Julian Moxon/PARIS

FOUR FRENCH companies and one from the UK have indicated to the French Government their interest in forming some type of alliance with Thomson-CSF's defence business, once a decision on the structure of the firm is taken.

Dassault, Matra, Alcatel and, surprisingly, state-owned Aerospatiale, along with the UK's GEC, have all made clear their interest, leaving the Government with the difficult decision as to what its next step should be.

The five firms have expressed a desire to buy or co-operate with all or part of the Thomson-CSF defence empire, which straddles airborne and ground radar, defence electronics and systems integration.

If it opts for a rapid privatisation, the Government risks major opposition from the defence ministry, concerned about the possible loss of key strategic capability.

The move to secure Thomson-CSF's future is one of several key restructuring decisions facing the French defence industry as the Government looks for ways of reducing defence spending and making the industry more competitive.

Recent statements by defence minister Charles Millon asking for serious co-operation talks between Dassault and its old rival, Aerospatiale, have added to speculation about the future of the industry.

Studies carried out by Government comites strategiques over the past few months have touched virtually every segment of the defence industry, from the annual budget, to the structure of the armed forces and which weapons they will require.

On 13 February Millon revealed that he sees the future defence industry centred around four "poles", comprising aeronautics, electronics, electromechanical and nuclear, consisting of groups of companies with sufficient critical mass "...to ensure they are in position to negotiate alliances with European companies".

Industrial reconstruction is already under way, with several companies fighting to reduce costs through major workforce reductions and improvements in productivity. Many companies seem unlikely to escape, however, from a spate of mergers and acquisitions similar to those which has taken place in the USA.

Source: Flight International