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MBDA Chief: Firm Faces Key French Decisions

Mar. 24, 2013 - 03:30PM   |  
By ANDREW CHUTER and PIERRE TRAN   |   Comments
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LONDON and PARIS — Europe’s defense industry, including the missile sector, faces a tipping point as governments weigh decisions this year that have far-reaching consequences on industry and capabilities, according to the chief executive of missile-maker MBDA.

For MBDA, three key program launch decisions and a large Indian deal hang in the balance, Antoine Bouvier told journalists in Paris on March 19 while presenting 2012 results. “2013 will be a turning point for the French and European defense industry,” he said. “We have to get concrete results out of export campaigns. 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.”

In Britain, MBDA’s focus is on delivery of programs under contract, such as the Sea Ceptor naval surface-to-air, anti-air modular missile, said Steve Wadey, managing director of MBDA’s U.K. arm.

“Basic delivery of weapons to the front line is key for us,” Wadey told reporters in London on March 20.

BAE Systems and EADS each own 37.5 percent of MBDA, and Finmeccanica owns 25 percent.

MBDA also plans to launch major U.S. sales campaigns this year. Bouvier declined to give details but said the U.S. market has proved to be tough because of budgetary tension and because non-American companies face obstacles in the sensitive defense sector. For future European capabilities, this year boils down to French launch decisions on three programs: the missile moyenne portée (MMP) medium-range anti-tank weapon, anti-navire leger (ANL) naval helicopter-borne missile and Aster block 1 new technology (NT) air defense missile.

Last year, MBDA submitted a proposal to France and Italy to develop the Aster block 1 NT. The new technology would allow the 100-kilometer-range Aster missile to hit theater ballistic missiles that have a range of 1,000 kilometers. The current Aster block 1 can intercept weapons such as the Scud B, which has a range of 600 kilometers.

Decisions on those programs were delayed from 2012 to 2013 because the incoming French 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 Organisation. The Maitri project is reportedly worth $1 billion for MBDA.

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

On the MMP, MBDA faces an American off-the-shelf rival.

Last June, U.S. officials gave a presentation to French authorities on an upgraded Javelin missile in its cost-reduction initiative version, a defense specialist said. The government-to-government offer was made just after the Eurosatory trade show outside Paris.

The cost reduction would cut the Javelin’s unit cost by 25 percent, and the model pitched to France would have a man-in-the-loop option and a multipurpose warhead, the specialist said.

The U.S. offered 3,000 Javelins under the Foreign Military Sales program but did not contain financial costs, as that requires a letter of request.

A Lockheed Martin-Raytheon joint venture builds the Javelin.

For the ANL missile, MBDA would be ready if the French government gives the green light, Bouvier said.

A program launch would allow France to work with the British Future Air-Surface Guided Weapon (FASGW) (Heavy).

In London, Bouvier said he hoped for a positive decision on FASGW (H) but warned a negative decision by France would have consequences for an Anglo-French defense treaty signed in 2010.

“In the absence of a positive decision, we would have to reassess the level of ambition of the cooperation between France and the U.K., and this is why we are doing our best to make it easier for France,” he said.

“We have proposed a number of options, like reallocating budgets from existing or new budgets, to make a decision easier. We have explained what is at stake and what the consequences of the decision might be,” 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 competencies would be concentrated in the centers of excellence to cut duplication.

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