In the afterglow of his July Strategic Defence Review, UK Defence Secretary George Robertson will be visiting Farnborough on Wednesday to talk turkey with the aerospace industry about European consolidation and his bid to revamp Britain's much criticised defence procurement system. Tim Ripley reports.
Q What is your view of the progress to date of European aerospace and defence industry consolidation?
A It is widely accepted now that the European industry needs to restructure itself to remain competitive and there is a lot of movement going on. The recent French announcement of the merger of Aerospatiale and Matra Hautes Technologies is a very welcome step. A number of other companies are talking to each other.
Overall then, I am encouraged by progress to date, but it is vital that momentum be maintained.
Q What is the British Government doing to encourage this process?
A Industry must decide for itself what its future size and shape will be, but there is much that governments can do to help the process along. I and my fellow defence ministers from France and Germany, now joined by those from Italy, Spain and Sweden, have signed a letter of intent setting out a plan of action to remove a number of practical obstacles to restructuring. This is an important government-led step to maintain the competitiveness of the European defence industry. My colleague in the Department of Trade and Industry, John Battle, is also holding his own discussions with industry ministers from the same countries.
Q What should the consolidated European industry look like?
A The detailed structure that will emerge from the restructuring is for industry alone to determine, based on the commercial logic of the marketplace.
John Battle and his ministerial colleagues from France, Germany, Italy, Spain and Sweden have agreed a common position defining the political framework within which the industries can move towards restructuring. They agreed that the governments should have no direct influence on the management of the future companies that will emerge and confirmed their support for the approach defined by the partner companies that they should be run on a commercial basis, with a single management structure, have access to private capital markets, be listed on the Stock Exchange and not be dominated by any one individual block shareholder. They called on the companies to resolve as quickly as possible the outstanding issues, and report on progress by the end of next month.
Q What does industry have to do to make your 'smart' procurement concept work?
A The objective of Smart Procurement is to produce defence equipment faster, cheaper and better, and the MoD and industry must work together to achieve that. A key feature in this will be a change from what has essentially been an arms length and adversarial relationship to one where we work together to mutual advantage. The clearest sign of this will be industry and MoD representatives working alongside each other in the through-life integrated project teams. There must be initiatives to make our estimates of project costs and timescales more accurate, agreement on improved commercial practices, the exploitation of new procurement techniques such as concurrent engineering and, importantly, information systems through which we can communicate more readily. So the basic answerto the question is for industry to utilise the latest practices to be as efficient and competitive as possible, and to bring these skills to bear in a closer, Cooperative relationship with MoD.
Q How can the UK aerospace industry contribute to future MOD projects?
A There are a number of new programmes in prospect. The Hercules Rolling Replacement Tranche 2, Short Term Strategic Airlift, Future Strategic Tanker Aircraft , Future Carrier Borne Aircraft, Beyond Visual Range Air-to-Air Missile, Sea Skua anti-ship missile replacement and Future Offensive Air System.
The potential for the involvement of UK aerospace companies in these programmes is significant. All offer substantial opportunities for companies either acting alone or perhaps in partnership with others. But the winner will be those willing to think radically and inovatively, as well as offering genuine value for money, and excellent products or services.
Q What are the prospects for trans-Atlantic defence procurement?
A We pursue cooperation with our allies on both sides of the Atlantic on an equal footing and equal vigour. In other words, we do not favour Europe over the US, or vice-versa. This is essential if we are to avoid the creation of a "Fortress Europe" or "Fortress America". It also allows us to cooperate with whatever nation, or group of nations, has a requirement that matches our own, and ensures that we deliver our armed forces the military capability they require at the right price and the right time.
Source: Flight Daily News
