German leadership in plane thinking

Dasa's chief wants Europe to dominate world aerospace, writes Andrea Rothman

MANFRED BISCHOFF says he is not aiming to position himself as a future leader of Europe's fragmented aerospace and defence industry, but in his campaign to unite the companies the chairman of Daimler-Benz Aerospace (Dasa) is certainly talking like one.

"Let me share my vision," he said. "I'd like us to get on quicker than we are today with restructuring, so that we can find European structures that are competitive with our American friends."

His ideal is a "Big Bang" merger for all of European industry. "I'll do my utmost to achieve it," he said.

As Mr Bischoff sees it, British Aerospace, France's Aerospatiale and Dassault Aviation, Spain's Casa, Italy's Alenia and Sweden's Saab can only escape becoming subcontractors to giants like Boeing or Lockheed Martin if they team up. Then they can meet their US rivals as equals and form partnerships to conquer world markets.

Political jealousies, legal complications and France's foot-dragging in privatising its industry make it unlikely that a single European company will appear anytime soon, according to most analysts. But as momentum for a restructuring begins to build, Mr Bischoff has the credentials to be the prime mover.

He can take credit for restoring Dasa to profit since taking over from Jurgen Schrempp in 1994. With DM15bn (pounds 5.2bn) in sales in 1997, Dasa makes civil jets through its 38 per cent stake in Airbus; builds combat aircraft under the Eurofighter umbrella, makes helicopters with Aerospatiale through Eurocopter and has activities in satellites, missiles and rocket launchers.

Industry analysts and colleagues describe Mr Bischoff as very different from his predecessor at Dasa, Mr Schrempp, now chairman of Daimler-Benz.

While Mr Schrempp is charismatic, aggressive and ego-driven, the 56-year- old Mr Bischoff is a low-key personality with a sharp mind for finance.

He studied law and economics and began his career at Daimler-Benz in the car division. He worked in financial areas of various international projects before becoming the chief financial officer for Dasa

in 1989, working under Mr Schrempp.

Mr Bischoff inherited a company haemorrhaging money from a combination of weak military spending, a civil aerospace slump and a weak dollar. To steer it back to profit, Mr Bischoff had to axe 10,000 jobs - more than 10 per cent of the workforce.

He also had to clean up his predecessor's $2bn (pounds 1.2bn) investment for a controlling stake in Fokker, hoping it would make Dasa the automatic leader of Europe's regional jet market.

Since reviving Dasa, Mr Bischoff has also become the chairman of the Airbus supervisory board. That puts him in the hot seat to steer the group's four partners - Daimler, Aero-spatiale, British Aerospace, and Spain's Casa - from a risk-sharing partnership to a stand-alone entity that owns plants and builds aircraft.

"Bischoff single-handedly got Dasa back under control," says Doug McVitie, managing director of Arran Aerospace, an aviation consultancy based in Scotland. "The next logical stage is to bring the same benefits to an integrated European defence industry, which we're moving toward. And he's in the best position to do it."

Transforming Airbus into a stand-alone company is a crucial move if it is to match Boeing in sales and maybe go public in 2000. But quibbling over valuation of assets has already forced the group to let slip its 1 January 1999 deadline.

Such delays will only make it tougher to pull things together on the defence side. Europe's political leaders have asked industry to use Airbus as a model for a sweeping industry reorganisation.

The German executive could also find his life complicated by a new development. Dasa's parent company, Daimler-Benz, recently announced plans to buy Chrysler, creating the world's fifth-largest car company. He will feel increased pressure to generate profits from the aerospace arm, although Mr Schrempp has said he has no intention of selling Dasa.

Mr Bischoff certainly believes Dasa will stay with the combined Daimler- Chrysler and sees being part of such a large company - it will have a market capitalisation of more than $90bn - as a boon. "With a larger base, you can shoulder larger projects."

As one of the two major partners in Airbus, Daimler-Benz must begin weighing the potential of investment in a new, 600-seat superjumbo that Mr Bischoff believes Airbus must produce to break Boeing's monopoly at the top end of the aircraft market. Development costs will be $12bn, and analysts question whether Airbus can raise that sum.

Mr Bischoff also has potentially big ambitions for the US market. If Lockheed Martin is permitted to buy Northrop Grumman, as it is trying to do, he said it would assuredly be forced to divest certain activities and he would be eager to buy the defence electronics interests.

Copyright: IOS & Bloomberg