Global aircraft manufacturers Airbus and Boeing have increasingly outsourced production of their planes to Asia in order to cut costs. By 2010, it was forecasted that Airbus would increase its global market share to 31% compared to Boeing's declining share of 51%, partly due to their outsourcing strategies. Both companies have established manufacturing facilities in China, with Airbus announcing a new assembly plant in 2005 in a major push to compete with Boeing.

1. Building Air Planes Globally

2. Global Aviation Manufacturers: Airbus(Europe) and Boeing (America) Transfer of technical know-how in Asia by Airbus and Boeing, as they were losing out their expertise for next generation aircrafts. 70% of the Boeing 787 Dream-liner were built outside USA. 60% of the Airbus A350 production was done outside Europe. Manufacturing race contributed to the battle of racism and corporate war. Major beneficiaries of the outsourcing work was Asia, especially Japan and China.

3. Founded by William E.Boeing & George Conrad Westervelt on 15 th July 1916. Became the largest aircraft manufacturer, HQ in Chicago, Illinois (US). Initially named “B & W” then named to “Pacific Aero Products” and finally “Boeing Airplane Co.” In 1927 a new airline service, BOEING AIRPLANE TRANSPORT ,later merged with its earlier company. First aircraft – Boeing 314 Clipper in June 1938. Manufactured B707 in 1958 -- US first commercial jet airliner. Acquired Piasecki Helicopter in 1960. Introduced a twin engine 737 in 1967 -- A short & medium range airliner. Contd.

4. Crisis : a) In 1970, Apollo program was cancelled b) In 1971, US Congress stopped financial support for development of Supersonic 2707. c) Employee strength reduced from 80,000 to half in Seattle. As passenger traffic increased, competition became tougher hence Boeing introduced new aircrafts-757,767,737,777. In mid- 1990, introduced Next Generation 737 or 737NG. Merged with Mc-Donnell Douglas in 1997 due to which MD-95 renamed to 717-200. The Boeing 787 or the Dreamliner is under development and is scheduled to enter services in 2008.

5. Formerly known as Airbus Industry. Jointly owned by EADS(80%) and BAE(20%). In 1967, MOU signed among British, French & German govt. to develop A300(with 300 seating capacity). In 1972, A300 touched the skies for the first time. Launch of A320 in 1981 helped Airbus emerge as a major player in aircraft market, had over 400 orders before its launch. In 2003, Airbus delivered more jet-powered airliner then Boeing for the first time in its 33 year history. On April 27, 2005, the A380 successfully completed its first flight from Toulouse to France with seat capacity of 555 passengers & would be world’s largest commercial passenger jet.

6. Global Market Share In 2006 (Actual) By 2010 (Forecasted) Boeing 55% 51% Airbus 21% 31% Others (Bombardeir and Embraer) 24% 24%

7. Global Civil Aerospace Market Boeing and Airbus dominated the large aircraft market (more than 100 seating capacity). Embraer (Brazil) and Bombardier (Canada) dominated sub 100 market segment. Major customers were national carriers providing both long haul and short haul services and low cost airlines. US, Europe, Asia and Latin America were primary markets for aerospace industry. Boeing had the largest market share in Asia (71%) and least in Europe (6%)

8. Boeing In 1982, Boeing outsourced 15% of manufacturing process to Japan for developing Boeing 787. In 2006, outsourced more than 35% for manufacturing Boeing 787 and Dreamliner. Airbus In march 2006 announced A320 production line in China - its first ever production facility outside Europe. Super Jumbo A380 which was recently brought by Kinfisher Airlines to India was being built by non Europeans also.

9. Low labor cost and production cost (in China) helped companies to reduced manufacturing costs. Acquiring parts and equipments from Japan and Canada helped to employ their expertise.

10. U.S enjoyed a close political relationship with Japan. Boeing got 96% market share in commercial aircraft market of Japan. Boeing also got subsidies from Japan. Airbus set up manufacturing unit in China in order to prevent Boeing taking control over the market.

11. Boeing : Japan Japanese government and industrial firm sought to establish Japan as an aerospace power. Japan’s METI invested US$ 76 million to developing facility for aircraft. Japanese aerospace manufacturing companies like MHI, KHI,FHI, JAL, ANA got contracts from Boeing 787 to manufacture the wings. Carbon fiber instead of Aluminium was used in wings which increased fuel efficiency and Boeing revived their market position. Airbus : China China lagging behind Japan technological aspect of aircraft manufacturing. Airbus outsourced its assembly work (less technical then wing design) to china. Airbus announced its assembly site in China, its first ever outside Europe in 2005. Airbus announced to invest $10 billion in China for 150 narrow body A320s. It was a major push by Airbus to pull even with Boeing.

12. Asian aerospace giants could capitalize on outsourcing spree from giant players like Airbus and Boeing. Close political and social ties to booming Asia Pacific market was certainly going to help. China expected to become second largest aviation market in world after U.S.