“Every aircraft in the world has tech made in Germany”

German aerospace OEMs hold a key technological and economic position, says BDLI President Klaus Richter.

11.2018

Dr. Richter, the German aerospace industry ­currently employs some 110,000 people. The German auto­motive industry, by contrast, ­employs 820,000 people. What makes you say that aero­space is a key industry for Germany and for Europe?

Dr. Klaus Richter: Everybody thinks of Germany as a country that makes cars, not aircraft. But while seven per­cent of all cars world­wide come from Germany, fully 17 per­cent of the world’s air­craft are made here. The reason for this success is our inno­vative power: the aero­space industry invests a tenth of its rev­enue in R&D-almost twice as much as other sectors do. And the spill­over effects are sub­stan­tial. Whether it’s the auto­pilot or light­weight construc­tion in the auto­motive industry, the anti-lock braking system or shark-skin surfaces for wind turbines, nu­mer­ous tech­no­logical inno­vations originate in the aero­space sector. Other industries and the country as a whole benefit from the pio­neer­ing advances made in this field.

What’s your assessment of the German aviation industry’s position in the world market, and in the global value chain of air­craft construction?

Richter: Every aircraft in the world contains tech­no­logy made in Germany. Today, one out of every six pas­senger air­planes de­livered to air­lines around the globe is manufactured in Germany, totaling some 300 each year! The German supplier industry is a major part of the ramp-up that’s cur­rently under­way. I’m espe­cially pleased to see that SMEs-our hidden champions-are ac­quiring more and more stakes in pro­grams on the global market. Aviation is an inter­national growth market, forecast to expand at an out­standing five per­cent annually. We’re expecting contracts for more than 30,000 wide­body aircraft over the next two de­cades, adding up to an impres­sive five trillion U.S. dollars. Right now we have to pour all our efforts into ensuring that our air­craft remain the world’s best and most effi­cient for the next five, ten and twenty years, as that’s the only way to achieve suc­cess on the global market.

Alongside the big players-Airbus, MTU Aero Engines, Luft­hansa Technik and Rolls-Royce Deutschland-there are a whole host of SME sup­pliers in Germany’s avi­ation industry. What chal­lenges are there for this national supply chain?

Richter: The supplier business is seeing strong growth and can bene­fit from the ramp-up in pro­duction and the increase in global air traffic. There are of course chal­lenges, too. Suppliers should work more closely together, branch out inter­natio­nally and improve their opera­tional per­for­mance by adopting new techno­logies and digi­tali­zation. To pro­vide them with opti­mum support, BDLI has joined with regional asso­ciations and the industry organization SPACE Germany in launching the Supply Chain Excel­lence Initiative. Its goal is to make suppliers fit for the future.

Technological progress is one thing, but stable and reliable aircraft pro­duction is another. There is a wide range of relation­ships and inter­depen­dencies among OEMs and sup­pliers. How resilient is this network?

Richter: Global air traffic doubles every fifteen years, and the resulting demand is a chal­lenge for the pro­duction capacity of the entire industry, no question. However, when the OEMs have full order books, this lends sup­pliers a certain degree of security as they plan for the next few years, while also streng­thening the OEM-supplier net­work. In addition, as many SME sup­pliers become more inter­national, they spread their capacity across a broader base and can thus improve their compe­titiveness.

What needs to be done to ensure that the supply chain for aircraft manu­facturing continues to work in the future?

Richter: To keep from risking our competitive position, Germany, which is a high-wage country, must avoid putting further strain on the in­dus­try. Since we produce primarily for export-our in­dus­try has an export rate of more than 70 per­cent-such burdens hit us harder than other indus­tries where Germany has a large domestic market. And naturally, we have to ensure that we have skilled staff and compe­titive working conditions.

Dr. Klaus RichterPresident of the German Aerospace Industries Association (BDLI)

Dr. Klaus Richter became BDLI President in 2017. Since January 2015, he has served as Chief Procure­ment Officer and an exe­cutive com­mit­tee member of Airbus Group SE. He is also the Chairman of the Board of Airbus in Germany and heads the Super­visory Board of Premium AEROTEC Group.

Richter’s responsibilities cover procurement across the entire Airbus Com­mercial Air­craft organi­zation as well as strategic procure­ment topics for the Group. Before joining Airbus in 2007, Richter was Senior Vice President Materials Purchasing for BMW.

Born in Munich in 1964, he began his career at McKinsey & Company in 1993 as a manage­ment consultant for auto­motive, electronics and aviation businesses and product devel­opment. He earned his doctorate in mech­anical engi­neering from the Technical University of Munich in 1991, and after that spent two years as a researcher and teacher at the University of California at Berkeley.

Every value chain starts off with good ideas. Who drives their devel­opment forward? The OEMs? The customers? Start-ups, research insti­tutions?

Richter: All of us together! Our motto is “nonstop innovation.“ The avi­ation research program in par­ticular takes on a key role here, bringing science and industry together. OEMs today are no longer aircraft manu­facturers in the traditional sense; instead, they’re more like system archi­tects and inte­grators within the value chain. Yet this is just one aspect of inno­vative change. Airbus, for example, acquires and inte­grates start-ups, but also works on revo­lutionary concepts itself, such as at the Center of Applied Aero­nautical Research (ZAL) in Hamburg. Industry 4.0 is one of the most interesting topics for avi­ation. For our complex products, digital solutions that cover the entire life cycle from devel­opment to operations offer enormous potential. This is why Germany needs to be a driver of digi­tali­zation and not merely an observer.

You yourself used to work in the automotive industry. What can air­craft manu­facturers learn from automakers?

Richter: We can learn a lot from each other. An air­craft is much more complex than a car: while a car contains up to 15,000 indi­vidual parts, a wide­body air­craft has several million. On the other hand, the batch sizes in the auto­motive industry are much larger. That’s why we can learn a lot from auto­motive, especially when it comes to indus­trial-scale pro­duction. A car today features com­plex soft­ware and con­nected systems, just as an air­liner does. What both industries have in common is that they produce in­cred­ibly com­plex products with a huge pro­por­tion of elec­tronics, and both have the strictest require­ments regarding func­tional safety. In up to 70 per­cent of all inno­vations, electrics and electronics are the most important drivers.

Give us a glimpse of what’s down the road: what new devel­opments can we expect from aero­space over the next few decades?

Richter: Aerospace conducts research more intensively than any other industry. Right now we’re working on flight that is virtually emissions-free. Electric drives already work well enough for smaller aircraft, and we are aiming towards launching hybrids with up to 100 seats by 2030. The second major break­through is auto­nomous flight, whether with cargo drones or air taxis. The aerospace industry drives tech­no­logy forward; after all, require­ments are nowhere so stringent as in the air and in space.

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