European defence firms need global campaign strategy

The war in Kosovo has shown up only too well the differences in capability between the European armed forces and those in the US – and how we manage, or fail to manage, our defence industries. According to US research institute the Rand Corporation, the operational capacity of the European defence industry is a tenth […]

The war in Kosovo has shown up only too well the differences in capability between the European armed forces and those in the US – and how we manage, or fail to manage, our defence industries. According to US research institute the Rand Corporation, the operational capacity of the European defence industry is a tenth of that of the US, but our defence spending is disproportionately high, at half the level of the US. Not surprisingly, about three quarters of the 1,000 or so aircraft in service in the war are American. Around 50 of the observation satellites that can be used are American. One is European.

It’s not just about budgets, either. Defence budgets have been falling across the board over the past 10 years, in the US as well as Europe. But the US industry has managed to restructure into four super-groups, which have cut costs to compensate for falling budgets. Not so in Europe, where despite goading by national governments, there are still more than a dozen big defence companies. Establishing common ground for what each plane, tank or ship should do is also proving difficult, causing national parties to pull out. Hence the collapse of the Horizon project.

If it is such a strain to push the national players into business cooperation, then the most effective way forward is to relax the notion of creating a strong European defence industry as a flag-waving rival to the US industries, and push instead for global link-ups. After British Aerospace’s merger with Marconi, why shouldn’t Dasa or Thomson-CSF forge links with US partners? The best deal for Europe as a consumer and user of military systems is to find coherently organised suppliers that can deliver on time and to budget, rather than forming a one-off consortium for each project, which is then stymied by bickering among the politicians.