EADS Increases Integration Into India
While recent announcements of stealth investment by Russia’s government have been grabbing the headlines, EADS is quietly making some noteworthy moves elsewhere. On August 29, 2006, CEO Tom Enders highlighted a wide-ranging set of initiatives in India.
One was the registration of 100% subsidiary EADS India Private Ltd. to lead the development of EADS Group businesses in India.
Another was the EADS Technology Centre India, bringing EADS subsidiaries and their Indian partners under the same roof for engineering and information technology services. Operations are expected to begin in the second quarter of 2007 and the entire campus will be inaugurated in early 2008. It will include the Airbus Engineering Centre, focused on high-end engineering analysis and design and scheduled to begin operations in early 2007.
Nor was that all…
- An Indian sourcing office with branches in New Delhi and Bangalore, to be operational by the end of 2006. Aerospace outsourcing to India is definitely a trend, and EADS cites India’s own shifting of parts manufacture from a limited number of state-run industries to the private sector as an important precursor.
- Estimated creation of 2,000 jobs and investment across these initiatives of INR 11,000 crore (EUR 2 billion, $) over the next 15 years.
See the full release for more information, including a broader list of EADS existing interests in and contracts involving India.
On September 1, 2006, EADS made a follow-up announcement: A a Memorandum of Understanding (MoU) with Hindustan Aeronautics Limited (HAL) to expand their cooperation into new market segments. Joint marketing agreements for specific products are expected to follow as part of that process, which adds a supporting corporate and legal structure under which joint efforts can expand.
For instance, Eurocopter also announced that it was willing to team with HAL for the development of 10-ton helicopter, probably based on the EC725, which HAL plans to co-develop with a foreign partner for domestic and export sales. India’s military wish list includes up to 200 of these helicopters for medium utility duties, with a possible naval variant for anti-submarine warfare. Eurocopter and Sikorsky are believed to be the front-runners, and Eurocopter can draw on a similar project with South Korea as a template.
This MoU will also smooth production agreements like the subcontracting of global airframe production for all Ecureuil type helicopters, production of emergency doors for Airbus passenger jets, et. al. As EADS reminds us, the A550 Fennec is the military version of the Ecureuil series. It is short-listed along with a variant of Bell’s ARH-winning 407 to replace India’s current Cheetah/ Chetak fleet. See DID’s coverage of this $500-700 million competition.
As always, however, there are likely to be some trickier issues. EADS Eurocopter has already cooperated with India on the Dhruv Advanced Light Helicopter’s rotor system, and the original joint development and marketing agreement with Israel Aircraft Industries has not led to the expected results in Israel and elsewhere. As such, a partnership with the world’s leading helicopter manufacturer may seem very attractive. On the other hand, the Dhruv ALH is in a class that competes with a number of Eurocopter’s own offerings. As specific joint production and marketing agreements are negotiated, time will tell.