First Europe, Now the World. MBDA Claims ‘No. 1 In Missiles’ Spot
MBDA Missile Systems arrives at Paris 2005 with a public face that is almost unchanged from Farnborough 2004, or Paris 2003. Sales are up, margins are up and the merger with LFK is so close you can touch it. Really. “We have never been so close to completing the transaction, says CEO Marwhan Lahoud, echoing what MBDA said in 2004, 2003, 2002 all the way back (almost) to 2000 when the deal was first mooted.
It seems almost churlish to point this out. After all, April’s final go-ahead for the $3.4 billion MEADS (Medium-range Extended Air Defense System) design and development contract surely removes the very last stumbling block to LFK’s integration with MBDA. With the value of the German company now assured (the German government is funding 25% of MEADS through LFK), the way must now be completely clear for the smooth absorption of LFK. That should be followed by the eventual acquisition of Germany’s other missile house, the independent-minded BGT (owned by the Diehl group). All joking aside, this will be a milestone event for MBDA and a major achievement for pan-European industry.
For 2004 MBDA is declaring sales of $3.78 billion (up from $2.93 billion) and a return on sales of 6.4% (up from 4%). The company’s order book stands at $16.47 billion. The 25% growth in sales is attributed to the ASTER/PAAMS air defense system, Storm Shadow cruise missile, Meteor and Mica air-to-air missiles, and to improved export sales generally. In 2003 MBDA placed itself second in worldwide guided weapons sales, behind Raytheon. For 2004 MBDA says it has edged ahead, to take the number one spot from Raytheon – followed by Lockheed Martin, Boeing, Diehl, Saab Bofors Dynamics, and LFK. It should be noted that the acquisition of the last three names on that list is already part of MBDA’s game plan.
In 2005 MBDA expects to deliver well over 4,000 weapons. In the longer-term term, the company’s priorities will be arranged around weapons for the net-centric warfare environment; air defense systems, be they ground-based, naval-based or what the company calls ‘extended air defenses’; and the provision of weapons systems for UCAVs.
MBDA remains an export-orientated company, one seeking to maintain its dominant position in the air defense sector while also hoping to repeat the proven sales of weapons like the Exocet anti-ship missiles with their next-generation successors. In the general airborne weapons market, the company is concentrating on the fighter acquisition programs in India, Singapore and Saudi Arabia as significant short-term opportunities.
Beyond that MBDA is working hard to establish long-term strategic partnerships in countries where it sees major opportunities for sales and industrial co-operation. These include India, Turkey, Singapore and the UAE. China is no longer on the current list, although in the past the company has made no secret of the fact that it would consider doing business there, were it permitted. One serious brake on any such plans is the need to secure a place for MBDA systems on the Joint Strike Fighter (for ASRAAM, Meteor, Storm Shadow) and to win more business in the U.S. in general.
The U.S. remains the great blank spot in MBDA’s map — a chart that reads ‘here be monsters’ on the other side of the Atlantic. MBDA is holding to its oft-stated strategy of penetrating the U.S. market through organic and external growth, and forming transatlantic partnerships. Every manufacturer that sits outside the United States, bedazzled by the $500 billion defense spend there, repeats the mantra that the U.S. is the only market worth getting into. However true that may be, the U.S. is putting more and more obstacles in the way of those who wish to do business with it, particularly in the high-tech sector. For that reason MBDA would be well advised to keep aiming for the bright lights, but make sure it has a Plan B. —Robert Hewson
