European Defense Industry Evolution

Extract

[...] The diversification of activities of defense industries varies from company to company. In fact, companies like Airbus Group no longer generate in 2015 only 18% of their turnover in defense, while this proportion still reaches 52% for Thales and 65% for Finmeccanica. The British BAE System remains a "pure" defense company with 93% of its turnover generated by defense activities"13. b. Product diversification: emergence of ICT The search for technological duality is also favored by the rise of ICT, which modifies the nature of military production and in particular the defense electronics sector. [...]

[...] As a result, we can legitimately ask: What have been the developments of the European defense industry after the 1990s and what are they due to? To attempt to answer this question, we will analyze in a first part what were the causes that led the European defense industry to reorganize, then, in a second part, we will study the phenomenon of restructuring and concentration that resulted from it. Finally, we will address in a third and final part the process of diversification of the armament industry that intensified after the Cold War. [...]

[...] For example, the Dassault group now has nearly 500 subcontractors, most of which are SMEs and PMEs specializing in the manufacture of specific components (electronic components, high-tech printed circuits . It is also interesting to note that in France, defense companies outsource a significant part of their R&D expenses (approximately 24.5%)11. Over the past thirty years, the European defense industry has therefore gradually transformed under the influence of a restructuring and concentration process. Another phenomenon has also shaken the European defense industry, it is diversification. It is on this last point that we will now linger in a third part. [...]

[...] The European defense industry, which had largely developed during the Cold War, was particularly affected by the end of this period. The collapse of the Soviet bloc at the beginning of the 1990s was accompanied by a rapid decline in defense budgets, leading to a crisis in the armaments industry. Without a prospect of finding new export markets in the Third World countries, which had also reduced their arms imports and developed their own defense industry, the armaments industry had to face the consequences of various economic crises that had led to a decline in defense budgets in many European countries. [...]

[...] Many examples can support our statements. In 1990, the French group Matra and the British GEC created Matra Marconi Space. Another case is that of GIAT-Industries, which concluded an agreement with the German company MTU for the motorization of the Leclerc tank10. The aerospace company has also engaged in other partnerships with European companies to create mixed companies, such as Eurocopter, which emerged in 1992. These alliances have allowed for the sharing of industrial capabilities at the European level and thus the emergence of larger groups on a world market largely dominated by Americans. [...]