Re: Sino-Korean AE100 (Re: FOKKER BANKRUPTCY?)

From:         rna@gsb-crown.Stanford.EDU (Robert Ashcroft)
Date:         8 Feb 1996 04:09:59 -0800
Organization: Graduate School of Business, Stanford University
References:   1 2 3 4
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In article <airliners.1996.174@ohare.Chicago.COM>,
H Andrew Chuang <> wrote:
>>The best thing, however, would be for Fokker to die and for the Koreans
>>and the Chinese to stop this nonsense about building the AE100.
>I agree with you that the market will be overcrowded with the AE100.
>However, I don't think it's such a bad idea to transfer the low-end
>market to low-cost countries.  China will have a tremendous domestic
>market that can sustain the AE100 production.  The Europeans as well
>as Boeing and McDonnell Douglas all realize the potential, and they
>are fiercely competing to be the Western partner for the Sino-Korean
>project.  Unfortunately, the biggest problem the AE100 is facing now
>is that the Chinese and the Koreans don't seem to be able to agree on

I strongly suspect that having low labor costs gives countries little
or no advantage in the creation of commercial aircraft.  Even the most
generic 737 is more complicated and more "hand-built" than the most
expensive Italian sports car.  This is a high-skill business, one
with a very substantial learning curve.

I think that Boeing and Airbus both realize that Asian production is
inevitable for non-economic reasons (every country has to have their
symbols of virility---unfortunately the national airline or an
airplane-making capability is often mistaken for a sign of national
vigor, e.g. the Indonesian mania).  Hence they're determined to get
a good position at the trough.

Actually, from the point of view of technology transfer, starting off
with the F100 might not be a bad idea.  You can't run before you crawl,
as the Chinese discovered with the Y-10.