AIRBUS AND THE PRODUCTION OF THE A380: A

Embry-Riddle Aeronautical University - Worldwide

Airbus is an aircraft manufacturer based in Toulouse, France and is wholly owned by the European Aeronautic Defence and Space Company (EADS), based in the Netherlands. Airbus has manufacturing facilities in Germany, France, Spain and the United Kingdom and employs approximately 57,000 people. Production is decentralized at various manufacturing plants in Europe with final aircraft assembly conducted at the Toulouse, France facility, or at Airbus‘s Hamburg, Germany facility. Even though all of Airbus‘s manufacturing facilities are in Europe, there are significant differences in the culture of their workforce. The most manifest example of such differences, in Airbus‘s case, is the early production difficulties related to the assembly of the A380 jet. Employees from diverse cultures have different work values and this impacts on how an international company like Airbus must manage its workforce, particularly in the context of grand, multinational projects like the design and assembly of the A380. This paper looks at the cultural differences between employees at various Airbus manufacturing facilities in Europe, and how the differences can and have affected Airbus production of the A380. As part of the research process, this paper examined cultural differences using the Hofstede model of work related values, concluded that there are differences between the workforce at the German and French production facilities, and urged that these differences must be understood to better manage the workforce.

Airbus S.A.S. builds medium to long range, narrow and wide body commercial aircraft, including the double-deck A380 aircraft. Airbus‘s final assembly facilities are located in Toulouse, France and Hamburg, Germany, with main component production facilities in France, Germany, Great Britain (GB), and Spain. This geographical footprint, while confined to Europe, covers an area

Roberts, Walton and Muldoon

with significant cultural differences that, inevitably, enter into the workforce. Employees from such diverse cultures have different work values; this impacts on how Airbus must manage its workforce.

The launch of the A380 was delayed by over a year, costing the aircraft manufacturer over $6 billion. Several senior managers of Airbus were asked to step down during this time (Anonymous, 2007, p. 12). Communication, dispersed production, and national traditions and practices were considered the root cause of the production delay (Anonymous, 2007, p. 11-12 and Anonymous, 1999, p. 52).

Like Airbus, many international companies struggle with managing multi-cultural workforces and management practices. Working on behalf of IBM between 1967 and 1973, Professor Geert Hofstede explored the cultural differences and work related values of workers from different countries, and how these work related values can affect the management of a multicultural workforce. On the basis of this study, Hofstede produced a comprehensive work values model that is relevant to exploring cultural differences at Airbus.

The cost overruns and perceived design flaws present in the A380 can, in part, be attributed to differences in work-related values. Indeed, had Airbus managed its multinational and multicultural staff differently, their production might have been more efficient.

A380 AIRCRAFT

The Airbus A380 is the world‘s largest passenger aircraft and is capable of carrying over 500 people. The A380 sells for upward of $220 million. At of the end of 2008, Airbus had delivered 12 A380 aircraft. However, the production schedule was almost two years behind with each aircraft practically hand-built because of ―flaws in the design engineering process for the wiring systems‖ (Done, 2008, p. 3). During 2009 alone, Airbus committed to delivering 21 A380s; however, by the end of 2009, Airbus had delivered only 10 (Anonymous, Leeham News and Comment). The A380 was partly designed and built in Airbus‘ Hamburg, Germany factory and partly in Toulouse, France. Problems began because the design team in Hamburg, Germany used an older, two-dimensional version of the design software that was not compatible with the newer, three-dimensional version being used in Toulouse. The problem was not discovered until all of the pieces were being assembled in Toulouse and the wiring harness was not properly aligned. Airbus has instrumented a short term, but expensive fix of flying the partially build aircraft from Toulouse to Hamburg, ―where ill-fitting wiring is ripped out and painstakingly replaced‖ (Schwartz, 2007, p. 94). The delay and subsequent rework may have been avoided if proper communication between the various airbus plants had been more effective.

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Any international business must understand how different cultures can affect workplace value. Geert Hofstede, while working as a psychologist for IBM, developed four dimensions that summarized different cultures (Hill, 2007, p. 111 and Hofstede, 1983). The four dimensions are power distance, uncertainty avoidance, individualism versus collectivism, and masculinity versus femininity (Hofstede, p. 78). Power distance focuses on a particular culture‘s acceptance of social inequality and distribution of power. Uncertainty avoidance measures a culture‘s tolerance level concerning uncertainty, such as job security. Individualism versus collectivism looks at the relationship between the individual and a group. Hofstede‘s fourth dimension, masculinity versus femininity, examines the relationship between gender and work roles. Hofstede‘s values are shown in Table 1 for France, Spain, Germany, and Great Britain, all countries in which Airbus has production facilities.

Table 1. Hofstede work related values for selected countries

Power Uncertainty

Distance Avoidance Individualism Masculinity

France 68 86 71 43

Germany 35 65 67 66

Great Britain 35 35 89 66

Spain 57 86 51 42

Source: from ―International business: Competing in the global marketplace‖ by C. W. Hill, 2007, McGraw-Hill/Irwin

communicate any new quality initiatives to workers. This study is supported by

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It is very clear that, through the use of Hofstede‘s cultural dimensions, broad cultural differences can be determined. These cultural differences can affect how an international company manages it operations in different countries.

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a high power distance dimension, like France, are more likely to accept not being part of a decision making process. This may in part, explain the ease with which French design teams implemented the newest version of CATIA software and trained their engineers on it. On the other hand, workers in countries with a low power distance, like Germany, expect a greater level of involvement in management decisions. In German, this concept has been institutionalized in business and is known as Mitbestimmung (Co-determination). It is said that the management of the German design team at Airbus resisted implementation of the newest CATIA software, as it would be too costly an investment, and too difficult to re-train German engineers on its use (Matlack, 2006).

In the present case, there is a proportional relationship between Power Distance and Uncertainty Avoidance. This is rational, as both measurements tend to engender certain behavioral patterns. In the same manner that Hofstede‘s Power Distance index can be cited to explain the willingness of Airbus‘s French design team to adopt the newest CATIA software and German reluctance to do so, the Uncertainty Avoidance index (with its emphasis on risk taking and risk aversion) may explain each design team‘s adoption of different software platforms. While there seems to have been no debate at Airbus‘s design bureau in Toulouse as to whether or not the newest CATIA software should be used, there was debate in Germany (Matlack, 2006). If Hofstede‘s indices are valid, it is possible that, with respect to the German design team, managers considered that they had an element of choice when it came to software, while French managers considered that they did not. Social sciences, like economics, have developed a deep body of knowledge by examining the relationship between risk and choice. While there is still disagreement as to the precise definition of these terms amongst academicians, all agree that they bear a more or less significant level of relation to each other (cf. Johh Maynard Keynes and Friedrich Hayek, for example).

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While there seems to be a numerically insignificant difference between French and German workers concerning their Individualism quotient, there is still a difference. As previously noted, Hofstede characterized individualism as centering on the extent to which workers are willing to work in teams, and how effectively they do so. This is psychologically significant, as each group‘s set of unspoken leading premises will lead to different and equally unspoken conclusions. It is possible that French adoption of the most recent CATIA software was an independent choice to be made, irrespective of the German design team‘s choices. Conversely, it is possible that the German reluctance to adopt the newest CATIA software stemmed from a cultural expectation that such a choice would be made jointly. According to Hofstede‘s research, the programming of individuals‘ culture will heavenly influence their roles and integrations in a system (Carraher & Hofstede, 2003).

Hofstede‘s cultural dimensions can be used to derive broad generalities about the work ethics of workers from different cultures. At simply the quantitative level, Hofstede‘s cultural dimensions show that the German and French cultures are different. Managers must understand these differences to manage the work force at Airbus better.

Germans have a lower individualism dimension than the French, so they will tend to work better in groups, and will instinctively assume that others (i.e., the French) would behave similarly.

Because of their higher uncertainty avoidance dimension, French workers tend to avoid risk and expect directive management decisions. Effective managers in France will provide more direction to their workers, whereas German cultural attributes in this regard point to a system of Mitbestimmung (Co-determination).

The Airbus A380 production problems stem from the use of different CATIA software at the two design sites. The clash between the German and French work ethics could have led to this problem, however. German ―groupwork‖ is not compatible with the French need for individuality; nor is the strict need for rules that the Germans have, compared to the independent attitude of the French. Coupled with Airbus‘s history, demographics, and failure to impose a centralized management structure (Matlack, 2006), unmanaged French and German work related values can lead to disastrous consequences.

French and German workers can be clearly differentiated using Hofstede‘s cultural dimensions. Different work forces require different management tactics. This is true not only for Airbus but for all multinational

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Journal of Business and Behavioral Sciences Vol 23, No 1; Spring 2011

Assumption University

Assumption University

San Jose State University

In keeping with the liberalization requirement of World Trade Organization (WTO), Vietnam‘s banking sector has been gradually opening up to both local and foreign investors. Therefore, there has been a steady increase in the number of local and foreign-owned financial institutions. With wholly-foreign owned banks entering the market, competition in the banking sector has become more intense as both domestic and foreign banks fight for new customers. In this highly competitive banking environment, foreign banks are at an advantage as compared to their Vietnamese counterparts. In comparison with Vietnamese banks, foreign banks have better infrastructures, offer more professional customer service, use more high technology, and enjoy a network across many countries.

In spite of foreign banks‘ competitive advantages, Asia Commercial Bank (ACB), one of the largest private banks, has still been able to keep the position of the best domestic bank in 2008 and 2009. Why have ACB customers remained loyal to it? What has ACB done to retain its existing customers and create customer loyalty? In this study, the researchers address these issues by considering several factors that are critical to customer loyalty and have given

Journal of Business and Behavioral Sciences

ACB a competitive advantage over its rivals. Dick and Basu (1994) found that gaining customer loyalty is the major factor for many firms today and the costs of ensuring that a customer stay with the firm is lower than the cost of acquiring a new one. Indeed, Reichheld (1996) pointed out that acquiring a new customer costs five times what it takes to keep an existing one. Also, Varki and Colgate, (2001) implied that customer satisfaction and service quality are considered as the most important factors that make customers stay loyal with the firm. Moreover, according to Nguyen and LeBlanc (2001), a company‘ corporate image, especially that of financial service firms, plays an important part in securing customer loyalty. Furthermore, Selnes (1993) found switching costs to effect on customer loyalty. Based on these findings, four main factors have been identified as critical to gaining customer loyalty.

LITERATURE REVIEW

Perceived Service Quality: According to Parasuraman et al., (1985), perceived service quality is described as the gap between what customers expect the service should be and what they actually receive. Consequently, Parasuraman et al., (1985) developed a service quality measurement instrument called SERVQUAL which consisted of ten dimensions. However, Parasuraman et al., (1988) collapsed theses ten dimensions into five dimensions comprised of tangles, reliability, responsiveness, assurance, and empathy. Although SERVQUAL has been applied in many studies to assess service quality, the reliability and validity of this measurement had been debated by several authors, particularly in the expectation dimension. Cronin and Taylor (1992) stated that service quality concept according to SERVQUAL confounds satisfaction and attitude.

The researchers concluded that service quality can be better measured by using only the perception dimensions, rather than expectation-perception methodology. Subsequently, the researchers developed an alternative measurement tool for measuring service quality named SERVPERF, which consists of the 22 perception items.