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23 June, 2002The developments in the aircraft sector and the predominance of the two corporations Boeing and Airbus make closer trade union cooperation necessary, both globally and between the workers' representatives of these two corporations.
BY ROBERT STEIERT
In a number of countries, the aircraft and aerospace industry has developed into an important industrial sector. Creating high value-added products, this sector offers workplaces for highly qualified staff in research and development and in the production of all types of aircraft and even satellites.
In 2000, about 1.22 million employees were occupied in this sector worldwide. By far, the highest proportion of workers were employed in the USA and the European Union, followed by Canada, Japan and a number of other countries.
For years, this industrial sector has been growing at an average rate of 5%. Recessionary phases were always followed by growth phases, partly reaching double figures. This development might be interrupted, or at least weakened, due to the events of September 11, 2001.
The aircraft industry and the airlines immediately felt the effects of the attacks in New York and Washington. Passenger numbers plummeted, especially on flights from and to the United States. Airlines parked many aircraft which could not be filled with passengers anymore in the Arizona desert. Aircraft orders which had already been placed with manufacturers were cancelled, or at least postponed. U.S. airlines, in particular, sacked thousands of pilots and flight attendants.
Unpopular measures
The events of September 11, however, did not trigger off the downturn in the aircraft industry. Cyclical fluctuations have repeatedly occurred in the aircraft and aerospace sector. The current slump was already looming on the horizon before that date. However, the attacks have intensified this development, and they have given a number of companies arguments for unpopular measures. The conceptual differences of the two large passenger and freight aircraft manufacturers Boeing and Airbus are shown in their response to this development. Whereas Airbus is trying to retain its highly-qualified workforce by implementing different instruments of personnel policy, such as short-time work, accounts of working hours, etc., in order to be prepared for another upswing, Boeing is reacting in what many consider to be the typical U.S. manner of hire and fire. Shortly after the first cancellations of orders, the corporation announced the dismissal of at least 30,000 employees. The two manufacturers are also implementing different policies in the field of industrial relations, acting differently towards workers and their trade unions. A few months ago, the newly-founded company EADS, which among other things also produces the Airbus, and the European Metalworkers' Federation (EMF) concluded an exemplary agreement on the establishment of a "European Works Council" (EWC). The contents of this agreement go far beyond the regulations of other companies hitherto considered to be exemplary. And it even leaves behind the minimum standards required by the 1996 EU-Directive on the European Works Council. The EADS-EWC has the right to meet four times a year. During at least two of these meetings, the company's management is also present. The EWC establishes an economic committee which has the right to consult the company's board of directors. The agreement also regulates that sub-committees for the central functional areas of the company, such as Airbus, Eurocopter and others, may be established. This model agreement is rounded off by an array of other options, such as the right to consult experts. In so doing, EADS has set a standard for the development of a cross-border workers' representation in this corporation. A similar development or even a discussion in this direction cannot be detected with Boeing. The two companies also have different market and production strategies. Whereas Boeing has given up its plan to build a jumbo-jet stretch version 747X and is now pursuing the concept of the supersonic aircraft, Airbus is determined to build the A380, a giant-jumbo meant to transport up to 600 passengers. Orders and options placed so far seem to confirm the latter company's expectations. This aircraft will not only have an impact on the production organisation of Airbus but, above all, will cause considerable investments into airport logistics, as airports already now are often "bursting at the seams". Growth will continue
Most analysts and experts are expecting that the sector will continue to grow in the next few years. The margins of profit might be slightly lower than in the past. What is assessed slightly differently is how fast the current downturn in the cyclical growth curve will be left behind. In its "Current Market Outlook 2001", Boeing is expecting to double its total fleet, from approximately 14,500 aircraft in the year 2000 to almost 33,000 in the year 2020. The number of airfreighters is also expected to double, from roughly 1,700 at the moment to 3,500 aircraft. The proportion of airfreighters in the total fleet will, however, remain at a stable 12%. Together with the enlargement of passenger and freight aircraft fleets, an increase of turnover in commercial aviation support services is expected, rising from the current $95 billion to a good $226 billion in 2020. Maintenance and repairs amount to roughly 50% of this volume. In its "Global Market Forecast 2000 -- 2019", Airbus is expecting an average annual growth rate of 4.9% over the next 20 years. Concerning airfreight traffic, the report predicts an annual growth rate of 5.9%. Airbus estimates that 15,400 new planes will be put into operation during the next 20 years, a slightly more moderate assessment than the one of Boeing. 1,200 of them are estimated to belong to the segment of the "big jumbos" (A380). This means a total delivery of 730 new aircraft every year. About 35% of these new aircraft are expected to go to North American airlines, while European airlines will buy roughly 30%, followed by Asia-Pacific with 34%. The remaining 11% will go to Latin America, the Middle East and Africa. Increasing workforce
The rising number of airplanes, and thus the rising number of takeoffs, flights and landings, will lead to a considerable additional strain on the environment. It is in particular the suppliers, mainly the manufacturers of jet engines, who must face this challenge. Jet engines that are less noisy and at the same time more efficient, and even new drive concepts are in demand. that could not be filled with passengers anymore No matter whether one follows the more optimistic or the less optimistic prediction of the sector's development, there will be considerable demand for new aircraft. The resulting turnover offers enough margin to at least maintain, or even increase the workforce in the sector. The same applies to the supplier industry. Concentration will go on
In recent years, the sector has seen a number of mergers, especially in the USA. Boeing took over McDonnell Douglas, and Lockheed Martin came into being by merging Lockheed with Martin Marietta. After a protracted negotiation process, Europe reacted to this development by founding EADS (European Aeronautic Defence and Space Company). In terms of turnover, Boeing is still far ahead of EADS and Lockheed Martin, two companies competing with each other for the No. 2 rank in the global list of leading aircraft and aerospace companies. In the next few years, the process of concentration will increase in particular in the manufacturing sector of small and medium-sized aircraft. Another concentration process will probably take place in the airline sector. It is assumed that there are currently 228 airlines with another 49 associated firms, whose operations cannot be clearly separated from the operations of their "conglomerate" or "parent" airlines. In addition to that, there are 187 cargo airlines. In the medium term, a restructuring and consolidation process is to be expected. One can also expect that in the next few years the supplier industry and the manufacturers of systems for the aircraft industry will both undergo a clearing and concentration process. Trade union needs
In the past, there was only rudimentary trade union cooperation in this industrial sector, even though the major companies of the sector are concentrated in a few countries. At least, this is true for the global level. Cooperation was mainly limited to the IMF aerospace conferences, which, however, took place only irregularly. Apart from this, there were hardly any tight union contacts at plant level between workers' representatives of the individual companies. Already in the late '80s, a closer cooperation of trade unions and workers' representatives was developing in Europe. On the one hand, this development was supported by a corresponding EMF taskforce, which offered a platform to get acquainted with each other and to exchange information. The Airbus conglomerate, consisting of Aerospatiale (France), British Aerospace (Great Britain), DASA (Germany) and CASA (Spain), increased the need for coordination of trade unions and workers' representatives in these four countries and encouraged the development of a unified position. In 1997, the demand for a unified aircraft and aerospace corporation was established in Seville in a then far-sighted resolution. In so doing, the trade unions declared their support for a European perspective of integration and consolidation. They also spoke out against national autonomist endeavours and reservations. The developments in the sector, the predominance of the two corporations Boeing and Airbus in the segment of aircraft with over 100 seats, make closer trade union cooperation more than necessary, both globally and between the workers' representatives of these two corporations. In the past, one could sometimes get the impression that, in discussions, the union and workers' representatives often were using the same arguments the companies were using again and again against their competitors in their competition for market shares. In the years to come, competition will increase further -- and at the same time passenger numbers and replacement orders of the airlines will increase as well. In the face of such an important production, and with respect to the number of workplaces for highly-qualified employees linked to this production, various countries and governments might even intensify the sector's competition with all sorts of incentives (from granting loans and giving guarantees to subsidising the establishment of new industries). Common strategy
The trade unions must face this situation and develop a common strategy in order to give a trade union answer to issues such as outsourcing, qualification, working hours, etc., and in order to avoid the companies playing off the workers' representatives against each other. Outsourcing processes and the use of subcontractors to supply entire systems and large parts will continue in the future. This will partly happen because many countries demand a share in production in return for placing orders. The bigger the domestic market (e.g. China), the stronger the demand for a "local content". This will be all but easy. It is precisely the aircraft and aerospace industry where national sentiments still play a role, even though in the meantime they have been "Europeanised" in Europe. The intensification of trade union cooperation cannot and must not be limited to the two "big ones" in the sector. Closer union cooperation is also on the agenda concerning the segment of airplanes with less then 100 seats, concerning suppliers, component manufacturers and military aircraft manufacturers. To establish the basic structure of this cooperation is precisely the goal of the IMF World Aerospace Conference taking place in Toulouse, France, in mid-June. Apart from exchanging information, an approach must be found in an open and even self-critical discussion, which subsequently can be used in smaller working groups as the basis for the development of a common position and political approach. The results of this process then can be used as a basis to formulate overall union policy for the entire sector.
The events of September 11, however, did not trigger off the downturn in the aircraft industry. Cyclical fluctuations have repeatedly occurred in the aircraft and aerospace sector. The current slump was already looming on the horizon before that date. However, the attacks have intensified this development, and they have given a number of companies arguments for unpopular measures. The conceptual differences of the two large passenger and freight aircraft manufacturers Boeing and Airbus are shown in their response to this development. Whereas Airbus is trying to retain its highly-qualified workforce by implementing different instruments of personnel policy, such as short-time work, accounts of working hours, etc., in order to be prepared for another upswing, Boeing is reacting in what many consider to be the typical U.S. manner of hire and fire. Shortly after the first cancellations of orders, the corporation announced the dismissal of at least 30,000 employees. The two manufacturers are also implementing different policies in the field of industrial relations, acting differently towards workers and their trade unions. A few months ago, the newly-founded company EADS, which among other things also produces the Airbus, and the European Metalworkers' Federation (EMF) concluded an exemplary agreement on the establishment of a "European Works Council" (EWC). The contents of this agreement go far beyond the regulations of other companies hitherto considered to be exemplary. And it even leaves behind the minimum standards required by the 1996 EU-Directive on the European Works Council. The EADS-EWC has the right to meet four times a year. During at least two of these meetings, the company's management is also present. The EWC establishes an economic committee which has the right to consult the company's board of directors. The agreement also regulates that sub-committees for the central functional areas of the company, such as Airbus, Eurocopter and others, may be established. This model agreement is rounded off by an array of other options, such as the right to consult experts. In so doing, EADS has set a standard for the development of a cross-border workers' representation in this corporation. A similar development or even a discussion in this direction cannot be detected with Boeing. The two companies also have different market and production strategies. Whereas Boeing has given up its plan to build a jumbo-jet stretch version 747X and is now pursuing the concept of the supersonic aircraft, Airbus is determined to build the A380, a giant-jumbo meant to transport up to 600 passengers. Orders and options placed so far seem to confirm the latter company's expectations. This aircraft will not only have an impact on the production organisation of Airbus but, above all, will cause considerable investments into airport logistics, as airports already now are often "bursting at the seams". Growth will continue
Most analysts and experts are expecting that the sector will continue to grow in the next few years. The margins of profit might be slightly lower than in the past. What is assessed slightly differently is how fast the current downturn in the cyclical growth curve will be left behind. In its "Current Market Outlook 2001", Boeing is expecting to double its total fleet, from approximately 14,500 aircraft in the year 2000 to almost 33,000 in the year 2020. The number of airfreighters is also expected to double, from roughly 1,700 at the moment to 3,500 aircraft. The proportion of airfreighters in the total fleet will, however, remain at a stable 12%. Together with the enlargement of passenger and freight aircraft fleets, an increase of turnover in commercial aviation support services is expected, rising from the current $95 billion to a good $226 billion in 2020. Maintenance and repairs amount to roughly 50% of this volume. In its "Global Market Forecast 2000 -- 2019", Airbus is expecting an average annual growth rate of 4.9% over the next 20 years. Concerning airfreight traffic, the report predicts an annual growth rate of 5.9%. Airbus estimates that 15,400 new planes will be put into operation during the next 20 years, a slightly more moderate assessment than the one of Boeing. 1,200 of them are estimated to belong to the segment of the "big jumbos" (A380). This means a total delivery of 730 new aircraft every year. About 35% of these new aircraft are expected to go to North American airlines, while European airlines will buy roughly 30%, followed by Asia-Pacific with 34%. The remaining 11% will go to Latin America, the Middle East and Africa. Increasing workforce
The rising number of airplanes, and thus the rising number of takeoffs, flights and landings, will lead to a considerable additional strain on the environment. It is in particular the suppliers, mainly the manufacturers of jet engines, who must face this challenge. Jet engines that are less noisy and at the same time more efficient, and even new drive concepts are in demand. that could not be filled with passengers anymore No matter whether one follows the more optimistic or the less optimistic prediction of the sector's development, there will be considerable demand for new aircraft. The resulting turnover offers enough margin to at least maintain, or even increase the workforce in the sector. The same applies to the supplier industry. Concentration will go on
In recent years, the sector has seen a number of mergers, especially in the USA. Boeing took over McDonnell Douglas, and Lockheed Martin came into being by merging Lockheed with Martin Marietta. After a protracted negotiation process, Europe reacted to this development by founding EADS (European Aeronautic Defence and Space Company). In terms of turnover, Boeing is still far ahead of EADS and Lockheed Martin, two companies competing with each other for the No. 2 rank in the global list of leading aircraft and aerospace companies. In the next few years, the process of concentration will increase in particular in the manufacturing sector of small and medium-sized aircraft. Another concentration process will probably take place in the airline sector. It is assumed that there are currently 228 airlines with another 49 associated firms, whose operations cannot be clearly separated from the operations of their "conglomerate" or "parent" airlines. In addition to that, there are 187 cargo airlines. In the medium term, a restructuring and consolidation process is to be expected. One can also expect that in the next few years the supplier industry and the manufacturers of systems for the aircraft industry will both undergo a clearing and concentration process. Trade union needs
In the past, there was only rudimentary trade union cooperation in this industrial sector, even though the major companies of the sector are concentrated in a few countries. At least, this is true for the global level. Cooperation was mainly limited to the IMF aerospace conferences, which, however, took place only irregularly. Apart from this, there were hardly any tight union contacts at plant level between workers' representatives of the individual companies. Already in the late '80s, a closer cooperation of trade unions and workers' representatives was developing in Europe. On the one hand, this development was supported by a corresponding EMF taskforce, which offered a platform to get acquainted with each other and to exchange information. The Airbus conglomerate, consisting of Aerospatiale (France), British Aerospace (Great Britain), DASA (Germany) and CASA (Spain), increased the need for coordination of trade unions and workers' representatives in these four countries and encouraged the development of a unified position. In 1997, the demand for a unified aircraft and aerospace corporation was established in Seville in a then far-sighted resolution. In so doing, the trade unions declared their support for a European perspective of integration and consolidation. They also spoke out against national autonomist endeavours and reservations. The developments in the sector, the predominance of the two corporations Boeing and Airbus in the segment of aircraft with over 100 seats, make closer trade union cooperation more than necessary, both globally and between the workers' representatives of these two corporations. In the past, one could sometimes get the impression that, in discussions, the union and workers' representatives often were using the same arguments the companies were using again and again against their competitors in their competition for market shares. In the years to come, competition will increase further -- and at the same time passenger numbers and replacement orders of the airlines will increase as well. In the face of such an important production, and with respect to the number of workplaces for highly-qualified employees linked to this production, various countries and governments might even intensify the sector's competition with all sorts of incentives (from granting loans and giving guarantees to subsidising the establishment of new industries). Common strategy
The trade unions must face this situation and develop a common strategy in order to give a trade union answer to issues such as outsourcing, qualification, working hours, etc., and in order to avoid the companies playing off the workers' representatives against each other. Outsourcing processes and the use of subcontractors to supply entire systems and large parts will continue in the future. This will partly happen because many countries demand a share in production in return for placing orders. The bigger the domestic market (e.g. China), the stronger the demand for a "local content". This will be all but easy. It is precisely the aircraft and aerospace industry where national sentiments still play a role, even though in the meantime they have been "Europeanised" in Europe. The intensification of trade union cooperation cannot and must not be limited to the two "big ones" in the sector. Closer union cooperation is also on the agenda concerning the segment of airplanes with less then 100 seats, concerning suppliers, component manufacturers and military aircraft manufacturers. To establish the basic structure of this cooperation is precisely the goal of the IMF World Aerospace Conference taking place in Toulouse, France, in mid-June. Apart from exchanging information, an approach must be found in an open and even self-critical discussion, which subsequently can be used in smaller working groups as the basis for the development of a common position and political approach. The results of this process then can be used as a basis to formulate overall union policy for the entire sector.