In the past few years, the French aerospace- equipment industry has undergone a major restructuring programme involving one-third of its members - an achievement which has run alongside an improvement in its fortunes.
According to GIFAS equipment industry president Jean-Robert Martin (who is also the president of Sextant Avionique) the industry, which remains the biggest in Europe, has responded "extremely well" to the simple dictum, "invest or die". The result of what he says was an "immense effort" by virtually the entire industry was an unprecedented 36% increase in the amount of export business in 1996.
Orders increase
Between 1988 and 1996, the French equipment industry saw its orders increase from Fr24.4 billion ($4.2 billion) to Fr28.8 billion in an industrial climate which saw the share of domestic military orders reduced from 78% to just 52%. The significance of this figure is not lost on industry leaders who, since the end of the 1980s, have succeeded in increasing civil sales from Fr8.68 billion to Fr13.1 billion.
The improvements in productivity reflect the decrease in the number of employees, from 34,800 in 1991 to 26,600 today, a figure which has remained more or less stable since 1994. While there are now slightly fewer companies in the sector, those that remain have developed a wider product portfolio which has enabled them to better penetrate the global markets upon which they now depend for their business.
As with the whole French aerospace industry, the equipment companies are still subject to the continuing problem of the low dollar exchange rate. Edmund Marchegay, president of Intertechnique, says that the recent small rise in the dollar's value has "-given us some oxygen, but the fact is that all of our efforts to improve efficiency can be wiped out overnight by changing global economic conditions. It means we have to think very carefully before we make major investment decisions".
Martin says that the equipment industry has penetrated two major market areas in the past couple of years. First, it won several key contracts with Bombardier, which Martin notes is the only one of the big four airframe manufacturers (the other three being Airbus, Boeing and Aero International (Regional) (AI(R)) to have launched new aircraft in 1995/6. "We had a very good harvest with Bombardier. Many of our members are on board their Global Express, Dash 8-400 and Regional Jet," he says. The second area is in global-satellite navigation, where the industry has "-invested in new products which have penetrated several key markets," says Martin.
Marchegay says that the recession led to a much better dialogue between the equipment and airframe industries, particularly in the definition of new equipment. Over the past five years there has also been what he calls "a more open approach to the outside world-many firms decided that instead of sitting in a chair and waiting for the crisis to end, they would take themselves abroad. For example, our efforts in North America have been fruitful - we have bought several small equipment manufacturers, at the rate of one a year since 1992, and established bonds we didn't have before."
Others, such as Sextant Avionique, have pushed into new markets in India, Russia and other parts of Asia. "I think they have been surprised by how successful they have been," says Marchegay.
He is, however, unsure whether the drive for consolidation, and the resulting creation of huge companies, is a good thing. "Small companies are more flexible, and can adapt more easily to market requirements. They must, however, attack markets that are the right size. Those making the mistake of trying to sell into markets beyond their capacity often suffer badly as a result."
A major effort has been mounted to develop the ability of small- and medium-sized equipment companies (called PMEs in France) to survive in export markets. The 50 or so PMEs account for an annual turnover of more than Fr4 billion, and many conduct business in other areas besides aerospace, where they might offer just one or two high technology products.
Accordingly, in July 1996, GIFAS' equipment industry section launched the "Aero PME" initiative which, says Martin, "-intends to help strengthen the PMEs so they can improve competitively and push into new areas".
Solidarity with PMEs
The hope is also that the larger main companies like Dassault Electronique, Sagem and Sextant will help "carry" PMEs into new aerospace export markets. "It's a simple matter of solidarity," he adds. An example of the kind of support GIFAS provides came in March, when it took 26 equipment companies on a 12-day tour of sites in China. This was the second such visit in two years, and Martin says that "-it gave us an opportunity to meet engineers we would never encounter at the Paris air show".
Marchegay says that he believes strongly that the industry will consolidate, so that in ten years' time "-it may be impossible to tell French, German and UK equipment companies apart". The driving force, as ever, is competition from the USA. "I don't believe in the idea of US dominance. Any European company can prove it is better than its US counterpart," he adds.
Source: Flight International