ROME — As Italy and France edge closer to merging their largest military shipyards, the head of Italian defense group Leonardo has proposed a plan designed to ensure his products are used on future Italo-French warships.
Leonardo CEO Alessandro Profumo outlined his plan to an Italian parliamentary commission this week as Italy’s Fincantieri and France’s Naval Group limber up for talks on integrating their operations in a bid to cut down on the fragmentation that characterizes Europe’s naval industry.
Both sides have said they hope to reach a deal in 2018.
Leonardo typically supplies radars and systems to Fincantieri ships, while Thales supplies Naval Group vessels, begging the question of which firm would get the contracts for jointly built ships in the future.
Observers in Italy fear that Thales would have the upper hand because it holds a 35 percent stake in Naval Group, meaning it would have a seat at the table in talks on choosing systems.
Profumo said the solution would be to give Leonardo a seat at the table, too. The way to do that was to engineer a deal between Naval Group and Orizzonte Sistemi Navali, rather than Fincantieri, he said.
OSN is an existing joint venture between Fincantieri and Leonardo, 51 percent controlled by the former and 49 percent by the latter, which was set up to run the manufacture of Italy’s FREMM frigates.
“In the case of an accord between Fincantieri and Naval Group, it will be necessary to organize measures to safeguard capabilities developed over the years by Leonardo in a strategic sector for the country in which substantial state investments have been made,” Profumo said.
Using OSN as a “vehicle” was the way to safeguard that investment, he added.
Asked on Wednesday about Profumo’s proposal, Fincantieri CEO Giuseppe Bono said: “We will do what the government tells us to do.”
Both Leonardo and Fincantieri are controlled by the Italian state.
Profumo appeared to receive support this week from Italy’s industry minister, Carlo Calenda, who said: “Leonardo is a fundamental piece in this deal — it needs to have the same dignity as Thales, or else this merger will not go ahead.”