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SOURCE: ECONOMIC TIMES
a German paratrooper in his youth, has been trooping into India every year for the past seven years. The chief executive of European defence and aerospace giant EADS, which has in its fold entities such as Airbus, Eurocopter, Cassidian and Astrium, was in Delhi to meet several top government officials. Enders says the 56.5-billion EADS – the first foreign company to strike a joint venture in defence with an Indian private company (Larsen & Toubro) – is excited about local engineering talent. In an exclusive interview with ET the 54-year-old also talks about the opportunities and challenges in civil and military aviation in the country, lessons from a failed merger with BAE Systems, the ongoing re-structuring exercise, which includes renaming of the company as the Airbus Group, and the hazards of doing business in democracies. Edited excerpts:
How do you expect the ongoing re-structuring and re-branding exercise at EADS to help boost presence in markets such as India?
Our defence business is now scattered over four of our divisions – from aerospace to military and space. So, we decided that this was not the optimal way of organising business, particularly at a time when the business is shrinking in Europe and flattening in North America. There was a clear need for consolidating our defence business with the space business because we have some overlaps within segments.
To give you an example, when a customer has a need for wide-area surveillance, our space guys offer low-flying satellites and defence guys high-flying UAVs, separately. That is not the way to drive competitiveness. You consolidate because you think that way you can save costs, can be more efficient, and you can focus much better on customers.
This consolidation should help us a lot in countries like India to have greater focus on the customer. (Following re-structuring and rebranding, EADS will have three core units: Cassidian and Astrium will be combined with Airbus Military and called Airbus Defense & Space; Eurocopter, the world’s largest commercial helicopter maker, will be renamed Airbus Helicopters. Passenger aircraft, Airbus, will form the third core unit)
Are you looking at investing morin R&D in India?
I am a big fan of crawl, walk and run strategy. If you look where we were 5-6 years ago, we were almost nothing in India, but now we already have two engineering centres in Bangalore, one working for the commercial side for Airbus and the other working for Cassidian (which will soon be part of the core defence unit, Airbus Defence and Space).
We have a couple of hundred people working for us and have two additional offshore development centres with partners here. All in all, we have more than 2,500 people working for us, employed by us but also in subcontracting. Our business units in Europe are very positive about the work done here. We are looking forward to actively utilising these capabilities to grow in India, which we no longer see as a market. This is a place where we want to build our own Indian identity.
Our sourcing business in India is 10 times more than it was six years ago. We are now around 250 million euros per year. Our own employee population has gone up 10 times during the period.
What are your business growth expectations in the country?
We have something called general market forecast for 20 years. The numbers for India, I believe, are very conservative: sale of 1,200 commercial aircraft. What are the hazards of doing business in democracies like India?
Things take longer. We take this into account and would still rather do business with democracies than other countries. Decision-making takes a long time because you have to follow the democratic rules and a lot of committees are involved in this process… India is one of these sleeping giants when it comes to space and defence activities.
We believe there should be plenty of business opportunities in not just running businesses but also in establishing win-win relationships with Indian companies. In fact, I am currently in talks with quite a few companies such as the Tatas, Larsen & Toubro and HAL. I can’t disclose the details though.
Various foreign defence firms now talk of an ‘India fatigue’ thanks to slowness at decision-making. What are your views?
Five years ago, western companies were all excited about India. But they were probably overestimating the speed with which change will happen in India. For many foreign companies slowness was frustrating. But we didn’t have to face too much of it because at one level things are moving fast for us—in commercial aviation. Close to 90% of our business here is commercial aviation: Airbus.
If you are a pure defence player, it could be a bit frustrating. I don’t share this view because I understand India has a different political system. I am enthusiastic because the players I meet – both public and private – are enthusiastic.
How bullish are you about India? Could you explain it in numbers?
From now to 2020, we expect to grow in sourcing to a billion euros, a quadruple growth from now. As I said, India certainly is one of the key countries where we think we need to take steps to be Indian. It is easy for us to do so because we are a truly international aerospace and defence company because we have pooled in resources from four different countries to make it happen.
I don’t think it was easy to get the Germans and the French together in one company. We also have overcome the historical baggage that separates the British and the French. But once you integrate, you are far more sensitive to other cultures and histories. We expect to become a household name in India soon, under the future name, Airbus.
a German paratrooper in his youth, has been trooping into India every year for the past seven years. The chief executive of European defence and aerospace giant EADS, which has in its fold entities such as Airbus, Eurocopter, Cassidian and Astrium, was in Delhi to meet several top government officials. Enders says the 56.5-billion EADS – the first foreign company to strike a joint venture in defence with an Indian private company (Larsen & Toubro) – is excited about local engineering talent. In an exclusive interview with ET the 54-year-old also talks about the opportunities and challenges in civil and military aviation in the country, lessons from a failed merger with BAE Systems, the ongoing re-structuring exercise, which includes renaming of the company as the Airbus Group, and the hazards of doing business in democracies. Edited excerpts:
How do you expect the ongoing re-structuring and re-branding exercise at EADS to help boost presence in markets such as India?
Our defence business is now scattered over four of our divisions – from aerospace to military and space. So, we decided that this was not the optimal way of organising business, particularly at a time when the business is shrinking in Europe and flattening in North America. There was a clear need for consolidating our defence business with the space business because we have some overlaps within segments.
To give you an example, when a customer has a need for wide-area surveillance, our space guys offer low-flying satellites and defence guys high-flying UAVs, separately. That is not the way to drive competitiveness. You consolidate because you think that way you can save costs, can be more efficient, and you can focus much better on customers.
This consolidation should help us a lot in countries like India to have greater focus on the customer. (Following re-structuring and rebranding, EADS will have three core units: Cassidian and Astrium will be combined with Airbus Military and called Airbus Defense & Space; Eurocopter, the world’s largest commercial helicopter maker, will be renamed Airbus Helicopters. Passenger aircraft, Airbus, will form the third core unit)
Are you looking at investing morin R&D in India?
I am a big fan of crawl, walk and run strategy. If you look where we were 5-6 years ago, we were almost nothing in India, but now we already have two engineering centres in Bangalore, one working for the commercial side for Airbus and the other working for Cassidian (which will soon be part of the core defence unit, Airbus Defence and Space).
We have a couple of hundred people working for us and have two additional offshore development centres with partners here. All in all, we have more than 2,500 people working for us, employed by us but also in subcontracting. Our business units in Europe are very positive about the work done here. We are looking forward to actively utilising these capabilities to grow in India, which we no longer see as a market. This is a place where we want to build our own Indian identity.
Our sourcing business in India is 10 times more than it was six years ago. We are now around 250 million euros per year. Our own employee population has gone up 10 times during the period.
What are your business growth expectations in the country?
We have something called general market forecast for 20 years. The numbers for India, I believe, are very conservative: sale of 1,200 commercial aircraft. What are the hazards of doing business in democracies like India?
Things take longer. We take this into account and would still rather do business with democracies than other countries. Decision-making takes a long time because you have to follow the democratic rules and a lot of committees are involved in this process… India is one of these sleeping giants when it comes to space and defence activities.
We believe there should be plenty of business opportunities in not just running businesses but also in establishing win-win relationships with Indian companies. In fact, I am currently in talks with quite a few companies such as the Tatas, Larsen & Toubro and HAL. I can’t disclose the details though.
Various foreign defence firms now talk of an ‘India fatigue’ thanks to slowness at decision-making. What are your views?
Five years ago, western companies were all excited about India. But they were probably overestimating the speed with which change will happen in India. For many foreign companies slowness was frustrating. But we didn’t have to face too much of it because at one level things are moving fast for us—in commercial aviation. Close to 90% of our business here is commercial aviation: Airbus.
If you are a pure defence player, it could be a bit frustrating. I don’t share this view because I understand India has a different political system. I am enthusiastic because the players I meet – both public and private – are enthusiastic.
How bullish are you about India? Could you explain it in numbers?
From now to 2020, we expect to grow in sourcing to a billion euros, a quadruple growth from now. As I said, India certainly is one of the key countries where we think we need to take steps to be Indian. It is easy for us to do so because we are a truly international aerospace and defence company because we have pooled in resources from four different countries to make it happen.
I don’t think it was easy to get the Germans and the French together in one company. We also have overcome the historical baggage that separates the British and the French. But once you integrate, you are far more sensitive to other cultures and histories. We expect to become a household name in India soon, under the future name, Airbus.
