The Chinese Art of Aircraft Maintenance

As the clock marks 3.15pm in Xiamen, China, 200 maintenance workers in green overalls pour out of the cafeteria and swarm like ants over a Boeing 747-400 jumbo jet.

It is an impressive display of China's ability to muster many hands to do lots of work -- cheaply.

This is also the new face of heavy aircraft maintenance. Cheap labour has enticed American and European aircraft manufacturers and maintenance companies to set up huge workshops in China in joint ventures with Chinese companies and government.

This is what Air New Zealand claimed it was up against when the airline announced the closure of its wide-body heavy engineering base in Auckland late last year and the loss of up to 617 engineering division jobs.

A compromise struck with workers saved the airframe maintenance work and about 300 jobs. Engines of the big jets are being sent overseas.

Xiamen's Taikoo Aircraft Engineering Company (Taeco) boasts four huge hangars giving it the capacity to work on up to eight 747s plus three narrow-body 737 or Airbus A320 jets at once.

A fifth hangar is under construction and a sixth is planned for the base, about an hour's flight from Hong Kong.

At the time of Air New Zealand's announcement, there were claims the airline's reputation could suffer if it sent planes to be maintained by low-paid Chinese workers.

Taeco chief executive Merlin Swire defends the company, saying there is no comparison between aircraft maintenance and China's sweatshop industries such as textile manufacturing.

Staff work a basic 170 hours a month and, while wages are low, they pay as little as $10 a month for accommodation in a huge complex of 1800 apartments built by the company, featuring guest accommodation, leisure facilities and a kindergarten.

Airlines and aircraft manufacturers demand exacting standards, Mr Swire says. He points to the notoriously risk-averse Japanese airlines, which make up more than half of Taeco's business. "If the Japanese carriers are happy to come to us, we would hope that is because we provide the quality."

Photos on the boardroom walls show a customer base featuring the world's major airlines, including Japan Airlines, Northwest Airlines, Cathay Pacific, Lufthansa, KLM Royal Dutch Airlines, Virgin Atlantic and Singapore.

Among them is an Air New Zealand 747-200 that underwent a heavy maintenance check at Taeco eight years ago.

The 200 Taeco workers in hangar four perhaps represent the biggest vote of confidence from aerospace giant Boeing in the Chinese company's ability.

After 14 years flying more than a million passengers around the world, Cathay Pacific is giving a 747 a new lease of life by converting it to a freighter.

Taeco is the first maintenance company in the world to undertake the 130-day conversion on behalf of Boeing. It is also the first time that Boeing has had such a prototype project done outside of the United States.

"It does imply a hell of a lot of confidence and trust from Boeing," Mr Swire says.

The 747 has already been stripped of its seats and interior fittings. A large cargo door has been fitted to its side and the windows have been plugged, a new stronger floor installed, the upper deck shortened and flight control cables rerouted. Two converted aircraft have already been delivered to Cathay and Japan Airlines.

Taeco has orders to convert 50 747-400s over the next five years. With a total of 688 of the jumbos sold to 41 airlines around the world, the order book is likely to grow as airlines seek to extend the planes' economic lives.

"Broadly speaking you would expect almost every 747-400 in the world to be converted into a freighter," Mr Swire says.

But though Taeco meets all the regulatory standards, working conditions in the hangars fall short of those in the West.

Apart from basic surgical face masks, no one wears safety glasses, hard hats or earplugs, which are mandatory in similar Western facilities.

Taeco has hand-picked its 3000 workers direct from school and university and trained them in its own specialist training facility.

"We train everybody from a clean sheet of paper, we train them exactly the way we want," says Hans Chau, the company's general manager for marketing.

After an initial course the trainees spend two years with Taeco's Hong Kong parent company Haeco to complete their qualifications under experienced engineers and mechanics.

"We have the combination of Haeco's 50-year experience in the MRO (maintenance, repair and overhaul) business from a Hong Kong management perspective, with a local lower cost labour force that we have trained from scratch over the last 10 years."

Mr Swire says there is huge demand for mechanics and engineers in China's burgeoning aviation industry. "The airlines are growing faster than the current capability to supply trained people."

Cathay Pacific, Boeing and Japan Airlines collectively own about 27 per cent of Taeco and aviation arms of the Chinese government and Xiamen City just over another 18 per cent.

Haeco, as 55 per cent owner, is in turn 27 per cent owned by Cathay Pacific and 25 per cent by Swire Pacific. The latter owns 40 per cent of Cathay.

Mr Swire says Taeco will eventually have to diversify into more specialised maintenance and repair services that will attract a premium from customers.

"Clearly the labour cost advantage we have now in Xiamen is not going to sustain for ever as new areas of low cost operations start up. For sure in 20 years' time there are going to be very cheap MROs in India or in interior China."

Local labour costs are already slowly rising as rivals look to poach well-trained workers, but the average salary of an engineer is being kept under wraps.

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