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Bouvier: 2013 Pivotal Year for MBDA

Mar. 19, 2013 - 02:10PM   |  
By PIERRE TRAN   |   Comments
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Paris — This year will be crucial for MBDA as the European missile maker awaits French government decisions on the launch of three key programs, big budget cuts, all while a vital Indian deal needs to be closed, Chief Executive Antoine Bouvier said March 19.

“2013 will be a turning point for the French and European defense industry,” Bouvier told journalists.

“We have to get concrete results out of export campaigns,” he said. “Major decisions will be taken in France and other European countries on defense policy, including the defense budget, and these decisions will have a significant impact on the way in which the defense industry in France and Europe can develop and maintain its competence and activities in the coming years.”

MBDA also plans to launch major U.S. sales campaigns this year. Bouvier declined to give details, but said the American market has proved tough to enter because of budgetary tension, but also because non-American companies faces obstacles in the sensitive defense sector, he said.

MBDA is 37.5 percent owned respectively by BAE Systems and EADS, and 25 percent by Finmeccanica.

This year boils down to French launch decisions on three programs: the missile moyenne portée (MMP) medium-range antitank weapon, anti-navire leger (ANL) naval helicopter-borne missile, and Aster block 1 new technology (NT) air defense missile.

MBDA last year submitted to France and Italy a proposal for development of the Aster block 1 NT. That would allow the Aster missile to hit theater ballistic missiles that have a range of 1,000 kilometers. The current Aster block 1 intercepts weapons that have a range of 600 kilometers.

Decisions on those vital programs were pushed back into 2013 from 2012 because the incoming Socialist government commissioned a white paper on defense and security, and work will start this summer on the multiyear military budget law.

The key foreign deal MBDA hopes to sign this year is co-development and co-production on a short-range surface-to-air missile (SRSAM) with the Indian Defence Development and Research Organization, under the Maitri project, reported to be worth $1 billion.

A signature on the SRSAM deal would give MBDA a long-term presence in the Indian market, based on an industrial partnership, Bouvier said.

MBDA’s window of opportunity for a signing also will be decided by parliamentary elections in early 2014, which are expected to put a chilling effect on big defense deals.

On the ANL anti-ship and MMP anti-tank weapons, MBDA has taken on risk and invested company money to maintain competences, including employing around 100 engineers on the former project, Bouvier said.

MBDA would be ready if the French government gives the green light on the ANL program. A Paris program launch would allow France to work in cooperation with the British Future Air-Surface Guided Weapon (FASGW) (Heavy) program, he said.

MBDA needs the ANL program to restructure its Anglo-French industrial operations around 12 centers of excellence, based on specialization and implementing the concept of mutual interdependence outlined in the 2010 Lancaster House defense cooperation treaty, Bouvier said.

Sites would not close under the planned reorganization, but engineering competences would be concentrated in the centers of excellence to cut duplication.

In financial results, new orders in 2012 fell to 2.3 billion euros ($3 billion) from 2.6 billion in the previous year, of which exports made up a record high of 1.5 billion euros. Domestic orders totaled a “disappointing” 800 million euros, a company executive said.

Annual sales held stable at 3 billion euros, split 60 percent domestic and 40 percent export.

MBDA’s orders in 2012 and 2011 have underperformed the target of an average annual ratio of orders to sales above 1-to-1, and the company needs to boost new orders in coming years to make up for that, Bouvier said.

The return on sales was above 10 percent.

A consolidation of the missile industry by acquisition, as a response to budget cuts, is not in the cards because such deals take a long time, Bouvier said.

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