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READING LIST

JULY 2016 ISSUE


Future Sense
Buoyed by the positive market trends, Airbus D&S looks forward to growth
 


CEO Airbus Defence and Space Dirk Hoke Ottobrun, Bavaria, Germany: Since it was an unexpected meeting, a bit about the new CEO, Airbus Defense and Space, Dirk Hoke is in order. He is young (in his forties), a mechanical engineer from Germany who has worked thus far in non-military sectors, and, to top it all, believes that understanding strategic issues helps conceive good defence marketing strategy.

Back from the Shangri La dialogue held in June in Singapore, within months of taking over his new assignment on April 1, Hoke told the 60 plus journalists assembled from across the globe for the annual Trade Magazines Briefing (TMB) that he expected a rise in defence budgets across the world. “Nations could be spending up to 2.5 per cent of the GDP on defence,” he quipped.

Giving the rationale, he said that increasing global crisis, especially the issue of South China Sea, would ensure that nations pay special attention to their security. As an example, he listed Germany’s (with a subdued interest in defence since the end of the World War II) effort to increase its defence budget. What he did not say is that numerous German think tanks are, perhaps for the first time in decades, focussed on military role for meeting interconnected global security challenges.

So, what does this mean for Airbus D&S? “We would concentrate on integrating start-up ideas with evolving technologies for developing skills for speedier and innovative growth,” he said. While conceding that he had yet not formulated the company’s development and marketing plans from the first principles listed above, he hoped to present them soon. “That is when I will be prepared to answer your (journalists’) questions,” was his parting shot.

What was Hoke’s intention in making a brief appearance at the TMB? It was perhaps to convey that while concentrating on its traditional military business, Airbus D&S would not be averse to market exploration elsewhere; that the company was gearing for speedier and fierce competition with new ideas, skills, roadmap, and research and development; and that he valued having TMBs for better dissemination of his company’s plans and progress.

Head of Military Aircraft Fernando Alonso Specific to Airbus D&S, it was left to the head of Military Aircraft, Fernando Alonso to provide details to visiting journalists. Fernando’s overall company strategy had four components: connecting platforms, development of systems, focus on services, and innovation. Without ducking the issue of the company’s star presentation, the A400M, which had drawn plenty of adverse media attention in recent months, Fernando took pains to dwell on what had been done to mitigate problems and to answer a host of questions.

There have been heavy financial losses due to erratic production and customary delivery schedule of A400M, the heavy-lift aircraft of the European consortium. At the centre of the crisis are problems in the engine propeller gearbox. The four turboprop engines on the A400M are built by a European consortium comprising ITP of Spain, MTU of Germany, Rolls-Royce and Safran. Avio Aero, an Italian subsidiary of General Electric builds the gearbox.

According to Fernando, once the new gearbox from Avio Aero is delivered, Airbus D&S would issue a revised delivery schedule. Explaining further, he said that since safety is guaranteed by inspection intervals, the company would focus on this issue. He hoped that with this remedial measure, the A400M could be fielded in the highly competitive US market; the foreign sales outside the consortium could be at least 200 A400Ms in next 30 years. According to Fernando, the Airbus staff in the US was drafting a marketing strategy with the focus on digital systems and connectivity capabilities on the range of military aircraft built by Airbus.

 
 
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