Boeing sets up new Digital Innovation Centre in Bangalore

Duopolistic Competition fostering increasing commitments by Airbus and Boeing in India

Boeing [NYSE: BA] has inaugurated a Digital Innovation Centre, the newest phase of the Boeing India Engineering and Technology Center (BIETC) in Bangalore, India.

The facility houses an integrated lab for Internet of Things (IoT), Analytics and Mobility, a 3DX lab to develop 3D experiences, a Systems Integration Lab, a Proof of Concepts Lab and 25 Collaboration Areas to enable agile project management. Spread across 150,000 sq. ft. and eight floors, the new facility will double Boeing’s existing footprint of 160,000 sq. ft. and will accommodate another 1,000 new employees.

BIETC has increased its employee count from just 100 when it was inaugurated in early 2017, to over 1,000 at present. “And, as the center grows over the next few years, it will develop into a team of over 2,500 employees in specialized fields of IT, engineering and R&D,” the comapny said in a statement.

BIETC is also growing its teams focused on advanced aerospace research in materials and manufacturing, aircraft structures and airplane health management. Its engineering teams work on Digital Aviation, electrical, mechanical and systems design and providing support for lab and flight testing for aircrafts.

From an IT perspective, key focus would be on areas such as Product Lifecycle Management, Enterprise Resource Planning, Internet of Things, Blockchain, Data Analytics and Software Design for aerospace.

Marc Allen, president, Boeing International and Ted Colbert, Boeing’s chief information officer and senior vice president of Information Technology & Data Analytics inaugurating the newest phase of the Boeing India Engineering and Technology Center (BIETC) in Bangalore.

“We see India as a hotbed for path-breaking software solutions that can redefine the way the world designs, operates and manages airplanes,” said Ted Colbert, Boeing’s chief information officer and senior vice president of Information Technology & Data Analytics, while inaugurating the new facility. “The IT talent and capabilities available in India will be an enabler for Boeing’s success across the world.”

“We are excited about Boeing’s ever expanding footprint in India. The new engineering facility at BIETC reflects an agile and driven Boeing in India, one that inspires people to collaborate and accelerate step-change innovation,” said Pratyush Kumar, president, Boeing India. “This center brings together engineers from the fields of aerospace, computer science and mathematics, who will collaborate to achieve next-gen breakthroughs for aircraft design, manufacturing and maintenance.”

Air India-Boeing Accelerated Apprenticeship Programme

A day before inaugurating the Digital Innovation Centre, on June 14th 2018, Boeing and Air India Engineering Services Limited (AIESL) launched the Air India-Boeing Accelerated Apprenticeship Programme in Mumbai, a finishing school for aircraft maintenance engineers. Boeing has invested $1.25 million in the initiative. Speaking on the occassion Union Minister of State for Civil Aviation Jayant Sinha said that there would be a demand of over 10,000 aircraft maintenance engineers over the next 10 years as 1,000 aircraft on order from Indian airlines are delivered.

“Boeing is proud to be a partner in this initiative in one of the fastest growing civil aviation markets in the world,” said Marc Allen, president, Boeing International. “We are committed to help catalyse the growth of special skills needed for the Indian aerospace ecosystem, and create a capable workforce.”

“Boeing is also actively involved in developing skills across the aviation sector by partnering with leading Indian vocational training institutes, industrial training institutes and Indian partners, to train workers for the aerospace industry,” the company said in a statement.

Make in India

These initiatives could be considered the company’s response to the Indian Government’s clarion call to “Make in India.”

Last week Suresh Prabhu, Minister of Commerce and Industry, Civil Aviation, Government of India appealed to global aircraft manufacturers to participate in the the initiative to create a manufacturing ecosystem for aircrafts in the country.

Prabhu, who visited an Airbus facility in Toulouse the week before that, wants to encourage aircraft-makers to manufacture in the country, beginning with components and eventually moving on to complete aircraft production.

“Make in India is at the heart of our strategy. Airbus has the largest footprint in India of any international aircraft manufacturer, nationwide across all aircraft programmes,” said Srinivasan Dwarakanath, President — Airbus Commercial Aircraft in India in a statement during the release of Airbus’ forecast for the Indian market. Airbus’ first fully owned training facility in Asia is coming up in New Delhi.

Sourcing and Jobs created in India

Boeing currently employs 1700 people in India, and more than 7000 people work with its supply chain partners. The company has over 160 supply chain partners in India, and annual sourcing from India stands at $1 billion.

Airbus currently employs 6000 people in India (including 1,500 engineers) directly and indirectly. The company’s sourcing volume has grown 16 times over the past 10 years and it is currently at more than US$550 million annually.

Forecast and Marketshare

Boeing Forecasts Demand for 2,100 New Airplanes in India. 20-year outlook shows $290 billion worth of airplanes needed over next 20 years. SOURCE : Boeing Current Market Outlook 2017.

Boeing forecasts a demand for 2,100 new airplanes in India, valued at $290 billion, over the next 20 years. Single-aisle airplanes, like the 737 MAX family, will continue to account for the largest share of new deliveries, with airlines in India needing approximately 1,780 airplanes.

The more recently released Airbus [EPA: AIR] forecast estimates that India will need 1750 new aircraft, valued at $255 billion, from 2017–36. This would include 1,320+ single aisle aircraft and nearly 430 widebodies.

Airbus has backlog orders of over 530 aircraft to date from India. Airbus in India claims a marketshare of 60 percent of in-service fleet and 70 percent in order-backlog.

Competition and Trade Wars

Airbus Chief Executive Officer Tom Enders indicated in April that the Boeing sales team was at its most aggressive stance in 20 years. [*]

Airbus was forced to cut back on production plans for its A330 wide-body aircraft after losing a series of major contracts to Boeing.

Vistara, the Indian affiliate of Singapore Airlines Ltd, choosing Boeing’s Dreamliner over Airbus’ A330neo follows similar decisions by American Airlines Group Inc. and Hawaiian Holdings Inc.

Boeing’s aggressiveness on pricing coupled with US tax cuts and subsidies is giving a tough time to Airbus.

“Trade wars are not inevitable and can be avoided. We need to achieve a reasonable resolution to these disputes to protect the future of the global aviation industry and thousands of jobs on both sides of the Atlantic,” said Tom Enders, CEO Airbus.

“The WTO has consistently ruled that the Airbus loans are less damaging to global trade than the tax breaks and research grants Boeing receives, which have cost Airbus an estimated $100 billion (USD) in lost sales,” said John Harrison, Airbus General Counsel, in a statement at the Airbus Annual General Meeting on 11 April 2018.

Global airlines and aviation executives have warned that the growing tension over international trade could damage the airline industry. Both Airbus and Boeing have expressed concern regarding the uncertainty created by these tensions.

The U.S. has escalated tariff threats against China and imposed duties on steel and aluminium on U.S. allies Canada, Mexico and the European Union.

India is among the few countries with which US trade-deficit has decreased in the last one year. The US goods trade deficit with India was USD 22.9 billion in 2017, a 5.9% decrease (USD 1.4 billion) over 2016.

The US goods trade deficit with India was USD 22.9 billion in 2017, a 5.9% decrease (USD 1.4 billion) over 2016. SOURCE : census.gov

However, the US continues to hound India on a number of issues, including market access, high tariff and protection of intellectual property.

Senior officials of India and the US are expected to soon meet to address concerns of both the sides, including issues related with visa, continuation of certain concession for exports, duty on steel and aluminium, and prices of certain medical devices.

Suresh Prabhu had said that he held discussions with US commerce secretary Wilbur Ross and USTR Robert Lighthizer to find out ways to enhance trade and investments between the two nations.