Mubadala in $5bn deal with Boeing and Airbus

Different aircraft at the Dubai Airshow on Monday. Pawan Singh / The National

DUBAI // Abu Dhabi has cemented its position in the global aerospace manufacturing industry with deals worth US$5 billion to make parts for Airbus and Boeing.

The deals will bring more skilled jobs to the emirate at a time of massive expansion by carriers such as Emirates and Etihad.

The agreements with Mubadala Development announced at the Dubai Airshow came a day after Etihad Airways, Emirates and flydubai placed multibillion dollar orders with the two plane makers.

As those aircraft are delivered, an increasing number are likely to be flying with components built by Strata Manufacturing, Mubadala’s advanced composite aerostructures manufacturing plant in Al Ain.

Boeing will help Mubadala to develop a facility to make high-tech composite materials favoured in the aviation industry because of their light weight and fuel efficiency. Airbus has promised to buy the parts from Strata too.

In addition, Mubadala will supply further composite and metallic aerostructure components to Airbus.

Strata already supplies Boeing and Airbus with parts, but the new deals add long-term value to Abu Dhabi’s vision to become an integral link in the global aerospace manufacturing supply chain and will also develop expertise in aerospace engineering in the local workforce.

When the new plant is operational it will triple Strata’s size, said its chief executive, Badr Al Olama.

“It’s a really important commitment from Airbus and Boeing to grow Strata and it’s also a reinforcement of the kind of credibility they’ve appreciated in terms of cost, quality and timely delivery out of Al Ain,” he said.

“The UAE ranks sixth worldwide in terms of new aircraft orders and number three worldwide in terms of value of new aircraft orders,” Mr Al Olama said. “So it only makes sense that there is a type of arrangement … to do with buying stuff and making stuff in this part of the world as well.

“Strata was a game changer, it started shifting the market from just buying aircraft to actually making parts of those aircraft.”

“Tripling in size means a tripling of all those efforts. So you can see more employment, more training and development for nationals, more investment into the private sector, more diversification and more exports.”

Fabrice Brégier, president and chief executive of Airbus, said aircraft orders from the region supported additional partnership with Mubadala. “What we believe they can do is move up the technology and scale and be one of the leading partners for production of composite aerostructures.”

In all, the extra contracts with the European plane maker could be worth as much as US$2.5 billion.

“We are pleased to strengthen our relationship with Airbus, which reflects Mubadala’s clear commitment to invest in and support the continued development and growth of the aerospace sector,” said Homaid Al Shemmari, executive director of Mubadala Aerospace. Mubadala is an investment vehicle owned by the Abu Dhabi Government.

Strata’s agreement with Boeing increases the long-term role of the company as a tier one supplier to the US plane maker. It gives it the opportunity to supply as much as US$2.5bn in advanced composites and machined metals to Boeing’s 787 Dreamliner and 777X.

“We have always had industrial partnerships in countries we’ve done business in,” said Jim McNerney, head of Boeing. “It’s not just making a reduction in our risk but is mutually beneficial.”

In a further boost to the emirate’s efforts to develop its footprint in the aerospace industry, Boeing and Abu Dhabi Government’s Tawazun Precision Industries have announced a joint venture to set up a new production aerospace surface treatment facility in the UAE, the first such project in the Middle East.

The facility, which is scheduled for start-up in 2016, will stretch over 26,000 square metres in Tawazun Industrial Park in Abu Dhabi and will create jobs for UAE nationals.

“This is a substantial investment. It is one that we expect to have a certified capability up and running by the 2016 time frame,” said Dennis Muilenburg of Boeing.