Fokker Bankruptcy

From:         rna@gsb-crown.Stanford.EDU (Robert Ashcroft)
Date:         23 Jan 1996 10:58:20 -0800
Organization: Graduate School of Business, Stanford University
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My understanding of the Fokker crisis is less than clear because of a
screwup at Clarinet, which managed to route stories about Fokker just
about everywhere _but  Idiots.

Anyway, from a NYTimes article that appeared in the San Jose Mercury-
News this morning (Jan 23) the facts appear to be these:

Daimler-Benz has walked away from Fokker, taking $4.2 billion dollar
loss in the process, almost all of which can be traced to Fokker or
other DASA (German Aerospace) subsidiaries.  The Dutch government,
as of Monday night, says that it will not help Fokker either.

Bankrupcty thus appears inevitable.  What I have not seen, yet, is
the definitive statement that is has, in fact, gone belly-up.

Assuming it has, in fact, gone bankrupt, this is a tremendously
important event in world aerospace.

Historically, Fokker was one of the pioneers in aircraft manufacture,
all the way back to the Triplane (of Red Baron fame), the Fokker Trimotor,
and so forth.  It's a sad loss of a great name.

Far more importantly for the modern age, however, is that it establishes
the principle that a European government can let an aerospace company
fail.  This has dire implications for the rest of EU aerospace, in
particular the French industry which has yet to be reorganized.  The
Dutch government is to be congratulated on its bravery, and I am sure
they will expect no less of other governments in the EU in the years
to come.  What's more, this gives the European Commission a handy
precedent to lean on in their battles to curb future subsidy.

On the other hand, I'm sure that there is discreet celebration in BAe
headquarters.  Even if Fokker is rescued by Bombardier (which has an
interest since its Shorts subsidiary is a major subcontractor of
Fokker---might Bombardier perhaps rescue the F70/100 program while
letting the F50 lapse?) the F70/100 line will surely suffer because of
the uncertainty.  Avro will be the most direct beneficiary.

It is also a big black eye for Daimler-Benz.  Their attempt to build
a conglomerate on top of their auto operation is in tatters.  It's
drained enormous amounts of money and diverted their attention from
their Mercedes operation.  It leaves them with a commercial aerospace
division comprising of a largely moribund aeroengine operation (MTU),
Dornier, which really only makes the 328 these days and isn't exactly
in the best of health, and the German part of the Airbus operation.
Adding salt to the wounds is the recent success of the more narrowly
focussed BMW/RR foray into aeroengines.  No, it's not the best of times
in Stuttgart.