IT SEEMS TO BE SHAPING UP into a battle of master-plans - and therefore one of cultures. On the one hand, there is the master- plan of the supra-national European commercial culture; on the other there is the master-plan of the super- national integrated French culture. The battle is for Thomson-CSF's future; the war is over the future of European aerospace.
Three years ago, it seemed certain that Dasa (then Deutsche, rather than Daimler-Benz, Aerospace) and Aerospatiale would merge their space and missile businesses to form a single powerful business, far stronger than the individual operations of Lagardère's Matra, GEC, British Aerospace and the rest. Since then, the European map has changed remarkably. The space businesses of GEC, Matra and BAe have been combined into Matra Marconi Space and, after an admittedly protracted courtship, BAe and Matra have finally merged their missiles operations into Matra BAe Dynamics.
Now, after years of hesitation, Aerospatiale and Dasa have effectively fallen out. Dasa is linking its future firmly to that of Matra in its bid for Thomson-CSF (the "European option"), while Aerospatiale (still awaiting the consummation of its shotgun marriage to Dassault) is left awaiting the outcome of a combined Alcatel Alsthom/ Dassault counter-bid. The Dasa/Matra/BAe alignment looks like mopping up the rest of the German missiles business (principally by absorbing Bodenseewerk Gerätetechnik - BGT) and perhaps the German defence-electronics business as well, if Dasa succeeds in buying the Siemens defence operations.
That leaves Aerospatiale dependent on a French solution to the problem of growing a missiles business to internationally competitive levels. In short, Aerospatiale has moved from being a driver in the merger stakes to one waiting on the outcome of the efforts of future partner Dassault with its new ally, Alcatel, in the battle for Thomson. Aerospatiale, Alcatel and Dassault still see the future as one embracing a giant, vertically integrated French aerospace/defence combine, perhaps along the lines of a Lockheed Martin. They should be careful of drawing such parallels too closely, however. While Lockheed Martin is an admirable role-model in business terms, it does have the extraordinary advantage that some 80% of its sales are to its own government - a strong home market if there ever was one. That home market, no matter how it is looked at, provides Lockheed Martin with the support necessary to develop the products which it can export to derive the other 20% of its turnover.
The whole reason for the privatisation of Thomson-CSF, as well as the merger of Aerospatiale and Dassault, is that France can no longer afford to be a strong home market for those companies, which must now make their primary living - especially in defence - on the international stage. Where the likes of Dasa, Matra and BAe are effectively expanding their home markets by moving towards cross-border joint ventures and (hopefully) true cross-border mergers, the Aerospatiale/Alcatel/Dassault alignment appears to be arguing the case for a largely French solution, around which only later to build European alliances.
There is nothing essentially wrong with wanting to build up a strong national company, at least in theory. In practice, as the Dasa move shows, the world has moved on and the rest of Europe will not willingly wait until France has gone through another protracted wave of internal restructuring - with all the politics that will inevitably involve. Neither do Dasa, BAe and others want to see rival centres of excellence in Europe's missiles and space markets even if that solved a few internal problems in France.
None of this week's posturings and positionings over defence regroupings may come to much anyway: the whole privatisation programme which has triggered the activity in the first place may come to a grinding halt if a strongly left-wing government is returned in France in the general election recently called for June. If Aerospatiale and Thomson were to stay in government hands as a result, it could only be to their disadvantage. The regrouping and strengthening of Europe's private-sector companies will continue with or without French involvement, spurred on by the consolidation across the Atlantic - but Europe's industry will be much the poorer if France is left isolated.
Source: Flight International
