D. THE CONSEQUENCES OF THE CORONAVIRUS CRISIS: CONTRIBUTE TO THE ECONOMIC RECOVERY BY INVESTING IN THE FCAS
Given the crisis in the aviation industry due to the coronavirus, Airbus CEO Guillaume Faury stated that Airbus's survival was at stake. A recapitalisation fund should be created for the aircraft manufacturer endowed with several hundred million euros (Airbus, Safran, Dassault and Thales), BPI France.
The Armed Forces Minister has also announced a support plan for the defence sector.
The support plan announced by the armed forces minister on 9 June 2020
"To support the sector's businesses, the armed forces ministry will use two tools:
- The first will be €600 million of military orders that we have decided to bring forward.
In this context of this unprecedented health crisis, we have made way to bring forward orders that had been planned for the future in the military programme.
- We will purchase three A330s which will be transformed after the military programme act into MRTTs, i.e. Phoenix refuelling aircraft for the air force. These aircraft will replace the air force's ageing A310s and A340s.
- We will order eight Caracal helicopters to replace the air force's Puma helicopters which are 40 years old on average. Initially, the Pumas were to remain in service until 2028, but, given the circumstances, we have decided to start replacing them in 2023. This will allow the air force to have new equipment and save money on operations.
- Finally, I wanted to ensure that innovation and small and medium manufacturers and businesses were a part of the new impetus that we are giving to our industry. More than €100 million have been reserved for the production of a light reconnaissance and surveillance aircraft and drones for the navy. These drones will be ordered directly from our small and medium businesses.
All these orders meet an existing operational need at our armed forces: we simply want to act faster. These proactive actions will help save more than 1,200 jobs over three years all over France. Half of these orders will benefit the subcontractors of large manufacturers.
A few moments ago I spoke of the big team that we all make up, Team France, and it goes without saying that in a team, everyone has a role, everyone has responsibilities, but success depends on everyone.
We have also committed to facilitating and accelerating payments to the major general contractors. And I would like to insist on one issue: each euro paid by the Armed Forces Ministry must be immediately passed on to the subcontracting chain.
I also expect our industrial partners to offer fair prices. Now is not the time for profits, it is time to save jobs. And I will make sure of it.
I will also make sure that your commitment, chairpersons of defence companies, to maintenance in operational condition continues. Progress has been made since 2017, but it is not yet enough, and I now expect a significant increase in the availability of our aircraft. Without that, the credibility of our defence system is at stake.
Finally, the aviation industry is the flagship of our national economy. It is a pride that shines beyond our own borders. Despite the crisis that we have found ourselves in, we must not give up on our export ambitions. On the contrary, we must redouble our efforts so that our industry can continue to flourish internationally. Naturally, I am counting on each one of you.
We are aware that these orders that we are bringing forward will not fulfil all the industry's needs. That is why are actively continuing discussions to modify our order schedule. In particular, I am thinking of Dassault Aviation, our industrial partner for combat aircraft. The Rafale is an absolutely magnificent aircraft, and I love going round the world to say so. Mister Chairman, like you I am closely monitoring the future of the Rafale industrial chain. I will have decisions to make in the coming weeks, and we will speak of them again.
- The second tool is mainly addressed to small businesses and gems in the defence industry and concerns our ability at the Armed Forces Ministry to take stakes in companies' capital. We are working to double the Definvest investment fund to go from €50 million to €100 million over a 5-year period. €100 million to safeguard companies of strategic interest to our defence through capital injections. The Definvest fund will of course act very closely with the fund whose creation was announced just this morning..."
There are fears that the consequences of the coronavirus-related economic crisis may also lead to a reconsideration of certain defence programmes , in an approach in which they would be balanced against the necessary investments in social or health programmes. However, this would not necessarily be a relevant line of reasoning: investments in defence can contribute to the economic recovery and to safeguarding jobs in France in the supply chain of systems integrators and major equipment manufacturers, because these jobs are not offshore.
Since the FCAS is an international programme and a share of the spending in France should translate into increased activity in Germany and Spain, it would be desirable that the recovery be coordinated between these three countries to maximise the effect in each of them . Additionally, if the programme reaches its export objectives, the economic return on this investment will be even greater.
Furthermore, the FCAS includes a significant aspect of sovereignty for France since the future combat aircraft will carry the airborne deterrent. A significant share of the investment allocated to the FCAS will necessarily bring business to France in this sovereign industrial sector.
Therefore, the FCAS should be integrated into national recovery plans and consideration should be given, together with the two programme partners, to speeding up its implementation with a view to completing it before 2040. This new deadline would also have the benefit of bringing the FCAS's production date closer to that of the Tempest, should it manage to be completed in the timeframe announced.
Proposal : Encourage the three partners to accelerate the FCAS schedule so that it is part of the post-coronavirus economic stimulus plans. Plan for the programme to be completed by 2040 .