French aerospace industry lobbying association Gifas (Hall 1 Stand A15) is foreseeing another excellent year in terms of revenue and orders. In an economy bombarded with bad news, France’s aerospace sector is often cited as an example. A thorn in its side, however, has been the euro/dollar currency exchange rate. Recruitment remains a tricky issue, too.
“There are good dynamics in 2014. Maybe orders won’t meet last year’s record, but the turnover will stay on the same curve,” said Gifas president Marwan Lahoud, who is also Airbus Group’s chief strategy and marketing officer. In 2013 orders reached an all-time-high of €73.1 billion ($100 billion), while revenues totaled €47.9 billion ($65 billion), the trend having risen since 2009.
The shift to more civil and less defense activity is continuing virtually every year. In 2013, the civil business accounted for 75 percent of total revenues and 83 percent of orders, by value. Overall, French OEMs have a five- to six-year backlog, Lahoud said. These numbers reflect the quality of the products, an effective supply chain and market confidence, he added.
In France, the aerospace industry’s performance is highlighted as an example for the rest of French industry, and not only because its export balance ranked first, at €22 billion ($30 billion) in 2013, before wines and spirits. “We are seen as strong, dynamic and united,” Lahoud said. Nevertheless, he expressed an intention not to rest on his laurels.
Currency and Employment Issues
A couple of ongoing problems in particular mean the industry has to avoid complacency–one being exchange rates, and the other being skills. The dollar has been consistently and significantly weaker than what Gifas considers an ideal exchange rate: €1=$1.20. As a result, reaching competitive prices is even more difficult. A 2-percent gain in operating margin can be swept away by a €0.10 decrease in the exchange rate. Dassault Aviation, for example, makes it clear that part of its investment in robotization is due to the strong euro, which makes qualified workers even more expensive to employ. “We have been talking to the ministry of finance about long-term hedging,” Lahoud said.
Employment can be seen as a strong point of France’s aerospace industry. In 2014, around 10,000 people will be hired. Last year, this number was close to 13,000, translating into 6,000 jobs created, and at year-end, Gifas member companies counted 177,000 people on their combined payrolls.
But the downside is companies find it difficult to find and hire workers. “Industrial” jobs have a surprisingly poor image in France, being seen as gruelling, requiring low skill levels and yielding small rewards.
To address this, Gifas presents regular communications intiatives. One such initiative was “L’avion des métiers” (“Find your profession in this aircraft”) at the Paris Air Show in June 2013. Visitors could see real, skilled professionals demonstrating their jobs in manufacturing, logistics, design and so forth in an aircraft mockup.
Another cause of hiring difficulty is the high level of qualification the industry needs. “These people are hard to find and training an engineer takes a matter of years,” Lahoud pointed out. There is also competition among aerospace firms. In those areas where aerospace is a major employer, a young graduate will often choose the largest company, making it even trickier for a small business to recruit.
One Gifas action has been “shared apprenticeships.” Some 300 apprentices this year will thus learn in both a large group and a small business. “This was our idea and shows how united the sector is,” Lahoud said, stressing that a smaller company may be the right choice for a recruit.
Geographically speaking, France’s aerospace industry is concentrated in a relatively small area. The Ile-de-France (Paris) and Midi-Pyrénées (Toulouse) regions each account for 28 percent of the workforce. The third and fourth regions are Aquitaine (Bordeaux) and Provence-Alpes Côte d’Azur (Marseille), which, respectively, house several Dassault factories and Airbus Helicopters’ headquarters, among others. Overall, these four regions are home to three quarters of aerospace employees in France.
Equipment manufacturers employ 44 percent of the aforementioned 177,000, while OEMs employ 42 percent and engine makers 14 percent.