Back to news

August 14, 2018 | International, Naval

Fincantieri bulks up with acquisition ahead of Naval Group partnership

By: and

ROME and PARIS — Italian shipyard Fincantieri has bought a key Italian technologyfirm to gain extra clout ahead of a planned team-up with France's Naval Group.

State-controlled Fincantieri said Aug. 7 it was jointly taking control of Vitrociset, which employs 800 people and posted 2017 sales of €187 million (U.S. $211 million) from its training and support work in the defense, security, transport and space sectors.

The shipyard will take over Vitrociset's defense work, while its partner in the purchase, Italian firm Mer Mec, will assume control of its civil work.

That leaves Fincantieri, which builds warships, submarines and cruise ships, in charge of Vitrociset's aerospace work, including ground support work on the F-35 Joint Strike Fighter.

The move triggered speculation in Italy that Fincantieri was bulking up to gain a stronger hand as it proceeds with cooperation talks with French shipyard Naval Group, given that Vitrociset is involved in automation, command and control, simulation, and testing work.

A company source played down the timing of the deal, saying: “Vitrociset simply makes us more complete.”

The announcement followed a visit to Rome on Aug. 1 by French Economy and Finance Minister Bruno Le Maire to discuss the Fincantieri-Naval Group talks, which started last year but slowed during the creation of a new, populist government in Italy in June.

The new government in Rome has had a series of spats with Paris, starting with France's reluctance to take in migrants who sail from Libya to Italy. The Italian government is also reluctant to move ahead on a new rail link between Italy and France, even though millions of euros have been spent on the program. And France and Italy are at loggerheads over lawless Libya, where the European nations back opposing sides in the slow-burning conflict.

Tensions reached a peak last month when Italian Deputy Prime Minister Matteo Salvini openly said he did not want France to win the soccer World Cup, which it did.

In June, Naval Group and Fincantieri handed their respective governments plans for possible industrial cooperation, a move seen by Fincantieri Chairman Giuseppe Bono as leading to an“Airbus of the sea,” seen as kick-starting a wider integration of the fractured European naval industry.

Addressing Italy's Parliament this month, Bono said he was also backing moves by the European Union to encourage joint spending among partners, effectively leading to pooled EU defense procurement from transnational European defense giants.

“Europe spends little and spends badly,” he said. “Everyone acts in the interest of their own nation; but if we concentrated, we could spend less but be more capable and more efficient.”

Fincantieri is already set to take over French civil shipyard STX, and at the start of the year, Bono said a French-Italian merger of naval work could occur within five to 10 years.

However, Le Maire was cautious during his Rome visit, claiming “it would not be wise” to talk of a naval merger.

Current plans go no further than a 10 percent share cross-holding, combined with pooling research, acquisition of material and teaming on export work to reduce competition.

Naval Group avoids the use of the Airbus tag, which signals a high degree of industrial consolidation, and prefers to refer to closer cooperation.

The cooperation plan is creating uncertainty over the role to be played by Italian and French firms Leonardo and Thales, which rely on selling their systems for their nations' warships.

Speculation that Leonardo would be sidelined in future joint ships built by Fincantieri and Naval Group increased with news of the Italian yard's purchase of Vitrociset, although Bono promised that Leonardo's involvement in the tie-up was “on the cards,” pointing out how it was an integral part of two offers of corvettes that Fincantieri was making to Romania and Brazil.

Thales, which holds a 35 percent stake in Naval Group, also reportedly expressed caution about linking up Naval Group and Fincantieri, an Italian source told Defense News.

This year, a leaked 36-page report from ADIT, a partially French state-owned company working in economic intelligence, painted a “highly negative” picture of the compliance and ethics of Fincantieri, a depiction which was challenged by Fincantieri.

“There is a lack of communication, a lack of figures,” according to Fabrice Wolf, a defense economics analyst. “This leads many to be concerned that this project is ideologically driven and that the realities of the industrial base are not fully taken into account.”

The main interest for Naval Group is to find work for its research office, which is the real reason for the FTI intermediate frigate program, he said.

There is a “concern” elsewhere in French industry, notably at Thales, which sees its sale of radars and electronic systems under risk from Italian archrival Leonardo, Wolf added.

“Naval Group is a great partner for Thales and I hope that lasts,” said Thales CEO Patrice Caine, business daily Les Echos reported May 27. Thales is more than just a shareholder in Naval Group, as the former transferred its combat systems business to the latter in 2007 in exchange for a shareholding, he added.

“When we build the FTI frigate with Naval Group, it's like building the Rafale with Dassault — it's a link up for life,” he said, pondering the intentions of an Italian government that pursues nationalism and a protectionist trade policy.

Naval Group and Thales were unavailable for comment.

The Italian pursuit of anti-immigration and anti-free trade seems to have struck a chord with U.S. President Donald Trump, who met Italian Prime Minister Giuseppe Conte at the White House on July 30.

“Italy is becoming a reference country in Europe and a privileged partner of the United States,” Trump said.

That U.S. preference for Italy effectively puts Rome ahead of Paris, French media have reported.

On the same subject

  • Zoom Adopts NIST-Approved Post-Quantum End-to-End Encryption for Meetings

    May 22, 2024 | International, Security, Other Defence

    Zoom Adopts NIST-Approved Post-Quantum End-to-End Encryption for Meetings

    Zoom has rolled out post-quantum end-to-end encryption (E2EE) for Zoom Meetings.

  • Tempest future fighter worth £25bn to UK economy

    October 19, 2020 | International, Aerospace

    Tempest future fighter worth £25bn to UK economy

    Harry Lye Analysis from PwC, commissioned by BAE Systems on behalf of Team Tempest, the partnership behind the Tempest future combat air system programme has said that the project to develop a future fighter will contribute at least £25bn to the UK's economy and support an average of 20,000 jobs a year between 2026 and 2050. Team Tempest is a partnership between BAE Systems, Leonardo, Rolls-Royce, MBDA and the Royal Air Force's (RAF) Rapid Capabilities Office, as well as a host of small-medium enterprises and academia. Preliminary findings from the PwC report due to published in full later this year said that the programme including ‘R&D spillover' would add £25.3bn to the UK economy for the first 30 years of the programme and ‘support an average of circa 20,000 jobs every year between 2026 and 2050'. The findings added that for every 100 people directly employed by Team Tempest, a further 270 would be employed across the UK. BAE Systems director combat air acquisition programme Michael Christie said: “Tempest is an exciting and ambitious multi-decade programme that will help to preserve our national security whilst at the same time driving significant economic benefits for the UK. “The initial analysis revealed today demonstrates that Tempest is critical to ensuring the UK can sustain its world-leading Combat Air Sector, preserving the sovereign capability that is essential to retaining military freedom of action for the UK.” rogramme is essential for national security and future prosperity The economic benefits of the programme come alongside the release of more technical details about the future fighter by Team Tempest, which the consortium said can “capture the equivalent of a ‘city's worth of data' in a second”. Tempest is expected to come into service in the mid-2030s and is set to replace the Eurofighter Typhoon within the RAF. The aircraft is set to form part of a broader combat air system that will likely include ‘wingman' uncrewed aerial systems (UAS). ADS chief executive Paul Everitt added: “The Tempest programme is essential for our national security and future prosperity. The high-value design and groundbreaking engineering skills required for success will create a new generation of talent to drive UK industry. “Defence programmes like Tempest offer an invaluable opportunity to secure a recovery from the current Covid-19 crisis. It will embed high-value design and manufacturing skills in the UK for decades to come, sustain thousands of high paying jobs and give apprentices the opportunity to build their career in an iconic programme with massive export potential.” Capture a city's worth of data in a second Team Tempest today also unveiled several insights into the programme including that Leonardo, the programme's electronics lead, was developing new radar systems capable of providing over 10,000 times more data than existing systems. Leonardo director of major air programmes Iain Bancroft said: “The collaborative relationship between Team Tempest and our network of academic and SME partners enables us to bring together the ‘best of the best' engineering talent from across the UK. Crucially, we are embracing new ways of working as an integrated team to dramatically improve efficiency and pace – sharing intelligence and refining our concepts digitally to deliver innovations that will shape the next generation combat air system. “Our new radar technology is a concrete example of the gains this approach has already brought, costing 25% less to develop while providing over 10,000 times more data than existing systems.” The ‘Multi-Function Radio Frequency System' is slated as being able to collect data ‘equivalent to the internet traffic of a large city such as Edinburgh' every second. The new sensor is described as providing a range of ‘abilities beyond traditional radar', with the company having already built complete sub-systems utilising the technology with a path set for airborne demonstrations in the ‘coming years'. On top of this, BAE Systems said it had begun flight-testing components for the aircraft's ‘wearable cockpit' technology. The system will see physical controls in the aircraft replaced with ‘Augmented and Virtual Reality displays projected directly inside the visor of a helmet' allowing them to be configured to meet different missions. A team from MBDA is also working on this technology to ensure the early introduction of weapons concepts. The MBDA team is also looking at how ‘weapons system information and operation' is optimised for pilots. BAE Systems is also exploring the development of a ‘virtual co-pilot' that can take on and automate some of the pilot's responsibilities. ‘Psycho-physiological' technology is also being trialled to measure a pilot's physical and cognitive processes. BAE Systems said this would help better understand ‘increasing exertion, stress, workload and fatigue'. BAE Systems test pilots are currently trialling these technologies on the Typhoon aircraft. Rolls-Royce is working on the programmes ‘advanced combustion system technology'. Team Tempest has said that the next-generation system will need to be ‘hotter than any previous platform' to increase the efficiency of Tempest's engines. The engine manufacturer has also been working on advanced composite materials and additive manufacturing techniques, to produce lighter weight, denser components able to withstand higher temperatures than current parts.

  • Russian Hacker Dmitry Khoroshev Unmasked as LockBit Ransomware Administrator

    May 7, 2024 | International, Security

    Russian Hacker Dmitry Khoroshev Unmasked as LockBit Ransomware Administrator

    UK's National Crime Agency has unmasked the admin behind the prolific LockBit ransomware as 31-year-old Russian national Dmitry Khoroshev.

All news