As evidenced by real numbers and objective facts
Ending, beginning here: As evidenced by real numbers and objective facts
In essence, the strategy of mergers and acquisitions is the basis for the growth of the leading Western defense companies in the last quarter of a century. This trend was especially evident in the 90s and 2000s against the backdrop of restructuring and cuts in military spending after the end of the Cold War.
All 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. Let's take a look at the process of the formation of these "grandees".
SO IT WAS IN AMERICA …
Lockheed Martin. In 1986, Lockheed Corporation acquired the large electronic company Sanders Associates, and in 1993 - the aircraft production of General Dynamics Corporation, which produced such a top-end aircraft as the F-16 fighter. At the same time, the electronic and rocket and space corporation Martin Marietta bought the satellite divisions of General Electric Corporation and the same General Dynamics. And in 1994-1995, Lockheed Corporation and Martin Marietta merge 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, rocketry and space appears on the American arms market. The new giant continues acquisitions - in 1996 it buys the electronic business of Loral Corporation for $ 9.1 billion, and in 1998 it was already about the merger of Lockheed Martin and Northrop Grumman, but this was opposed by the US government for antitrust reasons. However, Lockheed Martin is now the largest defense company in the United States and the world: in 2009, its sales exceeded $ 45 billion, 42 of which came from military products. 58% of the corporation's sales are accounted for by the Pentagon, another 27% (mainly in space) - by other US government agencies and only 15% - by export.
Boeing reached the status of the main American aircraft manufacturer through a chain of acquisitions of eminent American aviation firms. In 1960, Vertol Aircraft was bought (which, in particular, created the CH-47 Chinook helicopter), in 1996 - Rockwell (previously absorbed the famous North American itself) and, finally, in 1997 (for $ 13 billion) the concern was acquired McDonnell Douglas, the last competing passenger aircraft manufacturer in the United States. McDonnell Douglas itself by that time represented a large aircraft building group that emerged as a result of the merger of McDonnell and Douglas in 1967. In 1984, it bought the aircraft division of the Hughes Corporation (the main product is the AH-64 Apache attack helicopter). Thus, in 1997, Boeing received not only a line of McDonnell Douglas passenger aircraft (soon, of course, "nailed"), but also such important examples of weapons and military equipment as 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 equipment in the world (sales in 2009 - $ 68 billion, of which the defense sector accounted for $ 32 billion).
Northrop Grumman emerged in 1994 following the acquisition of Grumman Aerospace by Northrop Corporation for $ 2.1 billion (beat Martin Marietta's price). The new concern relied not so much on aircraft construction as on the military electronic business, starting to rapidly buy up the main American assets in this area: in 1996, it managed to get its hands on the leading overseas manufacturer of military radars Westinghouse Electronic Systems, then Teledyne Rayan, Litton Industries and up to a dozen electronic and computer firms. In 2001, Northrop Grumman became the leading US military shipbuilder by purchasing the Newport News Shipbuilding Corporation (which supplies the Pentagon with nuclear aircraft carriers and nuclear submarines). Then the turn came to the TRW rocket and space company. In 2009, Northrop Grumman's sales reached $ 36 billion, including defense products for $ 30.6 billion.
General Dynamics, a diversified holding company, grew out of the shipbuilding industry, and the Electric Boat shipyard that formed its core is still the main creator of nuclear submarines in the United States. But in 1946, the Canadian aircraft company Canadair was acquired, and in 1953, the American Convair, and the association was named General Dynamics. In 1985, the purchase of the Cessna company took place. However, in the 90s, the corporation changed its profile by selling off its aircraft building assets to Lockheed Corporation (including the F-16 fighter), McDonnell Douglas, Textron and concentrating on the production of naval and land equipment. In 1982, the corporation bought the Chrysler military division, in 2003 - the General Motors military division. As a result, General Dynamics concentrated in its hands the production of most of the US armored vehicles and at the same time acquired a number of important European assets for the manufacture of armored vehicles - 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 1999 Gulfstream Aerospace, a manufacturer of "business jets", entered the holding. In 2009, General Dynamics had $ 32 billion in sales, 26 of which were in the military sector.
To a large extent, by buying up specialized companies in the 90s and 2000s, they managed to get into the ranks of the leading American defense companies Raytheon and L-3 Communications. The latter was generally able to rise to the status of the Pentagon's seventh-largest supplier ($ 13 billion in 2009), mainly due to massive takeovers of the last decade.
… AND SO - IN THE OLD WORLD
Even more revealing are the military-industrial associations of Western Europe, where the narrowness of internal 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 British BAE Systems. Having emerged in 1960 as an association of leading British aircraft manufacturers, a kind of "British KLA" (British Aircraft Corporation), in 1977 it was transformed into the state-owned British Aerospace, in fact, becoming a complete monopoly of the United Kingdom in the field of aircraft production. In 1999, following privatization, British Aerospace formed an alliance with another British group, Marconi Electronic Systems, which by this time controlled much of Albion's traditional aviation, electronics and shipbuilding companies. BAE Systems, created as a result of the merger, actually controlled most of the UK defense industry, consolidating this position by buying up enterprises for the production of armored vehicles and artillery. In the course of the subsequent restructuring, BAE Systems dumped some of its European assets (in particular its stake in Airbus) and began to increasingly reorient itself to the alluring vast American defense market. In 2004, it acquired United Defense, which was the largest manufacturer of armored vehicles and artillery in the United States, and in 2007, another overseas company in this area, Armor Holdings. Overall, BAE Systems currently generates most of its revenue as a Pentagon contractor, while nominally being a UK 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 its further expansion, EADS acquired part of its aerospace assets from British BAE Systems. In 2009, EADS had sales of $ 60 billion, but Airbus production dominates, with military products bringing in only $ 15 billion.
Another powerful nominally French, but in fact a pan-European military-industrial complex is the Thales group. It arose after the acquisition of the British firm Racal by Thomson-CSF, a leading French company in the military electronics industry, in 2000. Thales became the largest defense contractor in France and the second largest in the UK (after BAE Systems). It continues its active expansion in the form of buying up core defense assets in France, other European countries and the United States, while expanding its civilian sector. In 2009, the group's sales were estimated at $ 20 billion, of which defense supplies amounted to $ 8 billion.
A 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, more than $ 13 of which came from military products. Finmeccanica is involved in a number of joint projects with EADS, and is also expanding its expansion into the US defense market, acquiring, in particular, in 2008, for $ 5.2 billion, the American electronic military contractor DRS Technologies. It should be noted that Finmeccanica is considered in Russia as a kind of model for the creation of the Rostekhnologii holding on the basis of Rosoboronexport.
A typical profile multilateral company can be considered the 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 the majority of European missile systems of almost all classes.
A prerequisite for the formation of European military-industrial associations was the active implementation in the Old World since the 60s of multilateral projects aimed at the development and production of various types of weapons and military equipment, primarily in the most complex and costly areas (military aviation and rocketry). Examples include programs for the creation of Jaguar and Tornado fighter-bombers, Puma, Lynx, Gazelle and EN101 (now AW101) helicopters, Alpha Jet combat trainer, Transall military transport aircraft, Roland anti-aircraft missile system, MILAN anti-tank missile systems, HOT and TRIGAT, the FH-70 towed howitzer.
It is necessary to briefly talk about some projects of the military-industrial complex of the Old World.
Eurofighter. The largest joint defense project currently underway in Europe is the successful, albeit long-drawn-out, program for the European "fourth +" generation Eurofighter Typhoon. The Eurofighter Typhoon (EF2000) twin-engine tactical fighter was developed by the Eurofighter consortium of the same name, formed by the governments of Great Britain (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 EJ200 bypass engines, which are produced by the Eurojet Turbo GmbH consortium with the participation of the British Rolls-Royce, German MTU, Italian Avio and Spanish ITP.
The Eurofighter program has been running since 1983, but since the early nineties it has undergone significant instability due to economic and political disagreements between the participants and the delay in work. It is constantly decreasing, and as a result, now nominally partner countries have confirmed an order for the purchase of 469 production vehicles until 2018 (160 - Great Britain, 140 - Germany, 96 - Italy, 73 - Spain, 72 more fighters were ordered by Saudi Arabia and 15 delivered to Austria) … The delivery of 148 aircraft of the so-called first tranche (Tranche 1, 55 - Great Britain, 44 - Germany, 29 - Italy, 20 - Spain) began in 2003 and ended by the end of 2007. The aircraft are manufactured on national assembly lines in all four states. Since 2008, the production of Tranche 2 series aircraft has been going on, and in 2011 Tranche 3 aircraft will be produced.
At the same time, there is still no complete clarity either with the number of purchased Eurofighter Typhoons, or with their equipment and configuration, since part of the R&D program under the program is facing funding restrictions and almost all countries have reduced orders for the Tranche 3 series fighters. as well as the full integration of the entire complex of weapons, especially the air-to-surface class. For all these reasons, as well as the high cost (up to $ 140 million per vehicle), the export potential of the Eurofighter Typhoon is still unclear. Now the fighter is taking part in an Indian tender and is being considered for purchase by Oman.
The Tiger Combat Helicopter is Eurocopter's most ambitious military project. The decision to start its joint (50 to 50) development was made by the governments of France and Germany back in 1984. In 1991, the first prototype of the helicopter flew. Its further refinement and testing dragged on significantly and took more than ten years, deliveries began only in 2004.
The delay was largely due to the initially wide variety of configurations in which the Tiger was developed. Almost every customer country wished to have an individual modification to suit its specific needs. France and Germany planned to purchase 80 vehicles each (in 2010, Germany announced its intention to halve the purchase), Spain - 24.
All Tiger versions differ among themselves in sighting and survey equipment and the types of weapons used. As a result, for example, while three French Tigers have already flown more than 1000 hours in Afghanistan, the German ones have not yet reached combat readiness and are unusable.
The high price tag, which is largely the result of a long and complex development process, makes Tiger less competitive in the combat helicopter market. 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 has been sold so far only to Australia, which has ordered 22 machines.
The NH90 is a "common NATO" 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 program was initiated by Germany, Italy, the Netherlands and France. For the development and promotion of the machine, the NHIndustries company was formed, where Eurocopter owns 62.5%, 32% - Italian AgustaWestland and 5.5% - Dutch Stork Fokker Aerospace. NH90 was created in two modifications - transport TTN and naval anti-submarine NFH.
The development start agreement was signed in 1992. The flight of the first prototype took place in 1995, deliveries began in 2006. The creation of NH90 was a major success for the European military-industrial complex: to date, 529 helicopters have been sold or contracted (Germany - 122, France - 61, Italy - 116, the Netherlands - 20). An increase in orders by some participating countries, primarily France, is possible. However, Germany in 2010 planned to reduce the purchase to 80 helicopters.
NH90, despite its significant cost (about 20 million euros), quickly gained popularity in the world and especially the 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 other countries.
Frigates Horizon and FREMM. The development of these ships is carried out by the French company Armaris (DCNS association, previously Thales also participated) and the Italian company Orizzonte (formed by Finmeccanica and Fincantieri).
The project of large air defense frigates Horizon with the Aster air defense system has been carried out since 1999, and to date, two ships have been built for the fleets of France and Italy, commissioned in 2008-2009.
Further development of the "frigate" -class ships in the French and Italian navies received in a more moderate cost project FREMM (Fre'gates Europe'ennes Multi-Missions). An intergovernmental agreement on the development of FREMM frigates, designed to become the main surface combatants of the fleets of both countries, was signed in 2005. Now for the French Navy it is planned to build 11 frigates (worth 7 billion euros), for the Italian Navy - 10. The lead French frigate was launched this year and should enter service in 2012. FREMM is considered 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 other countries are showing great interest in it.
FORMATION OF COMMON MARKETS
The narrowness of national arms markets and the prospects for their further narrowing are forcing Western governments in the interests of supporting 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 AME markets. Now we can say that two such markets are emerging - the transatlantic Anglo-American (Anglo-Saxon) and the continental-European.
The Anglo-American common defense market is associated with the increasing "spill-over" of British military-industrial companies overseas, where there is an increase in the number of orders they receive. In fiscal 2008 alone, ten leading UK defense companies signed contracts with the Pentagon for $ 14.4 billion, with BAE Systems accounting for $ 12.3 billion of this amount. In turn, American contractors have a privileged position in the United Kingdom. So, it is significant that General Dynamics won the tender for a tracked armored vehicle under the British FRES program. Overall, a significant portion of Britain's defense imports come from the United States.
The close military-technical ties between the United States and Great Britain make us talk about the formation of a kind of common Anglo-Saxon transatlantic defense market with a powerful "diffusion" of the military-industrial complexes of both countries. It is no coincidence that BAE Systems and Rolls-Royce have now become essentially Anglo-American corporations and tend to increasingly move their activity to the United States, from where they receive the bulk of orders and where an increasing number of their production sites are located. For example, BAE Systems already controls the bulk of American armored vehicles and artillery weapons production facilities. Apparently, the complete transition of BAE Systems and Rolls-Royce under the Stars and Stripes is not far off.
In 2010, after a long struggle with the American "protective" political forces and the protectionists of Great Britain, an agreement was reached with the United States, which greatly facilitates 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, of the 18 foreign companies that acquired US military firms, 14 were British. In 2006-2008, British companies invested about $ 10 billion in the purchase of US defense industrial assets.
In turn, the European Union is showing more and more initiatives to create a single defense market for its member states. Here the movement goes in two directions. On the one hand, the central bodies of the EU insist on opening the national defense markets of the member states of the union for all European military-industrial complex companies, eliminating national protectionism in this area and introducing unified procurement procedures. On the other hand, attempts are being made to intensify the joint development and purchase 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 except Denmark participate, as well as the joint European military procurement office OCCAR (Organisme Conjoint de Coope'ration en matie're d'Armement).
Now OCCAR is involved in several joint European projects (A400M, Tiger, Boxer, FREMM, SAM Aster). In the last couple of years, EDA has also launched a number of joint R&D programs with a wide representation of European countries (creation of means to combat improvised explosive devices, weapons of mass destruction detection, information network systems, etc.). Although at present a single European defense market is only being formed, it is indisputable that political pressure in this direction from European structures will inevitably lead to the emergence of a single military-commercial and military-industrial space of the EU. This, in turn, will most likely contribute to a new stage of integration and mergers in the European military-industrial complex.
