Walter Birkhan, The place for aviation - Hamburg

Release Date: 2009-10-20

Walter Birkhan, President of The Place for Aviation - Hamburg, discusses creating “Aviation Cluster” as an industry network, and winning the Excellence Cluster Competition in Germany

Hamburg has longstanding strength in the aerospace sector, even before the term “cluster” existed. Why was it important to formalize the term in its relation to the city, and which changes have you noticed before and after adopting this nomenclature?

In former times, the aviation industry wasn’t observed as now. The airplane manufacturers were considered, but there was no focus on the entire industry and its needs. Hamburg recognized the importance of building a network among the industry, its associations and the administration to discuss common objectives and adjust activities as being in one boat. It resulted in building up the Aviation cluster network of Hamburg by developing the so-called weak accelerators like qualification and R&D programs, and networking platforms. Marketing and PR campaigns have been launched because Hamburg is worldwide known for its port, but not necessarily for its aviation industry.

The word “cluster” itself has become trendy, with regions worldwide adopting the term in numerous ways; what in your opinion does it take to make a true cluster, in aviation for instance?

In our view, it was very important to generate a strong network in order to reach a common understanding about the objectives between the players in the industry, administration, universities, and suppliers. Thus confidence and trust have grown over a period of at least six years as well as a base for creating synergies. This was especially crucial because we have two players in Hamburg which are truly global companies with global goals, and it was important to get their support as well as of the airport together with the SME’s for building this regional cluster with worldwide respect in a win-win situation. This mindset was, in my opinion, also the reason for winning the excellence cluster competition in Germany, with a very convincing strategy and corresponding projects which have been presented to the jury by the top representatives of the cluster.

In this cluster competition you mention, aviation beats out 33 other sectors. What was it about the proposition that made it stand out over the others?

It was the proposition that Hamburg will follow the future strategy of “New Flying”: more economic, more ecologic, , more flexible, more reliable and more comfortable.Three landmark projects as well as complementary projects have been defined under this strategy. The key to success was the strong commitment of the core entities Airbus, Lufthansa Technik and the Hamburg Airport alongside with the SMEs and the academia and scientific institutions. This means all projects together reaching a level of €80 million with 50/50 private and public funding.

Would you like to highlight some of those projects in terms of the most important and where the money is being distributed?

The three landmark projects are concentrated on the special competences you find in Hamburg. Airbus takes the lead in ”Cabin Technology and Innovative Fuel Cell Applications”. Lufthansa Technik will manage the project “Extended Maintenance, Repair and Overhaul (MRO) for New Aircraft Generations“ in terms of diagnostics, new detection and measurements methods, new materials, IT tools etc. and the third one “Airport 2030” is led by the airport and the DLR, the German Aerospace Center, aiming at optimizing transport processes at the airport for a better eco-efficiency.

Industry consolidation in the supplier base is only being accelerated in the context of the current economic crisis. How do you view this industry consolidation, and how would you envision it progressing to best benefit Hamburg’s supplier base?

Hamburg has a supplier base of nearly 300 companies, 70% of which consist of service companies offering design, engineering, modeling, logistics, staff contractors, and so on. For smaller companies, there is an effect from the consolidation because not each and every one may deliver directly to the primes like Airbus anymore. Instead they have to develop new marketing strategies to secure their position in a reshuffled supply chain, i.e. if you take the engineering companies, where the base of direct supplier for Airbus has dropped from almost 400 to 10-15 strategic suppliers which then started to build their own supply chain including offshore partners. Other SME suppliers developed new products and services for different primes and aviation markets like MRO, retrofit, refurbishing, and general aviation with new challenges but also opportunities.

You mention the large number of suppliers in Hamburg, many of whom are present for historical reasons. How important is the city to the European aviation and aeronautical industry, and how does it remain an attractive location to situate business?

Hamburg is one of the most important pillars of the aviation industry in Europe, because of its combination of competences: the system technology and final assembly (FAL) of the A320 family (more 200 planes a year) and the final interior assembly of the A 380 at the Airbus Site. Then the most important divisions like engine repair, overhaul and the VIP completion centre of wide-body planes at Lufthansa Technik, and the most modern and efficient down town Airport of Hamburg with perfect connectivity and accessability. They play together with the SME’s offering services, equipments, logistics, and contract staff as well as the academia and scientific institutions as a source for applied aviation science.

In general, strategies of globalization have seen engineering and design in more advanced economies, with assembly and lower-level functions sent to lower-cost countries. Now, with China’s ARJ-21 program, Airbus final assembly plant for the A320 series, and a desire for commercially viable 150-200 seat aircraft within a decade, what implications does this trend of countries like China moving up the value chain have for cities like Hamburg?

On the one hand, it is a huge challenge for Hamburg-based suppliers, but on the other hand there are quite some chances, because in the future China is going to buy a large number of aircrafts and will be a respectable producer of aircrafts. The new final Airbus assembly line in Tianjin has been build after the model of the FAL in Hamburg and has already attracted some suppliers from here. Others have already built business relationships to other aircraft manufacturers in China. Long term business relations with China have been established by Lufthansa Technik and its joint venture with Ameco Beijing. The business partnership between Hamburg and China is based on a long and fruitful tradition especially in trade and logistics. Shanghai is the sister city of Hamburg. We would like to extend this to the aviation industry in the future.

Of course, Hamburg counts partnerships not only with China, but with Europe and the US as well. However, oftentimes during economic crises, countries adopt a protectionist instinct. How do you see the economic crisis impacting the cooperation and partnerships between clusters and trading partners?

We would regret if any side is going to build up trade barriers. From the European side, and Hamburg in particular, this it is not intended. The Aviation Cluster of the Hamburg Metropolitan Region has initiated the European Aerospace Cluster Partnership (EACP) which aims at sharing know-how and pursues joint projects in terms of skills& training, funding and internatiolalisation. 27 European aerspace cluster partners make use of this cooperation platform among others the aerospace clusters Aerospace Valley and Pôle Pégase from France as well as the Italian aerospace cluster CampaniAerospace with whom Hamburg already has bilateral cooperation agreements.

As your mission statement says, the institution and its partners endeavour to make flying more environmentally friendly, economical, safe, comfortable and flexible. Of these four categories, which is the most important for the long-term sustainability of Hamburg’s aviation industry?

It is important to reach the target with multiple disciplines: Hamburg has developed a special competence in aircraft interiors, and we believe that this is sustainable for the future. The global market outlooks are very promising because the world aircraft fleet will continuously increase, and the cabin is being changed three or four times over the entire lifecycle of a plane. To boost innovations in this field we are in the process of erecting a new Centre of Applied Aviation Research. This infrastructure project is initiated by the City of Hamburg and will be privately operated. But also eco-efficiency has become a very important issue. Consider fuel cells as a substitute for the APU (Axiliary Power Unit) to label another strong competence of ours. But also new MRO measures and the efficiency of the aviation transport system will deliver their part to reach the goal.

New aircraft generations will be built of weight-saving materials like CFK. In this respect we are also very good positioned in the Hamburg Metropolitan Region at the CFK Valley in Stade. Further R&D investments in this field have been implemented.

What role do you see Hamburg playing in the future of the worldwide aviation industry?

Hamburg wants to maintain, accelerate and extend its market position internationally. This would only be possible via innovation in products and processes. We envision Hamburg to be center for education, qualification, and training in aviation related professions. We have several technical universities with aviation related faculties in the region, as well as R&D institutions, and we’re going to establish the new Hamburg Center of Aviation Training (HCAT). The industry as well as universities and institutions for vocational training will stick together at one spot to build up educational schemes for technicians in the aviation industry.

When do you expect China to build an aviation industry of its own?

Europe’s aviation industy was very successful in selling modern aircrafts to China and therefore local content production is almost inevitable and helps the country to strengthen their know how. With the new Airbus FAL in Tianjin under operation and the development of new aircrafts China has taken bold steps into the future. The formation of the COMAC group for international marketing is logic. At this point of time developing, manufacturing and marketing wide-body airplanes in China seems to me quite ambitious but very likely in the long run. It will be challenging for the European aircraft industry to take up the pace and keep the lead in the future. But fair competition is a good stimulus for both sides.

What is your final message to send on behalf of Hamburg city and the aviation industry to China, Hamburg’s sister city of Shanghai, and the aerospace industry as a whole?

Hamburg has accomplished a state of being the cutting edge cluster in Germany. We’re going to develop international partnerships, and we look forward towards the cooperation for a mutual benefit with China in the future. We wish the people in aviation industry in China good luck and the Tianjin FAL - very successful operations.

Company:	The place for aviation - Hamburg
Position:	Clustermanager Service, PR, Marketing
Country:	Germany