EADS targets UK defence market
The Times:
EADS, the Franco-German defence group, has launched a public relations offensive in the UK, targeting the Ministry of Defence in an effort to muscle in on lucrative UK defence procurement contracts and take market share from BAE Systems, its biggest rival in Europe.
The move comes at a bad time for BAE, which has a deteriorating relationship with the MoD and is facing stiff competition from Thales, of France, over a £2.9 billion order for two new full-size aircraft carriers, the Navy’s first such vessels for decades.
“We want to become bigger in the UK,” Rainer Hertrich, German co-chief executive of EADS, said. “We see opportunities for joint ventures, organic growth and acquisitions.” Two weeks ago Herr Hertrich and Philippe Camus, his French co-head, hosted a dinner in London for MPs and senior defence officials. Other EADS executives, including Hans-Peter Ring, the finance director, have also been in the UK recently to help to raise the company’s profile.
EADS is thought likely to target the UK for a “substantial” contract to provide training aircraft, expected to be offered for tender by the MoD soon. The company also has its sights on a contract to integrate the Army’s ground-based air defence radar and control systems. EADS will compete with BAE for both orders.
Recent comments from Geoff Hoon, the Defence Secretary, affirming that all MoD contracts would go out to open international competition, has prompted EADS to act. But Mr Hoon also emphasised the importance of “local content” when awarding big defence contracts, which is why Herr Hertrich wants to expand EADS’s businesses in the UK.
BAE Systems campaigned to keep out foreign competition for UK contracts, but seems to have failed. There is a growing belief in the MoD that companies such as Thales or EADS already have a large UK presence and that awarding them contracts helps to protect British interests.