French trade body chief calls for equality in access to development support
France’s smaller aerospace businesses should be given the same access to state-funded development support in the form of repayable loans as enjoyed by Airbus, says Dassault Aviation chief executive Charles Edelstenne.
Edelstenne, also head of French aerospace industry association Gifas, says state support is vital because margins at small and medium-sized enterprises (SME) are being squeezed by rising costs, a strong euro and moves by aircraft manufacturers to shift financial risk on to suppliers.
“All is not rosy and we are alarmed at [SME] research and development budgets within civil aviation, which have plunged 40% since 2001 and which risk being frozen in 2005,” says Edelstenne.
State-funded project launch aid – in large part limited to large companies such as airframers and engine manufacturers – is an extremely sensitive issue as a trade row between the USA and Europe rages over subsidies for civil aircraft. The European Union and US government have asked the World Trade Organisation to investigate direct and indirect financial support for Airbus and Boeing.
“Despite an increased order book, the profit margins of SMEs are demonstrably down, falling from 9% in 2000 to a projected 2% in 2006, essentially caused by the pressure on prices, euro/dollar parity and the financing of non-recurring costs,” says Edelstenne. “As a result, SMEs in the aeronautical sector are in a highly delicate situation, which can be seen in the rapid increase in the number of business failures, the many takeovers, often by foreign companies.
“In addition, a significant number of SMEs are relocating a part or all of their production overseas,” he says, adding that in the eight months to August, 194 small French aerospace companies went under, against 164 for the whole of 2004.
Edelstenne says repayable launch aid is a “perfectly transparent system whose return on investment has been largely positive” and that it has been essential in the financing of new aircraft programmes. Access to this system of repayable loans for civil programmes is, however, highly limited for SMEs, he adds.
Edelstenne says Gifas will raise these issues at a round-table discussion organised by the French ministry of transport in December in an effort to explore ways of easing difficulties for France’s small to medium-sized aerospace companies. The provision of state financial assistance and the creation of a blueprint for securing better access to export markets will also be discussed, he adds.
AIMEE TURNER/PARIS
Source: Flight International
