World MIC today and tomorrow
End, start here: What are the real numbers and objective facts
In essence, the strategy of mergers and acquisitions is the basis for the growth of the leading Western defense concerns in the last quarter of a century. This trend was particularly evident in the 90 and 2000 years against the background of restructurings and reductions in military spending after the end of the Cold War.
All the major modern giants of the western military industrial complex appeared, as a rule, as a result of the merger of large national and foreign companies. Take a look at the process of formation of these "grandees".
SO THIS WAS IN AMERICA ...
Lockheed Martin. In 1986, Lockheed Corporation acquired the large electronic company Sanders Associates, and in 1993 - aviation production of General Dynamics Corporation, which produced such a top-of-the-line aircraft as the F-16 fighter. At the same time, the electronic and rocket and space corporation Martin Marietta bought the satellite units of General Electric Corporation and the same General Dynamics. And in 1994-1995, Lockheed Corporation and Martin Marietta merged into the Lockheed Martin group (the cost of this merger was then estimated at $ 10 billion). As a result, the largest contractor in the field of military aviation, rocket science and space appears on the American arms market. The new giant continues to take over - in 1996, it buys the electronic business of Loral Corporation for $ 9,1 billion, and in 1998, it was already discussed the merger of Lockheed Martin and Northrop Grumman, but the US government opposed this for antitrust reasons. However, Lockheed Martin is now the largest defense company in the United States and the world: in 2009, its sales volume exceeded $ 45 billion, 42 of which were obtained from military products. The Pentagon accounts for 58% of the corporation’s sales, another 27% (mainly in space) - to other US government agencies, and only 15% - for export.
The status of the main American aircraft manufacturer Boeing went through a chain of acquisitions of famous American aviation companies. In 1960, Vertol Aircraft (which created the CH-47 Chinook helicopter, in particular) was bought, in 1996, Rockwell (which itself had swallowed the well-known North American) - and, finally, in 1997 (for 13 billion dollars) the concern was acquired McDonnell Douglas, the last US competing passenger aircraft manufacturer. McDonnell Douglas itself at that time represented a large aircraft building group, which arose as a result of the merger of McDonnell and Douglas in 1967. In 1984, she bought the Hughes aircraft building division (the main product is the AH-64 Apache combat helicopter). Thus, in the 1997 year, Boeing received not only the McDonnell Douglas passenger aircraft line (soon, of course, “nailed”), but also such important weapons and military equipment as the F-15 and F / A-18 fighters, Apache helicopter, Harpoon missiles and Tomahawk This allowed the corporation to balance its sales. Now it is the largest manufacturer of aerospace technology in the world (sales in 2009 year - 68 billion dollars, of which the defense sector accounted for 32 billion).
Northrop Grumman appeared in 1994 year after Northrop acquired Grumman Aerospace for 2,1 billion dollars (the price offered by Martin Marietta was interrupted). The new concern has relied not so much on the aircraft industry as on the military electronic business, embarking on the rapid acquisition of major US assets in this area: in 1996, they managed to get hold of the leading overseas military radar manufacturer Westinghouse Electronic Systems, then Teledyne Rayan, Litton Industries and up to a dozen electronic and computer companies. In 2001, Northrop Grumman became the leading US military shipbuilder by purchasing Newport News Shipbuilding Corporation (the nuclear aircraft carrier and nuclear submarines supply the Pentagon). Then the turn came to the space rocket company TRW. In 2009, Northrop Grumman sales reached 36 billion dollars, including defense products - by 30,6 billion.
General Dynamics, a diversified holding company, has grown out of the shipbuilding industry, and the Electric Boat shipyard, which constituted its core, is still the main creator of nuclear submarines in the USA. But in 1946, the Canadair aircraft manufacturing company was acquired by Canadair, and in 1953, the American Convair and association was named General Dynamics. In 1985, the purchase of Cessna took place. However, in 90-ies, the corporation changed its profile, selling off its aircraft assets to the corporations Lockheed Corporation (including the F-16 fighter), McDonnell Douglas, Textron and concentrating on the production of naval and land vehicles. In 1982, the corporation bought the Chrysler military division, in 2003, the General Motors military division. As a result, General Dynamics concentrated in its own hands the production of most of the US armored vehicles and at the same time acquired a number of important European armor manufacturing assets - the Swiss company MOWAG (the world's leading supplier of wheeled armored personnel carriers), the Austrian Steyr-Daimler-Puch and the Spanish Santa Barbara. At the same time, in the 1999 year, the holding included the manufacturer of “business jets” Gulfstream Aerospace. In 2009, General Dynamics had 32 billion in sales, of which 26 was in the military sector.
To a large extent, by acquiring core companies in the 90 and 2000, they were able to become one of the leading US defense companies Raytheon and L-3 Communications. The latter in general was able to rise to the status of the seventh largest supplier of Pentagon (13 billion dollars in 2009 year) mainly due to the mass acquisitions of the last decade.
... AND SO - IN THE OLD LIGHTEven more significant are the military-industrial associations of Western Europe, where the narrowness of the domestic markets for military products has become a powerful incentive for the integration of the defense industry at the pan-European or transatlantic level.
A largely unique example is the British BAE Systems. Originating in 1960 year as an association of leading British aircraft manufacturers, a kind of “British Aircraft Corporation” (British Aircraft Corporation), it was transformed into 1977 in the state-owned British Aerospace, in effect becoming the complete monopolist of the United Kingdom in the field of aircraft manufacturing. In the 1999 year, after the privatization, British Aerospace formed an alliance with another British group, Marconi Electronic Systems, which by this time controlled a significant part of the traditional companies of Albion in the field of aviation, electronics and shipbuilding. Established as a result of the merger, BAE Systems actually controlled most of the UK defense industry, securing this position by buying enterprises for the production of armored vehicles and artillery. In the course of the subsequent restructuring, BAE Systems dropped part of its European assets (in particular, its share in Airbus) and began to reorient itself more and more to the attractive broad US defense market. In 2004, it acquired United Defense, the largest US manufacturer of armored vehicles and artillery, in 2007, another overseas company in this field, Armor Holdings. In general, BAE Systems currently receives most of its revenue as a Pentagon contractor, nominally being a British company. The total sales of BAE Systems in 2009 amounted to 34 billion dollars, of which about 18 billion - in the United States.
An example of a purely European supranational association was EADS, which in 2000 included German (DaimlerChrysler Aerospace), French (Ae'rospatiale-Matra) and Spanish (CASA) aircraft building holdings. In the course of further expansion, EADS purchased a part of aerospace assets from the British BAE Systems. In 2009, the EADS sales volume was equal to 60 billion dollars, but Airbus production dominated in it - military products brought only 15 billion dollars.
Another powerful nominally French, and in fact pan-European association of the military industrial complex is the group Thales. It arose after the acquisition of the leading French military electronics company Thomson-CSF by the British firm Racal in 2000 year. Thales became the largest defense contractor in France and the second in the UK (after BAE Systems). It continues its active expansion in the form of buying-in of specialized defense assets in France, in other European countries and in the USA, at the same time expanding its civilian sector. In 2009, the group's sales were estimated at 20 billion dollars, of which defense supplies amounted to 8 billion dollars.
The type of national defense industry association is the Italian holding Finmeccanica, formed back in 1948 under state control and currently in charge of a significant part of the Italian military, aerospace and high-tech sectors. In 2009, the holding's turnover approached 27 billion dollars, more than 13 of which is for military products. Finmeccanica participates in a number of joint projects with EADS, and also expands its expansion into the US defense market, acquiring, in particular, in 2008 for 5,2 billion US dollars of the American electronic military contractor DRS Technologies. It should be noted that Finmeccanica is considered in Russia as a kind of model for creating the Rostekhnologii holding on the basis of Rosoboronexport.
A typical specialized multilateral company can be considered an association for the production of guided missile weapons MBDA. It is controlled by BAE Systems (37,5%), EADS (37,5%), Finmeccanica (25%) and now creates most of the European rocket systems of almost all classes.
The prerequisite for the formation of European military-industrial associations was the active implementation of multilateral projects in the Old World since 60-s aimed at developing and producing various types of weapons and military equipment, primarily in the most complex and costly areas (military aviation and rocket production). Examples include the Jaguar and Tornado fighter-bomber programs, the Puma, Lynx, Gazelle and ЕН101 helicopters (now AW101), the Alpha Jet training aircraft, the Transall military transport aircraft, the Roland anti-aircraft missile system, the MILAN anti-tank missile systems, HOT and TRIGAT, towed howitzer FH-70.
It is necessary to briefly tell about some projects of the military industrial complex of the Old World.
Eurofighter. The largest joint defense project implemented in Europe is the successful, albeit highly protracted, program for the creation of the fourth-generation European fighter, the Eurofighter Typhoon. The twin-engined tactical fighter Eurofighter Typhoon (EF2000) was developed by the same name consortium Eurofighter, formed by the governments of the United Kingdom (now 37% participation), Germany (30%), Italy (19%) and Spain (14%). The direct implementation of the program is carried out jointly by EADS, BAE Systems and Finmeccanica. The aircraft is equipped with specially designed for it bypass engines EJ200, the production of which is conducted by a consortium of Eurojet Turbo GmbH with the participation of the British company Rolls-Royce, the German MTU, the Italian Avio and the Spanish ITP.
The Eurofighter program has been implemented since 1983, but since the beginning of the nineties, it has undergone considerable instability due to economic and political disagreements between the participants and the delay in work. It is constantly shrinking, and as a result, an order for the purchase of 2018 serial machines (469 by Great Britain, 160 by Germany, 140 by Italy, 96 by Spain, and 73 fighter ordered by Saudi Arabia and 72 by Austria) is confirmed nominally by partner countries. . The delivery of the so-called first tranche of 15 aircraft (Tranche 148, 1 - Great Britain, 55 - Germany, 44 - Italy, 29 - Spain) began in 20 and ended by the end of 2003. Aircraft are manufactured on national assembly lines in all four states. From the 2007 of the year, the Tranche 2008 series is being produced, and in the 2, Tranche 2011 aircraft will be produced.
At the same time, there is still no complete clarity with the number of Eurofighter Typhoon purchased, or with their equipment and equipment, as part of the program’s R & D program faces funding constraints and almost all countries have reduced orders for Tranche 3 fighter jets. Launching of the aircraft is constantly delayed, as is the full-fledged integration of the entire weapon system, especially air-to-surface class. For all these reasons, as well as the high cost (up to 140 million dollars per car), the export potential of the Eurofighter Typhoon is still unclear. Now the fighter is taking part in the Indian tender and is being considered for procurement by Oman.
The combat helicopter Tiger is the most ambitious military project Eurocopter. The decision to start its joint (50 on 50) development was taken by the governments of France and Germany in the 1984 year. In 1991, the first prototype helicopter flew. Its further refinement and testing was significantly delayed and took more than ten years, deliveries began only in the 2004 year.
The delay was largely due to the initially large variety of configurations in which Tiger was developed. Virtually every client country wished to have an individual modification that satisfies its specific needs. France and Germany planned to purchase 80 machines (in 2010, Germany announced its intention to cut the purchase in half), Spain - 24.
All versions of the Tiger differ in their aiming and viewing equipment and the types of weapons used. As a result, for example, while three French Tiger had already flown more than 1000 hours in Afghanistan, the Germans had not yet reached combat readiness and were unsuitable for use.
The high price, which is largely the result of a long and complex development process, reduces the possibility of Tiger competition in the market for military helicopters. In terms of combat capabilities, it is inferior to the much heavier and more powerful American AH-64D Apache, but at a price comparable to it. As a result, in addition to the countries - shareholders of Eurocopter, the helicopter was sold only to Australia, which ordered 22 machines.
NH90 is a “generalized” military transport helicopter of a new generation of the middle class, capable of carrying up to 20 soldiers or 2,5 tons of cargo. The initiators of the program were Germany, Italy, the Netherlands and France. For the development and promotion of the machine, NHIndustries was formed, where Eurocopter owns 62,5%, 32% - Italian AgustaWestland and 5,5% - Dutch Stork Fokker Aerospace. NH90 created in two versions - the transport TTH and naval anti-submarine NFH.
The agreement to start development was signed in 1992 year. The flight of the first prototype took place in 1995, deliveries began in 2006. The creation of NH90 was a major success of the European military industrial complex: 529 helicopters have been sold or contracted to date (Germany - 122, France - 61, Italy - 116, Netherlands - 20). An increase in orders by some participating countries, primarily France, is possible. However, Germany in the 2010 year planned to reduce the purchase of helicopters to 80.
NH90, despite its considerable cost (about 20 million euros), quickly gained popularity in the global and especially European market. Since 2004, the car has been ordered by Australia (46), Belgium (8), Greece (20), Spain (45), New Zealand (9), Norway (14), Oman (20), Portugal (10), Finland (20) ) and Sweden (18). Negotiations are underway to sell the helicopter to a number of countries.
Frigates Horizon and FREMM. The development of these ships is carried out by the French company Armaris (a merger of DCNS, previously participated in Thales) and the Italian company Orizzonte (formed by Finmeccanica and Fincantieri).
The project of large Horizon air defense frigates with the Aster air defense missile system is carried out from the 1999, and so far two ships have been built for the fleets of France and Italy, which were commissioned in the 2008-2009.
The frigate class ships in the French and Italian navies were further developed in the more cost-effective FREMM project (Fre'gates Europe'ennes Multi-Missions). An intergovernmental agreement on the development of FREMM frigates, designed to become the main surface combat ships of the fleets of both countries, was signed in 2005 year. Now for the French Navy it is planned to build 11 frigates (for the sum of 7 billion euros), for the Italian Navy - 10. The head French frigate was launched this year and should be commissioned in the 2012. FREMM is considered to be a very strong offer on the world market for ships of this class, one frigate is already under construction for Morocco and a number of countries are showing great interest in it.
FORMATION OF COMMON MARKETS
The narrowness of national arms markets and the prospects for their further narrowing force Western governments in the interest of maintaining the military-industrial complex to promote interethnic defense cooperation between allied and typologically close countries. This leads to the phenomenon of the formation of common arms and military equipment markets. Now we can say that there are two such markets - the transatlantic Anglo-American (Anglo-Saxon) and continental-European.
The Anglo-American common defense market is associated with the increasing overflow of British military-industrial companies over the ocean, where there is an increase in the number of orders they receive. In the 2008 fiscal year alone, ten leading UK military firms signed contracts with the Pentagon for 14,4 billion, with 12,3 billion from this amount accounted for by BAE Systems. In turn, US contractors hold privileged positions in the United Kingdom. So, it is indicative that the tender for the tracked armored vehicle according to the British program FRES won General Dynamics. In general, a significant portion of British defense imports come from the United States.
The close military-technical ties of the United States and Great Britain make us talk about the formation of a kind of common Anglo-Saxon trans-Atlantic defense market with a powerful “diffusion” of the military-industrial complexes of both countries. It is not by chance that BAE Systems and Rolls-Royce have now become essentially Anglo-American corporations and have a tendency to increasingly transfer activity in the United States, from where they receive the bulk of orders and where an increasing number of their production sites are located. Thus, BAE Systems already controls the bulk of US armored vehicles and artillery weapons. Apparently, the complete transition of BAE Systems and Rolls-Royce under the star-striped flag is not far off.
In the 2010 year, after a long struggle with the American "protective" political forces and protectionists of Great Britain, an agreement was reached with the United States, which greatly facilitated the mutual transfer of secret military technologies. This should further expand the military-industrial integration of the two countries and the mutual presence of defense companies in both markets.
British companies dominate foreign mergers in the US defense sector. In 2008, from 18 foreign companies that acquired American military firms, 14 were British. In 2006-2008, British companies invested about 10 billion dollars in the purchase of US defense industrial assets.
In turn, the European Union is taking more and more initiatives to create a single defense market of its member states. Here the movement goes in two directions. On the one hand, the central authorities of the EU insist on opening up the national defense markets of the member countries of the Union for all European defense companies with the elimination of national protectionism in this area and the introduction of uniform procurement procedures. On the other hand, attempts are being made to intensify the joint development and procurement of weapons and military equipment under the auspices of the EU. This is done by the European Defense Agency (EDA) formed in 2004, in which all EU members participate, except Denmark, and also existing since 1996, mainly under the Franco-German aegis, but still with little efficiency the joint European military procurement department OCCAR (Organisme Conjoint de Coope'ration en matie're d'Armement).
Now OCCAR participates in several joint European projects (A400M, Tiger, Boxer, FREMM, Aster AGMS). EDA has also launched a number of joint R & D programs with a wide representation of European countries (creating tools to combat improvised explosive devices, means of detecting weapons of mass destruction, information network systems, etc.) in the last couple of years. Although at present a single European defense market is only being formed, it is indisputable that political pressure in this direction from the European structures will inevitably lead to the emergence of a single military-commercial and military-industrial space of the EU. Which in turn is likely to contribute to the new stage of integration and mergers in the European defense industry.
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