UK: A TRIUMPH FOR EUROPEAN UNITY. - Sir Edward Heath, the former prime minister, sees in Airbus an illustration of the wider possibilities open to Britain when it collaborates with its partners in Europe.

Last Updated: 31 Aug 2010

Sir Edward Heath, the former prime minister, sees in Airbus an illustration of the wider possibilities open to Britain when it collaborates with its partners in Europe.

Birds of Prey: Boeing v Airbus

By Matthew Lynn

Heinemann; 260pp; £16.99

In 1970 there was only one aeroplane manufacturer that mattered: the industrial giant based on Seattle named after its founder Bill Boeing. At that time 90% of the aircraft sold worldwide were American, and Boeing was the biggest of the American producers. Today things could hardly be more different. I read in a paper recently that orders placed with Boeing had been surpassed by another manufacturer. Its name was, of course, Airbus.

Twenty-five years ago, which was when I was handed the keys of No 10 Downing Street, Airbus was only an idea. There were no planes and no designers, managers or salesmen. On 18 December 1970, Airbus Industrie was formally constituted under French law and the chairman and chief executive, along with a few secretaries and support staff, set themselves up in a small office in the centre of Paris. The story since then has been as astonishing as the history of air travel in the 20th century. Both are well told in Matthew Lynn's new book.

Lynn relates an adventure which, starting out in the Saudi desert, takes in princes, politicians and pioneering aviators. Deals are made and unmade (in smoke-filled rooms), pressure is exerted, strong-arm tactics are employed, dreams are realised and shattered. This is the stuff of Boys' Own, and Lynn tells it in just that style. We meet the early enthusiasts like de Havilland, Messerschmitt and Boeing, and watch as a global industry is built up. As a thriller, the book is not short of high-octane excitement. But its central theme is Boeing's rise to global dominance, and its ensuing struggle with Airbus. Lynn vividly charts corporate strategy and counter-strategy as Boeing's hegemony gives way to a titanic struggle between the US and Europe.

When Airbus was established, its founders dared not whisper their ambitions in public. The real world would have laughed at their dreams. It was inconceivable that Europe could provide a viable competitor to Boeing, and even more absurd to think that a European company could one day hope to beat the Americans at their own game.

The success of Airbus is an excellent example of the politics in which I have believed since the start of my career. Indeed, my maiden speech to the House of Commons in 1950 was about the importance of European co-operation. In 1975 my sentiments were echoed by the head of Airbus, who called the company 'a political symbol of what Europeans can do when they are united ... (adding that) these are countries that have been trying to kill each other for centuries.'

The recent history of the aerospace industry serves as a parable for broader economic and political questions. Here was an industry in which American national and corporate power worked in harmony to create a stranglehold on the market place. The size of the industry, and its capital and knowledge requirements, meant that the barriers to entry were huge. Individually, none of the European countries had an aerospace industry which could ever become a major player. The genius of the Airbus idea was that it pooled the resources and talent of different European countries. While Toulouse was to become its home, the personnel came from all over Europe, and components of the aircraft were actually made in countries which had some competitive advantage in that speciality. The working language at Toulouse is English.

The project was never without difficulties. The mid-'70s were dark days, but the struggle to sell aircraft in the face of stiff competition was bound to be tough. The breakthrough came in 1978-79 with success on the 'silk route' to the East. The 1980s were times of consolidation and expansion. The eventual success was a product of aggressive marketing, innovative financial engineering and state-of-the art technology. Airbus actually stole a march on Boeing with its fly-by-wire technology. In 1975 the aim was to capture a 30% share of the world market for new planes. By1994 the head of Airbus was setting out a different goal - to beat Boeing altogether.

Left to the market, the Airbus dream would never have been realised. Adam Smith's 'hidden hand' would have ensured continued US dominance. It took 20 years for Airbus to make its first operating surplus. The most adventurous investor in the City of London would not have sunk private capital into such a gamble. Without government assistance no Airbus plane would ever have left the runway. This must be a lesson to us all.

For Europe, the benefits of Airbus have been numerous. We have what is a very competitive industry that has generated many skilled, well-paid jobs, and pushed forward the frontiers of technology. It has also provided valuable exports and helped to create wealth. Most important, it has shown the possibilities open to us when we work together with our European partners. The success of Airbus must stimulate the search for 'Airbuses' in other industries. It must show that the way for European business - and indeed politics - to challenge the world is through collaboration and consent.

British involvement in Airbus has been similar, in a way, to our political relationship with the European Union. It has been marked at times by hesitancy, scepticism and indifference. From such an attitude no joy - and no profit - can come. It is time for us to believe in the future for British business - and that is a future of co-operation with our fellow Europeans.

1 Understanding Organizations

By Charles B. Handy

Penguin; 480pp; £9.99

2 The Laundrymen

By Jeffrey Robinson

Pocket Books; 352pp; £5.99

3 The Trap

By James Goldsmith

Macmillan; 224pp; £7.99

4 Re-engineering The Corporation

By Michael Hammer & James Champy

Nicholas Brealey; 240pp; £9.99

5 The One-Minute Manager

By Kenneth Blanchard & Spencer Johnson

Fontana; 112pp; £5.99

6 The Age Of Unreason

By Charles B. Handy

Arrow; 232pp; £5.99

7 The Fate Of IBM

By Robert Heller

Warner; 370pp; £7.99

8 In Search Of Excellence

By Tom Peters & Robert Waterman

HarperCollins; 384pp; £7.99

9 The Death Of Economics

By Paul Ormerod

Faber & Faber; 224pp; £7.99

10 Business Accounting, Volume 1

By Frank Wood

Pitman; 544pp; £13.99.

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