EADS CEO Rainer Hertrich: European Armaments Agency needs competencies and own budget
Amsterdam/Berlin, 04 November 2003
Rainer Hertrich, CEO of EADS, is calling for extensive competencies to be given to the planned European armaments agency. "Our procurement policies for the armed forces in Europe need to be thoroughly europeanised. This is the only way that our tight resources can be pooled and therefore used more efficiently and effectively," stated Hertrich on Tuesday at the 'Bundeswehr and Society' forum in Berlin. "The European armaments agency needs real political weight if it is to become more than just another EU authority."
The establishment of a "European Armaments, Research and Military Agency“, which the European Council has planned for 2004, is a first but particularly important step towards greater integration within European security and defence policy. In Hertrich's opinion, the member states ought to be prepared to transfer their national procurement competencies to the new agency. "Only in this way will we be able to reduce the bureaucracy in our procurement procedures. The decisive criterion in ensuring political weight for the agency will be its own budget," said Hertrich.
The agency must be tasked with preparing joint requirement profiles as well as with commissioning and coordinating research and development work, which would finally lead into joint procurement projects. According to Hertrich, who is also President of the German Aerospace Industries Association (BDLI), industry is ready to "cooperate constructively as a partner to the governments."
In particular, there is an urgent need for further action in the area of research. The USA already invests six times as much as Europe in armaments research. "And whilst research budgets in the USA continue to rise, those in Europe remain stagnant. In Germany we have even reached a new all-time low," explains Hertrich. "Today, this is already a serious competitive disadvantage for the defence industry. In the long term, however, this will also have severe negative effects on the competitiveness of European high technology as a whole, if we don't take action now."
According to Hertrich, a joint market also needs joint regulations. In the past, decision-making processes for European procurement programmes were often too long or complicated. "We cannot allow the slowest wagon to determine the speed of the whole convoy. And it is also not right when the smallest programme participant can use a veto to force his will on everyone else," Hertrich stressed.
The agency would also have to be equipped with the funds that would enable it to enforce agreements. "Anyone who wants to withdraw from a programme in midstream should be able to do so – but not at the cost of the other participants," said Hertrich.
Furthermore, the agency should also deal with questions of industrial policy. It should help to guide the necessary restructuring process in the European defence industry: away from the duplication of capacities, which uses up a valuable share of the tight overall resources, and towards the establishment of European centres of competence for defined areas of technology.
Finally, the agency would have to pursue a balance between Europe and the USA in the area of market access for defence technology. While US products have captured a roughly 20 share of the European defence market, we Europeans have taken only approx. 0.3 percent of the US market," commented Hertrich. "This is why in European selection criteria the protection of the technological and industrial base must be given the same high priority as the USA gives to its domestic products."
However, our aim should be to achieve a complete opening of all the defence markets in both Europe and North America as soon as possible. "True competition always produces better results than market isolation and political protection. Here, we should not overlook the fact that the 'Buy American' hardliners are running into opposition in the USA itself, not least from the Pentagon," stressed the EADS CEO.
Hertrich went on to warn against endangering this important project through national narrow-mindedness: "The important thing now is for everyone to understand this European armaments agency is an opportunity to be seized. Only if defence becomes more of a joint European effort we will produce the synergies that are so urgently needed in order to accelerate the transformation process within the armed forces and rapidly equip them with the necessary capabilities.A greater European ability to act would also serve the cause of NATO and the transatlantic alliance. An end to the duplication of work and uncoordinated procurement would be in the taxpayers' interest and greater efficiency in research and procurement would be of service to the defence industry."
EADS is the second largest aerospace and defence company in the world and achieved revenues amounting to € 29.9 billion in the year 2002 and has a workforce of over 100,000. It is a market leader in almost all segments of the business. In it role as systems integrator, EADS is one of the few companies worldwide capable of combining various products and technologies to form complete systems and providing the associated services. The EADS Group includes the aircraft manufacturer Airbus, the world's largest helicopter supplier Eurocopter and the joint venture MBDA, the second largest guided missile producer in the global market. EADS is the major partner in the Eurofighter consortium, is the prime contractor for the Ariane launcher, develops the A400M military transport aircraft and is the largest industrial partner for the European satellite navigation system Galileo. The company has over 70 sites in Germany, France, Great Britain and Spain. It is active in many regions worldwide, including America, Russia and Asia.
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