The Chinese Art of 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.

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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