Aerospace Industrial Development Corp (AIDC, 漢翔航空工業), the nation’s largest civilian and military aircraft manufacturer, yesterday said that despite recent media fanfare, the aerospace sector is still facing tremendous challenges.
“We are the reluctant sector bellwether,” AIDC chairman Anon Liao (廖榮鑫) told reporters at a media briefing in Taichung’s Salu District (沙鹿).
“Perhaps we are facing as many prospective challenges as opportunities,” Liao said, referring to the company’s plans to bolster partnerships with other domestic suppliers, called the “A-Team 4.0,” in a bid to tap into global markets.
Liao said that it is customary for clients such as Boeing Co and Airbus SAS to demand that suppliers cut prices by as much as 10 to 25 percent annually.
“Shifts in suppliers are rare, and adjustments only take place when companies’ quality and ability to satisfy cost-down demands falter,” he said.
Clients also grant higher order volumes to qualified companies.
The dominance of Boeing and Airbus in the global market is not likely to change, Liao said, adding that the two aircraft makers’ lists of suppliers remain quite constant.
“AIDC is the only tier-one supplier in the nation capable of design as well as manufacturing, and we aim to bring at least NT$1.7 billion [US$51.6 million] in business opportunities to companies wishing to take part in our A-Team initiative,” Liao said.
EVA Airways Corp (長榮航空) also has supply-chain operations, but it differs from AIDC because it has the advantage of being part of a conglomerate that operates and procures aircraft, he said.
EVA’s supply-chain operations draw most of its profit from maintenance, he added.
“This is a relatively stable sector, with long product cycles and contract terms lasting between eight and 10 years. I think it is an ideal market for Taiwan to pursue,” AIDC strategy and legal affairs department director Du Shie-chun (杜旭純) said.
Due to the high technology and capital threshold, companies cannot easily move their production to China as seen in the technology industry, Du said.
AIDC president Butch Hsu (徐延年) said that since the company was privatized in August last year, it has been able to better retain talent by offering more full-time jobs, increase its number of workers as the firm grows in size and streamline its procurement process.
The company is mulling merger and acquisition opportunities as it vies to expand its presence as a tier-one supplier, Hsu said.
Company data showed that sales in the first 11 months of the year rose 14.26 percent annually to NT$24.7 billion. Net income in the third quarter came to NT$794 million, or NT$0.87 per share.
Due to declining demand for helicopters for oil prospecting amid tumbling crude prices, gross margin slid to 10.04 percent last quarter from 13 percent in the previous quarter.
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