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Disputes from the United States about the need that Europe plays a greater role in defense, a Fresh rally In the defense stocks of the continent. The demand for tanks, soldiers and ammunition is a matter of course. It is less clear whether the industry is able to benefit from it.
US defense companies are able to deal with state expenditure for robust investor ends, through high research and development spending, scale effects and practical use of technology in the areas of research and development expenditure. But Europe is a fragmented landscape in which different countries procure different specifications. The lack of cooperation costs the block between € 25 billion and EUR 100 billion per year, the European Commission calculates.
The European company scale is at least partially due to the US market, which coincides with two fifths of sales at BAE Systems or more than Europe and Great Britain. At Airbus it is more than a fifth and in Leonardo more than a quarter to 2023.
The creation of a uniform US-style market with almost 30 countries will not happen. However, uniform standards and specifications are quite possible; At least one clutch (generally smaller) countries is on rifle specifications, for example. This could be expanded, which enables more efficient capacity utilization and the expansion of the scale effects.
Likewise, facilitating joint investments across borders would strengthen the supply chains and ultimately reduce the costs of unity. defense The manufacturers rely on part of parts and components and would benefit from agglomeration at a European level.
Consolidation at the top is the stuff of the imagination. Cooperation is not. Pooled resources, be it manufacturing platforms, F&E or joint procurement, all help with capacity and costs.
There are also precedents. Take the Joint Venture of the MBDA rocket production of BAE Systems from Great Britain, France’s Airbus and Leonardo from Italy. The trio is also involved in the consortium, which produces the Eurofighter flagship aircraft. Leonardo and Germany’s Rheinmetall contribute to developing and marketing the new Italian main fighter tank through a 50-50 joint venture.
The challenges of all of these are legion and gaps. When it comes to software, Europe is slightly behind the United States. After all, the technology industry of this country was generated by the Pentagon. German drone and defense AI Palantir -Market capitalization 270 billion USD and its start-up Spawn Anduril, which was allegedly shot for an evaluation of $ 28 billion.
Nevertheless, the dynamics of the industry have increased since Russia entered Ukraine. The European manufacturers have removed far from collecting only large order books, but have introduced efficiency in factories and supply chains. According to industry sources, the equipment times have already improved. They also correct new processes such as 3D printing.
More acceleration is possible. If Ukraine was able to build a drone production from zero to 4 million plus – During the war, it should not go beyond the staling in Europe to close gaps and prepare for a rush of orders.
