European defence companies asked to merge
Dec 8, 1997
In an effort to compete against US defence companies, the UK, French and German governments have called on European defence companies to merge into a single company.
In the last year, a number of American defence companies have merged into "mega" defence companies. The British, French and German governments have become increasingly concerned at the lack of rationalization in the European defence market as too many companies compete for too few orders.
Hence their trilateral statement calling for a restructuring of Europe's aerospace and defence sector. The governments have called on three companies in particular, British Aerospace (BAe), Aerospatiale and Daimler-Benz Aerospace to come up with proposals to integrate their civilian and defence operations before March 31, 1998.
Sighart Nehring, a official in Chancellor Helmut Kohl's office told reporters in a press conference today, "It would be desirable to have one company".
The statement calls for "Europe to improve its commercial position in the world and reinforce its security and guarantee that it plays fully its role in its own defence."
A statement from British Aerospace welcomes the plan but remains coy on whether the company is talking to its competitors. Chief Executive, Sir Richard Evans, said "We welcome the Trilateral statement which confirms and reinforces the urgent need for a restructuring of Europe's Aerospace and Defence Sector and the commitment of our own Government to this issue."
However, the British Manufacturers Association whose members include British Aerospace and GEC, said France must first commit to privatizing its aerospace industry before any proposals can go forward.
British Aerospace's managing director, John Weston, has called in the past for such a pan-european merger, but has publicly stated that the French government's stake in Aerospatiale and Dassault would be an obstacle to such a scheme.