Whether it is clever politics, a knee-jerk reaction or just well-meant advice, the "closed" sign has gone up in the window of the transatlantic merger diner at which Europe has been trying to book a table since merger-mania gripped the industry earlier this year.
Clever politics, perhaps, because Washington wants to witness - and assess - the full fall-out of Europe's spate of cross-border mergers before it entertains any structural ties with a financially vulnerable post- merger US defence industrial base.
A knee-jerk reaction, possibly, because the US Department of Defense (DoD) has been taken by surprise by a resurgent, and increasingly aggressive, European industry. That despite the fact that the USA has its ear firmly to the ground in Europe and the Pentagon-led Defense Science Board has had well over a year to prepare its report on Globalisation and Security, aimed at defining a policy for tackling sensitive security issues resulting from cross-border mergers. The "closed" sign will now foil any attempted transatlantic mega-mergers, the DoD may hope, while the USA figures out its gameplan.
Or it may just be well-meant advice based on experience. With multi-billion dollar mergers already under its belt, Washington may be offering brotherly counsel to ensure that its European NATO partners have a dependable defence and aerospace industry with which it can partner in the future - and not a dishevelled, inefficient, unstructured, mess.
Whichever interpretation is closest to the truth, the fact is that the 50 or so top US and European industry executives attending US deputy defense secretary John Hamre's dinner on 25 October were served a rather lukewarm view of transatlantic consolidation which in policy terms never get beyond the hors d'oeuvres.
Three hours of discussions, described as "level-headed and low key", took place over traditional American dishes including coleslaw and catfish, with hardly a nod in the direction of Europe's haute cuisine - or its defence industry.
Not that any snub was intended. The industry leaders were, after all, first-time guests at an annual soirée usually open only to US and European defence acquisition chiefs and NATO armament directors.
Yet, their appetites whetted by the special invite, the Pentagon's European - and US - guests had expected the DoD to lift the lid on its new policy on transatlantic defence mergers, and to reveal how it planned to tackle the thorny issue of technology transfer. Instead the Pentagon's stance has left industry up in the air.
The guest list was impressive. Influential US figures included Northrop Grumman's Kent Kresa, Lockheed Martin's Vance Coffman and Boeing's Harry Stonecipher, rubbing shoulders with European counterparts such as John Weston of BAe, Manfred Bischoff of Dasa and Aerospatiale Matra's Philippe Camus.
Many, though, will have left disappointed. Concern within US Government circles over international defence industrial co-operation remains high, not least because of recent well-publicised technology leaks .
True, US officials made reassuring noises about how they were dealing with "security roadblocks", and the efforts they were making to accelerate export licensing decisions and the technology transfer approvals needed for it to happen. But the usual US intransigence over transatlantic defence trade that has dogged NATO for decades again appeared on the menu.
Hamre, however, was keen to acknowledge the importance of globalisation, suggesting his inability to commit to a new timetable was borne not of caution but the need for Europe's merged companies to go through "the same digestive process" endured by their US rivals.
The DoD, of course, has a point, and Europe must take care to avoid a bad case of indigestion and stick to a diet of healthy restructuring. All the same, in a market economy, the Pentagon should aim to dictate only the rules governing mergers and not the timetables. Restaurant owners provide the menu, but it is the diners who decide what and when to eat.
Source: Flight International
