Essay - Airbus is Currently Implementing New Logistics Processes that it Expects...

Airbus is currently implementing new log*****tics processes that it expects to cut costs by 20%. Part of this is because Airbus has been flying parts for planes to central locations ***** facilitate assembly. However, it is perhaps more important ***** ***** increases inventory turnover; ***** like all airplane manufacturers, Airbus has a backlog: if this backlog is eliminated or lessened ***** ***** expedient manufacturing, Airbus produces at a f*****ster rate and is able to sell more products. The backlog is also counter-cyclical; cus*****mers get their orders faster when less are buying. The current backlog is over four years whereas cycles generally last ten or less with prolonged recessions rare. Only a sustained recession of ***** than several years can threaten Airbus'es production pipeline. This is unlikely as air travel has already rec*****ed from its early-2003 low. Acc*****ing to the exercise, a new ***** needs a *****tal ***** 85 days in the Toulouse plant, although many of these days it does not (or all of it ***** not) spend ********** the plant itself.

Perhaps m*****e disquieting is the falling dollar. Because most international banks use the dollar as a reserve currency, the Euro is ********** to buy drastically more ***** it did three years ago. Although this is good ***** western consumers, ***** occurs at the expense ***** ********** manufacturers who wish to export their products. Many companies such as Gulf Airlines that operate outside Europe and North America must now decide between expensive Airb*****s and relatively inexpensive Boeings.

Analysts have commented that Airbus and other European companies have so far protected themselves against the *****'s slide using hedging instruments: forward contracts designed to lock in contracts at a specific price. Of course, Euro-denomin*****ted ***** ***** Airbus ***** ********** are safe. (***** boasts a longer list of back-***** than Boeing, its only true direct competitor.) However, the Economist and other sources contend that the dollar will stabilize at a lower level, making the *****n economy ***** competitive. This bodes poorly for Airbus both inside ***** outside Europe. It is important to note that Boeing is reaping ***** benef***** ***** several defense contracts, which are bid on by EADS and BAE but not by Airbus, which they own 80 and 20 percent of, respectively. Airbus'es operating margin ***** year was 16.5%, exceeding Boeing's 10.5. Airbus budgeted $10.2 billion ***** develop the A380 but this *****ing has reached its peak. (businessweek.com)

Airbus sold an average of 100 planes a ye*****r ***** 1972 ***** 2002. However, this figure is misleading due to exponential sales growth. According to CNN, "sales rose $20.5 ***** from $17.2 billion in 2000 as it delivered a record 325 *****craft[in 2001], up from 311 in 2000." CNN also notes that orders dropped to 375 from 500, but these orders are projected several years into the future. When production capacity exceeds the number of orders, the backlog will begin to shrink: so ***** the reverse is true and the ***** ***** grown. Cancelled ***** ***** a problem. Shrinking pre-orders ***** already