The European defence industry could be guided into further consolidation by efficiency studies expected to be undertaken by the new European Defence Agency (EDA).
The agency, set to be agreed on by European governments next month, will act as a "systems integration house" for joint procurement deals involving European Union countries. Its remit is currently still being defined, but a member of its creation team, German director general of armaments Hilmar Linnekamp, says the agency will be "a forum for governments to moderate debates over industrial participation". Speaking at a conference organised by the EDA, Linnekamp said workshare deals often breach European competition rules, but are permitted on the grounds of national interest. In future, the agency will force co-operating nations towards "less fragmentation" of production, to deliver competitive products, he says.
Alexander Nicoll, senior fellow for defence industry and procurement at the International Institute for Strategic Studies, says the Eurofighter consortium's four final assembly lines are an example of inefficiencies in an unconsolidated European industry. Nicoll says the EDA should use any project management tasks it is awarded for future large programmes to make sure such duplication does not happen. Privatised industries should also be freed from political interference to speed up consolidation of the entire supply chain. "No European manufacturer makes a decent return on its defence business and shareholders will eventually move their funds elsewhere if European industry continues to resist transformation," he says.
Some countries are very keen to retain controls on export licensing, and as the agency's creation requires unanimity, these controls are likely to remain with the member states, says Linnekamp.
Europe's military spending only represents around half of the US defence budget, but only of around one-third of the value, says Linnekamp. Budgets are unlikely to increase over the medium term, so the only way for Europe to close the gap is to improve efficiency by consolidation and better work share planning, he adds.
JUSTIN WASTNAGE / BRUSSELS
Source: Flight International