Persuading even close allies to share sensitive defence technology is never easy. That has been the experience of those who six years ago formed MBDA to bring Europe's missile-manufacturing heavyweights under one roof. But slowly, the BAE Systems, EADS and Finmeccanica venture is evolving into the fully integrated missile house its fathers envisaged when the champions of the UK and France joined with Italy in the same flurry of consolidation that created EADS and the modern Airbus.
Last year MBDA acquired LFK, the German missile firm left out of the earlier merger. Now another big step is taking place. Next month, the semi-autonomous Italian part of MBDA will be fully absorbed into the organisation. Finmeccanica owns 25% of MBDA BAE and EADS 37.5%.
Chief executive Antoine Bouvier, the third Frenchman from EADS to head MBDA, believes integrating the business is desirable not "for its own sake", but as part of a strategy to make MBDA more streamlined to compete with US rivals Lockheed Martin and Raytheon. All three have a $3-4 billion share of a market worth around $12 billion a year outside China and Russia, with Asia and the Middle East the battleground for new business.
A third of MBDA sales are (non-European) exports - up from a fifth in 2002. Breaking the USA has proved hard, despite a subsidiary and willingness to work with local partners. An exception has been the transatlantic air defence system, MEADS, on which MBDA co-operates with Lockheed Martin, but, says Bouvier, the USA "will not represent in the foreseeable future a significant part of our market".
With shrinking defence budgets at home, MBDA, like many European companies, is looking east. "We have had a strong presence in the Middle East for several years and there is a huge potential in India, where we also think there are strong partners to jointly develop new products," he says.
MBDA has a tougher time of it than its US rivals, despite its technological edge, he says. "US budgets are increasing, and there is a single customer. In Europe there are many. In the USA, there is no restriction for industry to restructure to optimise the technological base and improve efficiency. In Europe we have an industrial set-up that is the outcome of a progressive integration of our national companies."
OVERCOMING HURDLES
To overcome these hurdles, MBDA must constantly be "looking for the next applications which will fuel the growth of the missile market in Europe. Our answer has to be innovation" to come up with combined solutions to the region's defence needs. An example, he says, is Storm Shadow/Scalp, the air-to-ground cruise missile, in service with the UK in Iraq and selected by four other countries. "It is emblematic of what we can do. It has combat proven capabilities and shows that we have no technological gap with the USA," he says.
It is up to MBDA's home customers to decide how far they want to push integration of national missile technology, he says. "Our job is to create as much industrial optimisation as possible by combining prime activities and marketing, pooling non-recurring costs and providing best value for money to the customer." Bouvier does not rule out more consolidation to bring the missile interests of Germany's Diehl, Sweden's Saab and Spain's Indra under MBDA, but "there are no discussions". Two business models now exist in the industry, he says, with three global all-rounders and a handful of niche, sub-$1 million revenue players, and "no one in the middle".
Although protecting sensitive technology remains vital for most European states, MBDA, he says, has been a "driving force" in offering ways for nations to share costs of developing complex missiles without losing sovereignty. "We are the most advanced European company on the defence side," he says. "The missile sector is the only one that has recorded this level of integration."
Source: Flight International
