Boeing predicts European consolidation as budgets fall

Matthew Bell

Friday, 23 July, 2010

Boeing envisages a spate of consolidation among European defence companies as the bloc's spending endures a sharper decline than previously expected, the company told Jane's at the Farnborough International Airshow on 21 July.

Jeffrey Kohler, Lieutenant General (ret) of the US Air Force and vice-president of international market strategy at Boeing's Integrated Defense Systems, said Boeing predicted 18 months ago that European defence spending would decline, but added: "It's taken a much deeper turn than we'd anticipated."

Kohler said, furthermore, that he found it hard to envisage how all European companies would be able to survive the downturn, particularly given reduced opportunities in the United States as a result of the current era of relative austerity.

Kohler appeared to hint that European countries sometimes display protectionist tendencies when a US company bids for a contract against the indigenous defence industry. "It's very hard for a US company to compete in Europe if they [the US company] compete as a prime," he said. "Could Boeing set up a 'Boeing France' and compete in France? I don't think so."

While he considered that the US Quadrennial Defense Review and 2011 budget gave some indication of future US spending, Kohler said European spending was harder to predict. "The European process is a little more opaque - in Germany and France especially."