Manufacturing on the Move: Airbus’s Operations take Flight in Vietnam

April 24, 2014 Posted by Vietnam Briefing Reading Time: 3 minutes

HANOI – Hanoi-based Nikkiso Vietnam will soon become the first Vietnam-based manufacturer of Airbus components according to a press conference held yesterday by the manufacturing division of the European multinational, Airbus Group.

Under a sub-contract with the Korean Air Aerospace Division, Japan-invested Nikkiso Vietnam will manufacture components of fuel-saving Sharklet wingtips for Airbus at Nikkiso’s factory in the northern Hung Yen Province’s Thang Long Industrial Park Two.

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At the press conference, Airbus introduced the company’s new industrial work package for Vietnam which features the production from raw materials of lightweight composite parts including interior spares and outer panels for Sharklets. Production is expected to commence before the end of the year.

Airbus’s Sharklet is a new 2.4 meter high wingtip device for A230 Family aircraft that reduces fuel usage by up to four percent and increases mission range by up to 100 nautical miles by reducing drag and improving airflow at the end of aircraft wings. All new aircraft in the A320neo Family will be fitted with the Sharklet devices. Last October, Airbus also launched the Sharklet retrofit program which retrofits the older A320 aircraft with the wingtip devices.

The Korean Air Aerospace Division (KAL-ASD), the firm subcontracting the manufacturing of the Sharklet to Nikkiso, has served as a major supplier to Airbus since 1998 and is currently the primary supplier of Sharklet wingtip devices.

Speaking at the press conference, Jean-Francois Laval, Executive Vice President of Airbus Asia, expressed optimism that relations between Airbus stakeholders and Vietnam would be strengthened through the new industrial work package.

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After Airbus entered Vietnam in 1990 with the company’s first delivery of an A300 to Vietnam Airlines, Vietnam’s passenger airline industry has grown rapidly. Since this initial delivery, Vietnam Airlines, Vietnam’s national carrier, has expanded to a fleet of 91 aircraft, and is currently one of the largest Airbus operators in Southeast Asia. In 2015, Vietnam Airlines will become one of the first airlines in Asia to operate the new A350XWB (extra wide body) – the newest and first Airbus with both fuselage and wing structures made primarily of carbon-fiber-reinforced polymer.

Earlier this year at the Singapore Airshow, low-cost airline VietJetAir also finalized a more than US$4 billion order with Airbus for the purchase of 42 A320 neo, 14 A320ceo, seven A321ceo and 30 purchase rights from the company.

Previously, Fabrice Bregier, the president and chief executive of Airbus has described VietJetAir as a “rising star” in Southeast Asia’s low-cost carrier market.

Throughout Asia, the airline industry is seeing impressive growth and this is predicted to continue for some time into the future. Mr Bregier has stated that “In Asia, we expect [passenger traffic] growth year-on-year of close to six percent for the next 20 years. In Vietnam, it will be close to 30 percent year-on-year. This is really impressive.”

Airbus’s main competitor, Boeing, has also stated that the Asia-Pacific region is a key growth area and will require almost 13,000 new airplanes worth US$1.9 trillion over the next 20 years.

Airbus’s decision to present a new industrial work package for Vietnam, and involving the sub-contracting of Korean Air Aerospace Division, is indicative of the larger shift in manufacturing operations to the country.

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email vietnam@dezshira.com or visit www.dezshira.com.

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