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Overview of the Alenia Aermacchi 2011 “3R - Recovery, Restructuration and Reorganization Plan”
(the following text is an abstract of the report - commented by the FIOM-CGIL Machinist Union - upon the National Coordination Meeting held in Rome, on 7 May 2013, between the Alenia Aermacchi top management and the national and territorial representatives of the major Unions (FIM-FIOM-UILM) for the aerospace sector. The main subject of the discussion was the general situation of the company, with regard to the production programmes.) On April 23, 2013, the Finmeccanica 2012 budget data were released. Losses totalled about 750 million Euro, almost positive in comparison with the 2 billion Euro loss in the 2011 budget. ALENIA AERMACCHI PRODUCTION PROGRAMMES “Boeing B.787 Dreamliner – CEO Giuseppe Giordo affirmed that the B.787 programme has an unsatisfactory profit level. The target of the company is to increase the monthly production rate from the current 7 fuselage sets to 10. Giordo stated that the company had attained a satisfactory level of experience in the the composite material field, both in design and manufacture.” “AEROSTRUCTURES – This sector is particularly important due to the high workload, both in design and production aspects. Unfortunately the profit level, in some cases, is still below the target value, due to the unsatisfactory financial conditions of the initial contracts. Better profits regard programmes such as the Airbus A 380 and Bombardier C-Series assemblies, thanks to the renegotiation of a number of contracts. The ATR fuselage yearly production rate increased from 50 to 70 fuselages. The target is a production rate of 80-90 ATR aircraft fuselages per year. The nacelle production activity will proceed with high level manufacturing levels.” “REGIONAL AIRCRAFT – the ATR consortium gained some 85% of the regional turboprop market worldwide. Deliveries of new aircraft exceeded 1000 articles; 200 more are expected to be manufactured in the next few years. There are plans to design and produce a new 90-seat “green” regional turboprop aircraft, with a prospective market of 1,500 items. It is worth mentioning that the financing plan for this programme (1 billion Euro) is already under study, with contributions from the Puglia and Campania regional administrations. Concerning the SuperJet programme, in collaboration with Sukhoi, two more aircraft will be soon delivered to InterJet, the main Mexican domestic airline. Discussions are under way with the Russian partner to obtain an higher percentage of the overall production workload.” “C-27J – The new US Defence budget includes possible C-27J procurement during the next 3 years. In the meantime, marketing efforts will focus on first-level air forces. The MC-27J armed version performed well during the recent tests in the USA. A number of Middle East countries expressed interest for the aircraft.” “M-346 – The M-346 trainer jet will soon participate in the Polish replacement contest. A number of Middle East countries expressed strong interest for this aircraft. A Memorandum of Understanding was signed with General Dynamics (USA) regarding the US version T-100. USAF has a requirement for 350 new jet trainers and U.S. Navy could join with 150 more items.” “LCA (Light Combat Aircraft) – The armed version of the M-346 will be financed after a launch customer is found.” “M-345 – A number of Middle East countries expressed interest for the M-311 trainer replacement. Also for this aircraft, financing will follow only in case a launch customer is found.” “EF 2000 – The development of export versions is under way. It is necessary to increase the avionic and new armament integration capability. After the contract with Oman, further contracts are expected with Saudi Arabia and Bahrain. Alenia Aermacchi acts as “prime Contractor” for Kuwait, where the demonstration campaign has recently been concluded, with the support of the Italian Government.” “F-35 – The company stated again that the drive in the JSF programme is in the hands of the Government. A production contract for a number of initial aircraft has been signed and the MRO (Maintenance Repair Overall) capability is under development. This will cater for all the aircraft which will operate in Europe.” “UAS/UCAV – A preliminary agreement exists with the Italian Government for the replacement of the current Predator with a 3-ton, new generation MALE. The launch of this new project is expected in 2013, with initial deliveries in 2018. The target is to maintain the expertise in this field through European collaboration, and also to break the US monopoly in the sector.” RESULTS “The company announced some of the results of 2011-2012, and the 2013 objectives. Prospective economic parameters (Orders, Backlog, Revenue, Turnover, Gross Margin and Investments) are, in general, positive. The tendency of the EBITA (Earnings Before Interests, Taxes and Amortization) is switching from negative to positive. The only “critical” aspect is represented by the cash flow (negative both in 2011 and 2012), but signs of significant recovery are expected in 2013. The 2013 First-Quarter balance-sheet is better than the estimate for that same period.” WORKFORCE AND OUTLOOK “At the moment, Alenia Aermacchi has a workforce of 10,505. This is distributed across a number of Italian Regions as follows: Campania 3,765 (35.84%), Lombardy 1,696 (16.14%), Piedmont 3,294 (31.36%), Apulia 1,609 (15.32%) and Veneto 141 (1.34%). A total of 490 senior workers have been placed in temporary lay-off. Within Q1 2013, 105 of them have reached the terms to receive unemployment benefits, and consequently are no longer within the Alenia Aermacchi workforce. The remaining 385 will follow by December 2014. In 2012, 559 new resources were engaged (including 399 with former temporary contracts), 140 more will follow before the end of 2013. Although the Unions acknowledge that an improving cash flow is fundamental for the company recovery, it is worth mentioning that the overall workforce has been reduced by 1.500 in the past two years, by the effect of agreements with the Unions signed in 2010 and 2011 (Editor’s Note: number does not include normal pensioning-offs, resignations and transfers to other Finmeccanica companies). To be able to compete at international level, the company cannot afford to further reduce its workforce. It would be wise to reconsider the outsourcing policy, both for administrative and production activities. In particular, some problems such as the programme profit decrease, arose from the lack of direct control of the supply chain. When the 3R Plan was announced, Alenia Aermacchi surprisingly affirmed that the then 1,800 suppliers would be reduced to 150. Now the company is keeping this argument under wraps, admitting delays but not revealing the results of the supply chain streamlining obtained to date. In turn, instead of taking back outsourced activities, the number of personnel tasked to control external activities rose from 30 to 120. If it is clear that all the decisions regarding the JSF programme depends on the political will; it is also evident that Alenia Aermacchi should be ready to prepare alternate industrial solutions, in case the purchase of the F-35 fighter should be cancelled. In addition, uncertainty remains about the future mission - and ultimately the destiny - of the Turin and Caselle plants. At the moment, there are no cogent commitments for the development of the Light Combat Aircraft version of the M-346 trainer. Regarding the new MALE, the search for one or more industrial partners appears to be far from conclusion. In any case, the eventual MALE workload is not comparable to those currently generated by the Eurofighter (representing 70-75% of the engineering workload until 2016).” (InformaFIOM) (Aeromedia)