major Tom wants to switch to a higher gear. "We need a plan for cooperative ventures across divisions, the reuse of tools and successful ideas, changing infrastructures and ways of thinking, developing partnerships and, or course, making suitable resources and budgets available."

A lot of change is in store for Airbus, change that goes beyond ramping up production. But Mr. Enders reassured his employees in the letter. "The opportunities prevail," he wrote.

 

Thomas Hanke is Handelsblatt's correspondent in Paris. To contact the author: [email protected]