For Britain’s land defence industry, consolidation is the best means to secure the future. Job losses will be unavoidable, but in the long run, UK defence companies could find themselves in a much more important position within the European industry.
How does the rest of the European market shape up? Given the speed at which deals can be struck, as we went to press on Wednesday the scene looked something like this: Germany, which has by far the biggest land forces and the biggest demand for tanks, armoured cars, and the new battlefield taxi, has three principal players, all in different regions and with strong political backing. One of these, Krauss-Maffei, is already a partner with GKN in the EuroKonsortium to build the MRAV battlefield taxi. Krauss-Maffei is understood to be seeking the leading role in any kind of single European land defence grouping to emerge.
France, meanwhile, has GIAT, which remains in state control, and is regarded by many analysts as being overmanned and facing slim order books. GIAT, too, is part of the MRAV consortium.
Last year, many observers would have bet that the German companies would be favourites to drive this part of a consolidated European defence industry. But with Alvis (which had already taken over Swedish maker Hagglunds) and GKN now merging for the manufacture of armoured vehicles and tanks, all bets are off. The balance has shifted slightly in the UK’s favour, and it could move further still. It is now up to Vickers to pull off a surprise.
Vickers has been left licking its wounds after missing out on the MRAV project. It also has one battle tank factory too many. But if it does snap up Alvis and GKN, the three-into-one UK land defence consolidation would look set to be a dominant player in European land defence. Not bad for a country with only a tenth of the number of tanks operated by our German Nato allies.