Just ahead of a reorganization set to stand up on Jan. 1, 2014, the European Aeronautic Defence and Space Co. (EADS) on Dec. 9 said it plans to cut nearly 6,000 jobs and consolidate facilities in four countries to boost the competitiveness of its defense and space business.
Beginning with the New Year, EADS will become Airbus Group under a new alignment announced in July to take advantage of its well-known brand Airbus, which makes passenger and cargo planes for air carriers world wide and military transport and refueling planes. The restructuring plan relates to the new Airbus Defence and Space (Airbus DS) Division, which will house the existing Airbus Military, Astrium and Cassidian businesses.
EADS is looking increasingly to international markets for its defense and space work where competition is becoming fierce as more companies, including defense firms in the United States, are facing shrinking government budgets in their home markets.
“We need to improve our competitiveness in defense and space, and we need to do it now,” Tom Enders, CEO of EADS, who will also become CEO of Airbus Group, said in a statement. “With our traditional markets down, we urgently need to improve access to international customers, to growth markets. For that to work, we need to cut costs, eliminate product and resource overlaps, create synergies in our operations and product portfolio and better focus our research and development efforts. That’s what the restructuring and integration plan for our defense and space business is all about.”
EADS said the timing and size of a one-time charge associated with the restructuring plan is being evaluated.
Under the restructuring plan, 5,800 positions will be scrapped at Airbus Defence and Space and Airbus Group headquarters by the end of 2016. Corporate functions and services will drop about 500 positions within the overall headcount reduction, EADS said.
The company also said 1,500 jobs will be offered at the Airbus commercial aircraft division and Eurocopter, which is being renamed Airbus Helicopter.
The restructuring plan also includes facilities consolidations in Germany, France, Space and the United Kingdom to lower costs and improve operational efficiencies.
EADS said that come Jan. 1, Airbus DS will operate at the executive level, with more than $19 billion in sales, making it the largest defense and space company in Europe and one of the top 10 defense companies worldwide.
The Airbus Military, Astrium and Cassidian businesses are expected to be fully integrated and operational within Airbus DS by mid-2014, resulting in four business units: Military Aircraft; Space Systems; Communication, Intelligence & Security; and Electronics.
EADS also said it plans to negotiate with local unions to reduce labor costs, which it said could help lessen the social impact of the restructuring plan.