I posted about Segolene Royal winning the Socialist party nomination for president of France. Now comes this item from American Thinker. Thomas Lifson takes a look at the financial destruction that the Airbus A-380 debacle is causing in the French and European economy. One has to wonder after reading this: are you really sure you want to win this office when this kind of economic ruin is facing you?
French economic growth is slumping and the problems at Airbus are getting blamed for it. The two year delay in delivery of the A380 super jumbo is reverberating throughout the French and EU economies. Politics, always a factor at the mammoth “social enterprise,” continues to intrude, as fear of unemployment and fear of failure motivate politicians to take measures dumping yet more tax money into Airbus.
The aerospace business, at the level occupied by Airbus and Boeing, is mind-bogglingly complex, technologically sophisticated, and extremely large in scale. Inevitably, the national interests of great nations are at stake in the fate of companies and even products. The business generates and perfects new technology consistently, literally living on the leading edge of innovation. Its products are a key part of the driving force of globalization.
This business really matters in terms of its leverage on the way the world grows and changes. That is why I have devoted an extraordinary amount of time and space to coverage of Airbus since the A380 began having its public troubles.
The two year delivery delay (announced in steps) is having consequences for many other companies with their own employees, cash flow worries, and futures to navigate. They, too, have suppliers, employees, and communities. The food chain is very large and long.
The scale is so great that it is starting to affect France and the EU. The full effect will be felt some time in the future.
Ambrose Evans-Pritchard of the UK Telegraph writes,
The French economy slumped in the third quarter as the Airbus crisis began to exact its toll, dousing hopes that Europe would take over as world’s growth engine as America slows. [....]
Jean Michel-Six, an economist of Standard & Poor’s, said French exports were suffering a loss of global market share due to high labour costs and the strong euro. “I am afraid that loss of exports is the major factor behind this bad surprise, and Airbus may be starting to play a role. Airbus deliveries generate $1.5bn (£1.01bn) a month for French exports and this is now in question. There had originally been plans to deliver 25 of the A380 jumbos in 2007 and instead there will be just one.”
Prime minister Dominique de Villepin was caught flat-footed by the data after playing up the French recovery “miracle” earlier this year. “Sadly we’re seeing a pause in growth but this should inspire us to yet more grit and determination,” he said yesterday.
There is almost no chance of France meeting the growth rate of 2.5pc predicted by the European Commission for 2007. The European Central Bank is expected to press ahead next month with a quarter point rise in interest rates to 3.5pc, arguing excess credit has swamped the system with excess liquidity.
There is a lot more. But Airbus, French politics and the European union are all taking a bad, bad hit from this. It is very likely to lead to a crisis with the WTO somewhere down the line as more and more money is pumped into Airbus to keep it afloat. It will be seen, rightfully, as a government subsidy. This is a real mess for Europe in general.