June 25, 2008 / 2:06 PM / 11 years ago

UPDATE 2-EADS seeks to calm new Franco-German row

(Rewrites, adds detail, background)

By Tim Hepher

PARIS, June 25 (Reuters) - Airbus parent EADS EAD.PA and unions called for calm between French and German workers at the planemaker’s factory in Toulouse on Wednesday, following tensions as job cuts take hold faster in France than in Germany.

Tensions have been rising on the factory floor in southwest France, as 2,500 German workers rub shoulders with 900 French final assembly workers in an effort to speed up production of the A380 superjumbo, which is running two years behind schedule.

Friction over benefits handed out to German workers, sent to Toulouse to work on faulty bundles of wiring for the A380, were compounded by recent signs that French jobs were being axed more quickly under the company’s Power8 restructuring plan.

Airbus plans to cut 10,000 jobs, equally shared with its suppliers, by end-2010 to cope with a disadvantage against Boeing (BA.N) from a slide in the value of the dollar.

EADS Chief Executive Louis Gallois briefed unions on the progress on job cuts at a European Works Council meeting and acknowledged that job cuts were moving more slowly in Germany.

Both sides said afterward this was to be expected because of tough labour consultation laws governing German companies.

Job cuts have reached 1,806 since the plan was launched last year, compared with a target of 4,419 cuts of permanent job, unions were told, according to data they supplied after the meeting.

Airbus has so far cut 608 jobs in France, not including Airbus headquarters at Toulouse, and 331 in Germany. Excluding attrition, Airbus has cut 492 jobs, including 163 in France through voluntary redundancy, and none in Germany.

German redundancies will start when a negotiating agreement is signed in July and could reach 480 by year-end, EADS said.

Quickest to bow to the job-cutting plan has been Britain which has hit 69 percent of its 2010 target by axing 459 jobs.

Airbus has ruled out compulsory redundancies but is working on further restructuring to find an extra billion euros in savings due to a weak dollar. Details are expected in September.

REPUBLIC OF TOULOUSE

Airbus was hit by sporadic strikes, mainly in France and Germany, last year. The job cuts became a heated issue in France’s presidential elections won by Nicolas Sarkozy and led to political skirmishes between France and Germany.

In Toulouse, some officials still accuse German executives of plotting against French interests at Airbus, a politically volatile company with plants in France, Germany, Spain and UK and which has said it must stamp out nationalism to survive.

Airbus Chief Executive Tom Enders lambasted anti-German sentiment in a newspaper interview earlier this week, following publication of an acrimonious internal note on a French website.

In an apparent bid to reassert authority over local activists, whose militancy has earned France’s aerospace capital the nickname “Republic of Toulouse,” French and German national union leaders and EADS put on a display of unity on Wednesday.

“It’s a small group of managers and maybe some union people who are being very partisan and can’t accept Franco-German co-operation,” said IG Metall union official Ruediger Luetjen during a series of briefings for a small group of journalists.

It was business as usual, however, in a joint declaration published by the unions which blamed Airbus management for fomenting worker tensions simply to drive through Power8.

The German presence in Toulouse stems from efforts to resolve an industrial crisis which began in 2005, when hundreds of miles of wires for each A380 arrived from Germany too short to be installed because factories did not use the same software.

Worse still, the only technical manuals for the wiring were in German, reflecting the production workshare on the plane.

Anxious for a rapid solution, Airbus decided to relocate 2,500 German workers to Toulouse to wire the first 25 planes while working on an automatic process for future production.

Hamburg did not have enough spare staff so a majority were hired from temporary agencies and handed a ticket to France.

Each displaced worker gets 120 euros a day in allowance, so the operation is costing Airbus at least 300,000 euros a day.

Rivalries flared up when French staff complained the German workers had little to do, but this was because the complexity of the work meant shift handovers were not always smooth, said Frederic Agenet, EADS’s head of human resources in France. (Editing by Carol Bishopric)

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