Defence Market Trends: Chinks in the Armour?

To take further the issue of how ongoing rows within EADS might well harm the company's long-term effectiveness – together with how Europe has managed, despite the arguments – to challenge the US in so many product areas, it is worthwhile examining just how far the European defence industry has come by simply pulling together.

Indeed, notwithstanding the huge budget disparities in procurement and R&D between Europe and the USA, the Old World's industry has outshone its transatlantic rival in many areas. Which raises the question that if things are going so well, then why is there any urge to change industrial horses in midstream?

A400M

Well, we might be counting chickens before they hatch but the progress made so far with A400M suggests that Europe has broken what can be reasonably regarded as a US monopoly sector dominated, as it has been for so long, by the C-130.

The original seven European A400M partners (180 aircraft) have since been joined by South Africa, and there are prospects for Sweden, Finland (the Nordic nations might pool resources) and countries as far afield as Malaysia, Canada and Thailand to support the project.

Taking this optimistic assumption – hopefully not too optimistic – Airbus Military could well look forward to an orderbook of some 250 aircraft within the next year, all existing customers and potential new ones taken into account. And the longer-term future (Defence Analysis believes that the Airbus Military and Teal Group market forecasts are too optimistic) could well result in an additional 100 aircraft being ordered by the current customers (expect the UK to raise its order early next decade), as well as by new ones.

In comparison, C-130J has 180 orders (117 USA, 25 UK, 22 Italy, 12 Australia, 4 Denmark) but has had a cloud hanging over its future with the threat of programme termination in the 2006 US defence budget. This level of uncertainty does little to reassure potential customers about the product's suitability. Neither does the first export customer, the UK, putting its short fuselage C-130Js up for sale add confidence to the C-130J's long-term prospects.

Tanker Aircraft

A point of reference used by Boeing during the UK's Future Strategic Tanker Aircraft (FSTA) programme was that 98 per cent of all tanker aircraft (USSR excluded) were provided by Boeing, the venerable KS-135 programme to the fore.

Well, with the UK having definitively opted for the Airbus A330, Australia too, and with good prospects in places such as France (as far as can be seen, a shoo-in for an order in 2006-07), possibly the UAE and several Asian countries, Europe has broken a monopoly.

With backing from A310 products for tanker/transports at the lower end of the equation, and now with a developed flying boom refuelling system plus options for A400M tanker aircraft, Europe can challenge US products in export markets. And it is a fair bet that this product area will experience healthy growth in many world regions.

Aster/FSAF

It should come as no surprise to many that a key driver for France when the decision was taken to launch the Aster programme was the pain suffered by France from its ownership of the Hawk medium-range SAM (MSAM) system. As described to Defence Analysis in the late 1980s, the threat was always that those who didn't get on the upgrade train would be left with an unsupportable system.

At the time, there were no other MSAM suppliers outside the USA. And during the late 1980s and 1990s a need grew for this type of system to provide extended area defence on land. This need is, arguably, still growing.

So the fact that by 2007-08, France and Italy will be deploying capable MSAM air defence systems that will also have some ATBM capabilities is a massive leap forward. Yet another US monopoly broken ........[Shown Right: French test fire an Aster 30 interceptor from a truck-mounted launcher]

The same can be said to be true for Aster's naval variants. For, apart from the UK, from where have most European navies obtained their missiles? Even France was using Tartar, a US supplied missile. The fact that with Aster 30, Europe has a valid alternative to Standard for area defence at sea is a major forward step.

Meteor BVRAAM

Until the Meteor BVRAAM contract signing in 2001, there was basically no option with regard to medium range air-to-air weaponry. [Shown Left: Meteor BVRAAM on an RAF Typhoon]

If you operated French-built Mirages, you could use the vastly-more-expensive Mica (three to four times more costly) or earlier generation Super 530 missiles. Otherwise you bought Sparrow or AMRAAM.

But within the next few years – now, it is within the delivery schedules for many customers ordering aircraft between 2005- 08 – Europe has an offering that can compete with and, indeed, trump AMRAAM.

OK, if there is a problem, then it is the initial price. But this is likely to come down, closer to the AMRAAM price range.

European Modular Missile

Not yet a product but it represents a product area that will gain European political attention. Think of the dominance of European anti-tank missiles in the 1970s and 1980s – Milan and HOT ruled the roost, even if more TOWs were sold under government-to-government deals.

That Milan users such as the UK chose Javelin hit home hard [Shown Left: Javelin firing]. But with some seed corn funding, it is possible to see Europe building back in what is now regarded as the battlefield engagement market sector.

The point here is that while Europe should not be crowing from the rooftops – well, perhaps some small display of smug celebration is permissible – the Old World hasn't done too badly in breaking US monopoly holds in certain defence market sectors with its existing industrial structures.

And so the question is put again: if so much has been achieved so far, why, exactly, is there any reason to change?

• EADS Internal Wrangles
• Imminent (sic) Merger of MBDA and LFK
• Singapore Fighter Programme
• EADS Internal Squabble
• UK Defence Market Transparency
• European Procurement Matters
• UK Helicopter Market
• European Industry Rationalisation
• UK Defence Budget Challenges
• US v European Defence Equipment
• US Naval Exports
• Equipment Exportability
• UK Procurement Matters
• UK Command and Control Market
• Defence Industry News
• Defence Diversity

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