<b>’To know the road ahead, ask those coming back’ – Chinese Proverb</b>
Last week, one of our e4engineering newsletter subscribers sent me an email asking me to remove him from our mailing list.
Not that he didn’t like the newsletter, you understand. It was just that the automotive manufacturing company that he worked for was moving its production overseas, with the unfortunate consequence that this poor individual would not be working for too much longer here in the UK.
The following day, I retold the story to John Beechey, the Manager of e4subcon – an affiliated site of ours where buyers can find new suppliers online.
But he wasn’t surprised. Instead, he hauled me over to his desk where he showed me a drawing of a component that was presently being machined by a UK subcontractor for his UK customer for over £1.50.
Interested in lowering their costs, the buyer had put a tender up on e4subcon looking for overseas subcontractors who could offer a cheaper option. And he had found one too. A Chinese outfit was bidding for the business at just less than 0.70p per part. And that included the cost of shipping the parts from China to the UK.
Ah, dear reader. If it were only just those small machined components that were heading East. But unfortunately, it’s not. This week, the news emerged that Airbus has signed a £55 million deal to outsource the manufacturing of the upper and lateral panels, the nose landing gear bay, as well as the forward cargo doors of the A380 Airbus to a manufacturing outfit in China.
Let’s ignore the fact that this aeroplane maker is subsidised by funds from the EU and that one might have hoped that our taxes might have led to some job creation here in Europe. Let’s look at the cost benefits instead. Yes, friends, it’s now obvious that whatever we can do in Europe they can do much cheaper in China, whether it’s turned parts or entire aircraft subassemblies.
So why not grab the bull by the horns and see where we can really save some money here in the EU. And let’s start with our military spending. It’s clear to me that a lot could be done in this area too to shave off many thousands of dollars off some very expensive projects.
While the offshoring of nuclear submarines to the Huludao Shipyard in the Bohai Gulf might be a bit of a sensitive subcontracting pill for some to swallow, there’s no reason at all that certain military aircraft, for example, couldn’t be made in China a lot cheaper.
There’s certainly a lot of them that need building. After all, last year, the good folks that run the EU signed a £12.6 billion contract to buy a fleet of 180 Airbus A400 military transport jumbo jets, didn’t they?
Perhaps the good folks at Airbus might consider making some of these in China with the same bunch of lucky lads at the China Aviation Industry Corporation that are making the bits for the A380. Then we might get a bit more value for our defence pounds. (What makes you think they’re not talking about it right now? -Ed).
I can`t help wondering if the decision of a lot of companies to shift manufacturing East is short sighted. It seems to me that the price will go up eventually, especially once the home manufacturing base has been totally dimantled.
Incidentally, the Americans already use Hyundai to make major parts of the fuselage for the F16 and have done for some time I believe.
Justin R. Davies
By building a few parts of Airbus in China we have made significant sales of aeroplanes to China and ousted Boeing as a preferred supplier. Just looking for one positive note.