This year's Paris air show arguably comes at the most crucial time in France's post Second World War aerospace history. It now finds itself on the brink of a fundamental restructuring which will change forever the shape of the industry, not only in France, but throughout the whole of Europe.
The encouraging news is that France enters this period of radical change on a rising tide of sales and orders, growing again for the first time since the prolonged depression of the early 1990s. Preliminary results from the industry association Gifas suggest that sales grew by 7%in 1996 to reach Fr108 billion ($19 billion), so ending five years of decline. Industry orderbooks also continued to build for a second year in a row as new-order intake, led by the boom in Airbus Industrie orders, outstripped sales.
France has a good claim to being the second largest aerospace industry in the world after the dominant USA, having edged ahead of the UK in terms of sales during in the early 1990s. Latest estimates suggest that France now accounts for 35% of the total European aerospace industry.
While France has so far maintained sales and an impressive level of research and technology (R&T)spending, the largely state-owned sector has been slower to adapt to the winds of free-market economics blowing across the Atlantic. France has made cuts in staffing levels, with numbers down to 96,000 people in 1996 from a peak of 120,700 in 1990, which in turn has helped to push up productivity. Yet it has certainly been slower than the UK and Germany in implementing the downsizing and cost-cutting strategies needed to keep pace with increasingly lean US competitors, especially in the shrinking world defence market.
Despite the upturn in other sectors and a massive push for export business, French military sales are still falling in the wake of tougher government spending limits and the end of the Cold War. The effect has only been emphasised by the stringent cost controls which France is having to impose on itself to meet the criteria for a common European currency. In short, the industry can no longer count on the large-scale funding for military development and procurement which previously was virtually guaranteed. The country's Délégation Générale de L'Armament has already been totally re-organised to reduce costs and improve procurement efficiency.
The Gifas figures show that military sales fell for the sixth consecutive year in 1996, dipping by another 3.2%. The trend is unlikely to see a serious reversal until deliveries of the Dassault Rafale fighter begin in earnest at the end of the century.
The industry also warns that the latest five-year defence spending plan will simply not allow it to continue the R&T effort at previous levels. Serge Dassault, Gifas and Dassault president, warns that the basic R&T spending has already fallen by 28% over the past eight years. By contrast, the portion of US defence budgets earmarked for R&Thas been on the rise.
Ultimately, the answer to such competitive pressures lies in creating integrated European institutions capable of matching the USA in terms of scale and efficiency. That is dependent on what now emerges from the restructuring.
Source: Flight International
