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PLANNING AHEAD

With defence budgets in decline, electronics provider Selex ES is leveraging its global footprint to keep the sales rolling in

By: Dominic Perry

Selex ES
The company recently won a UN contract to deploy the Falco Evo in the DR Congo

Finmeccanica's biggest operating division by revenue is its defence electronics business comprising Selex ES in Italy and DRS Technologies in the USA. The pair generated a combined revenue in the first half of €2.35 billion ($3.23 billion), outstripping sister companies AgustaWestland and Alenia Aermacchi.

Selex ES was formed on 1 January 2013 following the merger of Selex Sistemi Integrati, Selex Galileo and Selex Elsag, bringing together all of Finmeccanica’s European defence electronics businesses. However, its birth did not come at the best time given the general declines in defence spending and its overall bias towards the military market – though it has a plan in place to rebalance the business by 2018.

In addition to an environment in which budgets are shrinking, orders are taking longer to secure. As Fabrizio Boggiani – marketing and sales director for the airborne and space systems division of Selex ES – notes, the market is “going slower than expected” with procurement “delayed”.

However, the restructure of the business has given it some coping strategies, not least its bigger global footprint through the combined operations of the three companies and increased capabilities.

Another strategy, says Boggiani, is to focus on delivering comprehensive solutions for customers rather than stand-alone products. He points to the recent contract with the UN, which will see the deployment of its Falco Evo tactical unmanned air vehicle (UAV) in the DR Congo to perform surveillance missions in support of the UN’s peacekeeping efforts.

However, Selex has not sold the UAV and ground station to the UN; the company is supplying it, alongside pilots, on a contract basis. This turnkey approach could well become “more frequent than in the past” suggests Boggiani, potentially outstripping the normal procurement route.

“Maybe this is because the requirement is not permanent or that the budget will not allow the entity to buy the system,” he says. “The need is there, but on the other hand there is not enough money in the short term.”

Selex has a growing interest in the unmanned sector, manufacturing everything from micro UAVs to tactical types. Although theoretically it can produce anything up to a weight limit of 1,000kg (2,200lb) – beyond that it strays into the territory of sister company Alenia Aermacchi – its Falco Evo comes in at just 600kg.

As you might expect, it sees an opportunity to push these unmanned systems into the civil sector. It is already engaged with the EU to secure access for UAVs to civil airspace via its Single European Sky Air Traffic Management Research Programme initiative. Boggiani says it is “well positioned” to benefit from any relaxation in the regulations. Additionally, he sees an opportunity to provide systems for parapublic operators, citing police or coastguard services as particularly suitable.

“We are already talking to [civil] customers and organisations with a need to perform missions with mini or micro UAVs,” he adds.

Moreover, faced with the burgeoning use of unmanned systems, Selex sees a growing requirement to provide systems capable of coping with the “absolutely huge” amounts of data produced.

“A UAV flying for 14 hours can rally send to the control station a huge quantity of data. It is important then to exploit that data and transform it into information to be used by another operator,” says Boggiani.

Systems such as its platform-agnostic SkyISTAR are key to this activity, adds Boggiani.

Efforts to integrate different payloads on to its existing products and the development of increasingly sophisticated datalinks are, says Boggiani, more important than adding another UAV to its portfolio.

“Before starting a new programme it is important to reinforce the products and business presence we already have,” he says. “In our definition UAVs are sensor carriers and information providers.”

Relationships with its sister companies are also key. It supplies around 60% of the avionics on the Eurofighter Typhoon combat aircraft, and has a substantial presence on most AgustaWestland programmes, adds Boggiani. It also benefits from sales above and beyond the baseline aircraft – it recently secured a contract with the Republic of Korea to supply key systems including its Seaspray 7000E maritime radar and a defensive aids suite for the navy’s eight new AW159 helicopters.