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Flying into a bright future
Tim Hepher / 17 May 2012
UAE’s aerospace ambition blooms to challenge biggest parts industry players from Asia to US
Ross Bradley welcomes a delegation of aerospace suppliers in from the heat of the Arabian desert and cools them down with some refreshingly candid advice.
“You are too expensive. Please take this message back. We will not put up with prices we are paying today. Unaffordable.”
The welcome speech may not always be soothing to the ear but industry visitors keep flocking to the oasis town of Al Ain to see one of the world’s newest and best-equipped aerospace factories.
They are drawn by the dramatic rise of an ambitious and increasingly powerful player in the fast-growing aerospace industry, which is investing to make jets cheaper to fly.
Flanked by dunes on an ancient Frankincense route from Yemen to Mesopotamia, the factory is designed to help make lightweight carbon jets that will open up the trade lanes of the future.
It sprang from the desert in record time to spearhead Abu Dhabi’s ambitions to diversify its oil-dependent economy and produce high-tech jobs for the company’s mainly female local workforce.
“We put the first spade into the sand in September 2009 and when we started you couldn’t get here in a vehicle; you had to drive by 4x4 and then walk,” says Bradley, chief executive of Strata, the aerostructures business funded by Abu Dhabi.
The project is part of efforts by Abu Dhabi to boost the non-oil economy to 56 per cent of GDP by 2020 and 64 per cent in 2030, up from 41 per cent in 2005-07.
It is trying to do what many have long considered impossible — to challenge the biggest parts industry players from Asia to the United States in a short time and at even lower cost, while developing a previously unproven workforce.
The steady pilgrimage of industry visitors and a rapid build-up in contracts from the world’s largest planemakers suggest the $250 million factory project is starting to pay off.
Eighteen months after the first parts were produced, the Strata factory has a backlog of $3 billion in orders.
In an open-plan “clean room,” young white-coated women work at large tables laying out carbon material.
The resinous black material will be moulded into aircraft parts and baked in a high-pressure autoclave oven. The resulting structure is lighter and stronger than traditional aluminium, allowing airlines to save weight and burn less fuel. Each piece is tested with giant ultrasound scanners for invisible flaws.
The result of their work is a row of gleaming white “flap track fairings” — canoe-shaped pods that stick out from under a jetliner’s wings to house the mechanism for deploying the flaps. They will end up on Airbus A330s and soon on A380s.
Last month Strata signed a $1 billion deal to make composites for Boeing, with an aim to be sole supplier of vertical tailfins for the 787 Dreamliner by the end of the decade.
Strata and others are now chasing a possible future contract for flaps on the Airbus A320 that could net another $1 billion.
Carbon is the black gold for aerospace.
Its potential for creating jobs and technology has been grabbed by many, but few with more upfront investment than the UAE, whose airlines have already redrawn the map for air travel.
Fuel-sipping aircraft like the recently introduced Boeing 787 Dreamliner and the future Airbus A350 make it possible to fly further for less cost than metal aircraft of the same size, opening up new direct routes and saving time on connections.
The use of carbon composites in aerospace is expected to double in the next decade, marking the biggest single technological upheaval since the arrival of the jet engine.
Competition from South Korea, Japan, Europe and North America is intense but Strata’s parent group Mubadala Aerospace, owned by Abu Dhabi’s sovereign investment fund, is determined to leapfrog rivals and claim a top-three spot in the industry by 2020.
“Our objective is within a decade to be a global leader in composite airframes and a leader in wings and empennage (tail sections),” said Mubadala Aerospace executive director Homaid Al Shemmari, who leads the expansion drive.
Ten years is not long in an industry with long lead times and heavy capital costs. It is how long most suppliers believe they need to prepare for the next instalment of innovations.
Even as Airbus and Boeing notch up record sales by prolonging the life of their smallest and best-selling models, Strata is plotting the moves needed to grab contracts to build part of the next generation, which is expected next decade. Among the challenges it faces are recruiting enough local workers to meet the country’s development targets, and keeping its costs down by driving efficiency down to its suppliers through constant pep talks like Bradley’s supplier speech.
Strata says it has promised to start earning a return for its shareholder Mubadala by 2014, which is why Bradley is so insistent his suppliers must pull their weight in keeping costs down.
“They have simply got to look at driving efficiencies into their own facilities,” says Bradley, the former head of the Eurofigher Typhoon fighter programme, who worked his way up from an apprentice in British Aerospace.
A bigger unknown is whether Strata can tap the workforce it needs while meeting targets to boost national employment. Two hours east of Abu Dhabi, Al Ain is home to the UAE university and a fledgling aerospace community.
As the town where the UAE’s founder late Shaikh Zayed bin Sultan Al Nahyan was raised, its development is seen as symbolically important and creating local skilled jobs is a priority. Strata has 500 employees, about 30 per cent of whom are UAE nationals, mainly women. It aims to lift this figure to 50 per cent by 2014. But it may also double its total workforce over time, suggesting local recruitment must go at a faster rate.
“When I first came here I thought that would be a risk,” Bradley says, asked about the risk of staff shortages. “We are recruiting and training Emiratis and at the last intake we needed 40 people and got 200 applications. I get CVs, telephone calls, people walking off the street. People are not the issue for us; the supply chain is.”
To leap into the industry’s top league alongside rivals led by US-based Spirit Aero Systems it needs to develop its own design shops and have a global portfolio by end-decade. Planemakers now prefer to outsource complex sections to a top tier of suppliers complete with the systems they contain.
“In order to become one the five major actors in aerostructures, Strata must develop the expertise to support several new programmes and manage the production ramp-up,” said Thierry Duvette, a supply expert at consultants Alix Partners.
Bradley claims Al Ain could be mentioned in the same breath as the world’s aerospace capitals Seattle and Toulouse. “Korea entered the market and took 30 years to develop. We don’t have that time,” Bradley said. — Reuters
If all goes to plan it could be a “risk-sharing partner” on the next generation of narrow-body programmes, which means putting up money in return for a slice of profits from a jet market whose catalogue value is estimated at $1 trillion per decade — a tidy jackpot.
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