RPAGF #470 - The giants strike back
#470 - The giants strike back
Westminster.
Rolls-Royce Headquarters.
"President, Boeing, McDonnell Douglas, and Douglas have all terminated our aircraft engine supply contracts."
The secretary rushed in with a telegram, bringing Robert the president the news he least wanted to hear.
"What are their reasons for terminating the contracts?" Robert rubbed his temples and asked.
"According to them, it's because the safety of our engines cannot be guaranteed," the secretary replied, glancing at the telegram in her hand.
Very well, at least they could give a reason.
Robert closed his eyes and pondered for a moment, "Put the telegram down and go back to your work."
Robert leaned back in his comfortable executive chair, silently calculating the losses this bad news would bring to Rolls-Royce.
The aircraft engine business, relying on those meager contracts from the British military, barely covered the maintenance costs of the production line.
It was entirely dependent on those giants across the Atlantic for sustenance, allowing Rolls-Royce's aircraft engine business to operate normally.
However, if they didn't cooperate with Dongda on passenger aircraft, entering this more promising passenger aircraft business, Rolls-Royce would never escape the control of those giants' orders, only getting the scraps they left behind.
Indeed, even though Rolls-Royce poured everything they had, even having to separate the top luxury car brand Rolls-Royce, to create the RB211, and captured the passenger aircraft engine market with the RB211 three-spool engine, becoming one of the three major aircraft engine suppliers, their market value in the main world at the beginning of the new century was only a little over 4 billion pounds due to being limited to this field.
The status of one of the world's three major aircraft engine giants was only worth that much.
Therefore, from Robert's perspective, entering the passenger aircraft market was a long-cherished dream.
Before Dongda Yandu Aviation extended an olive branch, he could only dream about it, but with Yandu Aviation's invitation for cooperation and the support of Dongda's huge aviation market.
Robert felt that if he missed such an opportunity, he would be a sinner to Rolls-Royce!
Unfortunately, distant prospects cannot solve immediate problems.
Now that the rogue eagle's aviation giants have collectively retaliated, his aircraft engine business will immediately come to a standstill.
How can this huge business deficit be made up?
Robert's head was spinning at that moment.
"Director Ren, the cooperation between Yandu Aviation and Rolls-Royce has run into problems again."
Chief of Staff Ye visited, bringing with him Chen Hanyuan, the general manager of Yandu Aviation Industry Corporation.
As one of the key supported aviation enterprise groups, Yandu Aviation Industry Corporation, which bore the hopes of Dongda's rise in civil passenger aircraft, was undoubtedly a key focus for Chief of Staff Ye.
He would naturally handle minor problems himself, but when major problems arose, Chief of Staff Ye still wanted to hear Ren Zhong's opinions and suggestions first.
"What problems are there now?" Ren Zhong asked, somewhat puzzled.
The cooperation agreement between the two parties had been signed for a long time, and their respective assembly plants were under construction in full swing.
In terms of research and development, Rolls-Royce had already formed a team of over 100 people at Yandu Aviation Industry's CAC-120 Technology Research Center to begin research on the European customized A300 model.
According to the plan, the first A300 would be a mixed layout, with the first 5 rows in the cabin changing from a 5*5 economy layout to a 4*4 business class layout, plus 5*19 economy class seats, totaling 111 seats.
This layout would enhance the A300's adaptability to flights for business VIPs.
After all, in Europe, there is much more demand for business travelers, high-level white-collar workers, and bosses than in Dongda.
Although those who fly in Dongda are currently these people, they have not yet evolved to the point where they can demand comfort in aviation.
Coupled with the instillation of egalitarianism in Dongda, it is currently unlikely to differentiate cabin classes on domestic flights.
Of course, when developing international routes next, some zoning will be necessary.
Therefore, the A300 will not only be the main regional jet model in Europe but also the model that Dongda will use to launch international routes, making it the first passenger aircraft of sincere cooperation between the two parties.
Ren Zhong had seen this design, and he thought there were no problems.
Even further in the future, it would be possible to derive a first-class cabin based on the business class.
These changes were only to meet market customer demands and would not significantly affect the airframe or the entire aircraft.
Therefore, Ren Zhong didn't think there were any problems.
"Mr. Ren, the problem is that Rolls-Royce has encountered order cancellations from the rogue eagle's aviation giants, which will lead to the stagnation of their aviation business before future passenger aircraft sales.
There is pressure in terms of funding, and the result of negotiations with the government is that the authorities also have no budget funds to subsidize them, which may lead to a break in the funding chain with our cooperation," Chen Hanyuan explained.
Ren Zhong frowned.
He really hadn't thought of this problem beforehand.
Although this was the other party's problem, it could be completely ignored according to general logic.
However, Ren Zhong was very clear that John's family in Britain really did things to the extreme.
In the main world, Rolls-Royce would soon be conducting research on the RB211 three-spool aircraft engine, and the research budget would exceed from tens of millions of pounds to 170 million pounds, directly leading to bankruptcy, and the Rolls-Royce car division had to be separated before it was reorganized as a state-owned enterprise.
Therefore, Ren Zhong really had to rack his brains to come up with a solution for Rolls-Royce's trouble, and he had to prevent the other party from suddenly going bankrupt before the passenger aircraft was launched and sales formed a positive cycle.
Now, it's still okay for private enterprises to cooperate, even if the rogue eagle side has many opinions, Downing Street can push it as a market behavior of private enterprises, but once it is transferred to British state-owned, it will be different.
"Although we are partners, it is not appropriate for us to transfuse blood to support them."
It seemed that they had already studied many plans, but they really hadn't found a reasonable one.
"It is indeed not appropriate to directly give money subsidies," Ren Zhong nodded.
"Our cooperation with foreign companies, regardless of who we cooperate with, should never use non-commercial means to solve problems that can be solved in a commercial way, otherwise, it will not only give others a pretext but also be detrimental to safeguarding our interests."
"I have two solutions, see which one you think is more suitable for reference."
"The first way is a mortgage loan.
According to our valuation of Rolls-Royce, we can provide international credit to Rolls-Royce through syndicated loans.
According to their current expenses, a loan of at most 100 million pounds, roughly equivalent to 280 million US dollars for a 5-year term, would basically solve their problem.
This method is the simplest and fastest, and the intermediate assessment is also very easy to do."
"The second approach involves Rolls-Royce, which has an automotive division and a close partnership with the British Royal Family. Looking at future development, while it's unlikely to become a mass-market automotive consumer product, it has the potential to become a top-tier luxury automotive brand. The value is self-evident. We could purchase 30% to 50% of Rolls-Royce's automotive division through an automotive joint venture and jointly develop high-end automotive products. This would not only provide them with the capital to develop their automotive business but also help them weather the current difficulties until our Airbus A300 collaboration is launched, solving the problem once and for all."
"Ah, is that possible? Then why don't we simply invest in Rolls-Royce's aero-engine business? I remember Brother Ren mentioning that Rolls-Royce's aero-engines have great potential and could become one of the world's leading aero-engine giants. Wouldn't it be more worthwhile to invest in their aero-engine business?" Chief of Staff Ye said to Ren Zhong with a bright expression.
"I'd like to do that too, but that business isn't something we can get involved in. They won't open up aviation business investment to investors like us," Ren Zhong said with a wry smile.
Rolls-Royce is a treasure trove. If possible, Ren Zhong would love to dig it up and bring it back to Dongda. That way, he would basically only need to provide an idea, and the team could realize everything he envisioned.
Not to mention the EJ200 medium-sized advanced turbofan engine. This engine has high thrust, high reliability, and good maintainability. It is one of the most successful medium-thrust engines in the main world. Using it to replace the current WS-9 would be perfect. If this medium-thrust engine comes out, the F-15 in the Bright Sword world would be born earlier and become a leader among heavy fighters.
It's not just the aero-engine that would jump to the world's top level, but also the marine engines and nuclear power units for nuclear submarines, which would greatly improve Dongda's corresponding capabilities, especially the gas turbine. The MT-30 gas turbine is simply the ultimate power source for destroyers.
If there were even a sliver of possibility, Ren Zhong would not let go of such a world-class engine company.
It's a pity that even if it goes bankrupt, the British Empire will not let this company fall into the hands of others. At most, it will be re-nationalized and supported until it's privatized again at the right time.
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However, there is room for discussion regarding Rolls-Royce's automotive business.
After all, the sensitivity of the automotive business cannot be compared with the aviation business.
"Can Rolls-Royce's automotive business really create a top-tier luxury automotive brand?" Chief of Staff Ye repeated to Ren Zhong for confirmation after a moment of silence.
According to the current timeline of the Bright Sword world, Rolls-Royce has only just begun its cooperation with the royal family. The brand's awareness and reputation have not yet been established. Although it has been an automotive brand for several decades, its current reputation is completely incomparable to its future reputation in the main world.
"I think there's a high probability. The creation of this brand relies on the British Royal Family. These resources are completely unavailable to other automotive brands. Our brand building is still at the elementary school level. If we take advantage of this possible joint venture, we can send a team to learn their brand building and automotive production quality control. In the future, when the time is right, both parties can jointly create a secondary brand based on the Rolls-Royce super brand, which may make up for Dongda's shortcomings in the high-end automotive brand segment," Ren Zhong said. He had studied many Rolls-Royce stories.
Although he can't say he knows everything about this brand, he is aware of the general timeline and future evolution.
Of course, to achieve this, there is still a lot of work to be done, including how to acquire competing brands like Bentley.
If this cooperation is successful, Ren Zhong can suggest starting the encirclement and acquisition of Bentley now.
That way, in the future, in the ultra-high luxury car segment, Dongda can enjoy the profits of Rolls-Royce and the opportunity to create sub-brands, re-establishing the prestige of the two trump cards, Rolls-Royce Phantom and Cullinan, in the Bright Sword world, and then form a high-end automotive lineup with Bentley, with the former focusing on 5 million and above, and Bentley filling the 1 million to 5 million market, competing with the BBA high-end market.
The only question is whether Rolls-Royce will cooperate.
"Dongda wants to join hands with us in the automotive business?" Robert received the results of his subordinates' communication and fell into deep thought after reading the report.
Compared to the aviation business, the automotive business is clearly secondary to Robert.
However, the aviation cooperation involves profit sharing and division of labor on new products, without any asset entanglement between the joint venture parent companies. In fact, the two parties are like a loose production alliance, forming a cooperative and symbiotic relationship around airliners, creating a unified aviation brand, and then dividing the production and sales of products, with sales revenue distributed according to the contribution in production.
Although this cooperative method is somewhat loose, and the coordination work will be very troublesome, it fully guarantees the interests of all parties, especially in terms of technical security. Because the new airliner production line cuts off the direct connection between the respective companies and the new company, the original company's technical secrets are maximally protected.
"Spinning off the automotive business to form an entity, with the entire automotive business valued at £400 million, Dongda is willing to offer £200 million for a 50% stake. This £200 million can be directly taken away by the parent company to develop the aviation business as consideration for the independent operation of the automotive business. Of course, Rolls-Royce remains the controlling shareholder of the independently operated Rolls-Royce Motor Cars," Robert looked at the draft of the cooperation plan, and his heart was obviously racing as he looked at these numbers!
With this £200 million lifeline, he was confident that he could ignore the order pressure from the Big Three across the Atlantic!
With this money, Rolls-Royce would basically have no problem surviving until the A300 goes into mass production.
Once the A300 is in mass production, things will get better for the entire Rolls-Royce company.
Not to mention, even if only ten A300s are produced a year, the Rolls-Royce Group will have no worries about supporting itself.
Of course, the price is also very high, with half of the automotive business being given away.
What to do? Robert also hesitated.
Since there was no other way to go before, Robert had set his sights on Dongda. His original intention was to borrow a long-term loan from Dongda, but Ren Zhong saw through his intentions and put the loan solution as a last resort. In this way, they will be forced to accept the cooperation plan.
Robert looked at the plan and fell into deep thought.
. . . (End of this chapter)