A Friendly Bunch Of Fierce Competitors
By ANN Senior Editor Pete Combs
(This is the third in a series about Harry Stonecipher and
the legacy he leaves the aviation industry after a 50-year career.
-- ed.)
He was one of the first people ever involved with Airbus when
the European consortium launched more than 30 years ago. In fact,
if you look at Airbus's contract for its very first jet engine,
you'll find his name on the document: Harry Stonecipher.
He was working for Jack Welch at GE back then and today, takes
no small pleasure in the irony of going from one of Airbus's first
suppliers to becoming president and CEO of its fiercest
competitor.
Airbus overtook Boeing in civil aircraft sales last year -- the
first time that's ever happened. It sparked a lot of angst within
the US aerospace company. It also sparked a bitter battle over
what, if any, involvement governments should have in helping both
companies get new aircraft off the ground.
Stonecipher, the Boeing leader ousted on the heels of an
embarrassing sex scandal, spoke in Naples, FL, last week, sounding
very much like he's still a big wheel in the front office.
"Airbus is very successful today," Stonecipher told the Naples
Forum Club. "They're 35-years old. They're selling more airplanes
than we [Boeing] are. They say they're making more money than we
are." So, Stonecipher said, the only thing he had to say during a
visit with US Trade Representative Robert Zoellick in March, 2004,
was, "I think it's time we stop this launch aid stuff."
It's become one of Boeing's pet peeves and was a major priority
on Stonecipher's agenda before he was pushed out of Boeing earlier
this month.
Under a 1992 trade agreement, Airbus was allowed to use
government funds from Europe to launch new projects. If the
projects were successful, Airbus paid back the loans. If the
project flopped, Airbus was able to walk away debt-free.
"When they want to launch an airplane," Stonecipher said last
Friday, "they go hook up a hose to the treasuries of three great
countries and one smaller one and they go 'whoosh!'" -- he
imitated the sound of a working siphon -- "$3.8 billion goes
whizzin' across through there and they start! And if they're not
successful, then they don't have to pay it back."
So Stonecipher said he went to the US Trade Representative's
office and blatantly told Zoellick, "We want... this... stopped.
This isn't about the past. We're not suing anybody. But in the
future, we want this stopped.
The issue mushroomed last year when the US
unilaterally pulled out of that 1992 trade agreement and took the
issue to the World Trade Organization, which has arbitrary power in
disputes like this one. Airbus promptly issued a blistering rash of
coutercharges against Boeing, essentially saying the US aerospace
giant was itself guilty of taking undeclared subsidies in the form
of tax cuts from local governments hoping to lure its manufacturing
operations.
"It's real," Stonecipher said of the dispute and Boeing's
position on European subsidies to Airbus. "It's supported by the
President of the United States. In fact, during the election, the
French (a major Airbus backer) kept saying, 'Oh, this is just a
political ploy,' because Bush said something about it... everywhere
he went. I said, 'No, it's not just a political ploy.' They said,
'Well, what if Bush loses?' I said, I think you better go see Mr.
Kerry's statement about the situation." Indeed, 2004 Democratic
candidate Sen. John Kerry (D-MA), seemed to take an even harsher
position toward the European subsidies than did George W. Bush.
The dispute deepened when Boeing announced it would build its
new 787 (then called the 7E7). Airbus chairman Noel Foregeard and
his European backers, said Stonecipher, lashed out -- not at the
US, but at foreign backers of the new Boeing. "They said, 'We're
going to attack the Japanese'" because airlines in Japan were
active supporters of the 787 project. In fact, much of the
aircraft's manufacture has been outsourced to Japanese firms.
"What'd Harry Stonecipher say? 'Yeah, baby! Go after 'em! You
dummy.' That's the funniest thing [Forgeard] ever said.
"The next thing Forgeard said was, 'Well, it's a Chinese copy of
an A330.' The Chinese loved that one too. There for about a month,
Forgeard was my best salesman."
In spite of the bitter acrimony at the corporate level,
Stonecipher insisted the ongoing sales battle between Boeing and
Airbus isn't personal.
"We have a lot of fun with this thing and, by the way, we are
all friends," Stonecipher told the Naples civic group. "The
greatest thing about being in the aerospace industry is you get to
deal with really smart people -- and we're all friends. We compete
like crazy, yet on some programs, we are partners."
Now that the conflict between Boeing and Airbus -- the US and EU
-- over subsidies has calmed down and both sides are talking, will
the peace last? Stonecipher isn't sure.
"The EU trade commissioner and the USTR, Bob Zoellick, agreed to
have three months of trying to negotiate a different agreement,"
Stonecipher told his audience. He said Boeing was all for it -- as
long as any new agreement doesn't allow launch aid.
"Fundamentally," he said, "the moment there is any more launch aid,
there's going to be a WTO case." If that happens, he said, the
fight could stretch out over a period of years.
ANN's Daily Aero-Linx (04.15.24)
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