The most eagerly awaited statement on the future of the aerospace industry is the one which new French prime minister Lionel Jospin did not make at the end of the Paris air show. Jospin, like the US Government will with the Boeing/McDonnell Douglas merger, is going to have to decide very quickly what is to be done with the state-owned French aerospace companies, and how they will be able to work within the rest of the industry. Unlike the US Government, however, Jospin - on the evidence so far - looks like making the wrong decision.

Both the French and US cases revolve around the central tenet that a major industrial nation must have its own independent, full-capability defence and aerospace industry. Only in that way, the argument goes, can a country guarantee that it will have access to the defence equipment that it wants/needs, rather than that which others are willing or able to supply. Only in that way, too, can its industry be free to export to whomsoever it wants. That is, however, a fine, but irrelevant, sentiment.

With the possible exception of the USA, there is now not a single country in the world which can, in proper economic terms, afford to maintain an industry which could satisfy all its aerospace and defence-equipment needs - far less all its defence needs. Not Russia, not China, not the UK, not France, not Israel, not Germany, not anywhere. Some of those countries have the capability on paper to design and build every single component of every modern fighter or tank they need, but none of them can afford to. Even the USA cannot afford to maintain the capability to do it all: despite the best efforts of its home industry, two of its latest training-aircraft designs have European roots; increasing numbers of US defence and aerospace companies are falling into the hands of overseas owners.

The US industry has not suffered as a result of either of these developments: if anything, it is the richer because of them. The US aero-engine business, for example, still has Allison as a major player because it was bought by a UK company, Rolls-Royce. Without that take-over, Allison at best would have disappeared into one of the other major US engine-builders. That lesson seems to cut no ice with many Europeans, however. Even in countries like the UK, which have taken their aerospace industries out of state control, there are limits on the stakes which overseas companies can build up in so-called strategic industries. Had the tables been turned, Allison would not have been allowed to buy Rolls-Royce (although, if R-R and British Aerospace have their way, the current low limits of overseas investment in their stocks will be raised by the new UK Government).

In that, the new French Government may not be as isolated as it might at first appear. That does not make it any more right than at first appears in what it is trying to do by keeping strategic companies like Aerospatiale and Thomson wholly in French hands. Their strategic importance lies not so much with France - which cannot afford to sustain them in isolation - but with Europe and other parts of the world. To most of the companies for which Aerospatiale or Thomson would be an attractive partner, continued state ownership and influence is a positive disincentive to further co-operation.

Those - and other French companies - are already inextricably tied up in international ventures, some of which are being constrained from reaching their full potential because of this local ownership issue.

Airbus Industrie is merely the most prominent example: it can compete with Boeing technically, but it cannot compete commercially because, in part at least, of the French Government's reluctance to loose its hold on the industry that it has nurtured for so long.

The USA is about to clear Boeing's merger with McDonnell Douglas, and the only price it will have to pay as a sop to the Europeans will be a watering-down of largely meaningless, unenforcable "exclusive-supplier" contracts. If the aerospace firms which are not in Boeing's firmament are to compete with it, they need positive action, not posturing, from European governments, not least by loosing the shackles of ownership. In trying to keep these great names French, Jospin runs the risk of ensuring that there are no great French names in aerospace.

Source: Flight International