According to Gifas, the professional union, without visibility on prices, investments will desert Europe.
A major risk of relocation, due to lack of visibility on the evolution of energy prices in Europe. This is the subject that is at the heart of the concerns of the aeronautics sector. “It is very important to quickly regain visibility on the medium and long-term price of energy, because the lack of predictability is toxic”, insisted Guillaume Faury, president of the Group of French aeronautical and space industries (Gifas), this Thursday. Failing this, the risk is to see the players in the sector arbitrate in favor of North America or Asia to make new investments, or even to relocate their most energy-intensive activities.
Our companies can absorb the costs in the short term, but they need to know whether the energy price differential at the expense of Europe vis-à-vis other regions of the world will remain high in the long term.
Guillaume Faury, Executive Chairman of Airbus
“Our companies can absorb the costs in the short term, but they need to know whether the energy price differential at the expense of Europe compared to other regions of the world will remain high in the long term to decide on their investments in the right place and at the good time”, insists Guillaume Faury, who is executive chairman of Airbus. Between 2019 and 2022, gas and electricity prices increased fivefold on average in France and Europe, while they remained stable in North America and Asia. These prices tend to fall in Europe at the start of 2023. But experts predict a period of expensive energy, linked to the increase in the needs of all industry.
Another gap against Europe is the Inflation Reduction Act (IRA), an American law implementing more than 700 billion in subsidies to several strategic sectors. “This is very good news for aviation”because it will access subsidies in order to decarbonize, “but, at the same time, it creates an imbalance in favor of the United States and against Europe”, develops the president of Gifas. The Old Continent which would be well advised to set up a European IRA to support its strategic industries.
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Imbalances
Despite these imbalances, which are added to the persistent problems of shortage of raw materials, certain components, disorganization of supply chains and recruitment, “we are not yet seeing a major shift in industrial footprint reorientation”, adds Guillaume Faury. Safran has however decided to freeze, for eighteen to twenty-four months, a project to create a fourth carbon brake factory in France, an activity whose energy represents 40% of the costs.
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Currently, SMEs and VSEs specializing in metalworking, forging and machining parts are the most affected by the soaring energy bill. Energy represents between 25% and 40% of the costs of these activities. In order to avoid the shutdown of factories, Gifas uses the solidarity of the sector between major clients and subcontractors to “finding solutions on a case-by-case basis and avoiding production disruptions”.
It is not the cost of energy that determines where we will build. We have invested in Toulouse and Hamburg to assemble the A321 there
Guillaume Faury, Executive Chairman of Airbus
At the end of the chain, Airbus, which carries out the final assembly of the aircraft, is “low energy intensive”according to the expression of his boss. “It is not the cost of energy that determines where we will build. We have invested in Toulouse and Hamburg to assemble the A321 there, which defines our industrial chain for decades,” recalls Guillaume Faury.
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