French defense industry plays catch-up as lockdown partially lifts

By: Christina Mackenzie

PARIS — As France slowly emerges from an almost complete industry shutdown imposed March 16 in response to the COVID-19 pandemic, defense company executives are considering their next steps.

Stephane Mayer, Eric Trappier and Herve Guillou — respectively presidents of the groups of French industries for land and air-land (GICAT), air and space (GIFAS), and naval (GICAN) systems — were witnesses at an April 23 hearing by the National Assembly's Defence Committee. They said that despite the partial return of employees to work, the supply chain is still experiencing problems.

The three industry leaders explained that following discussions with unions and the implementation of modifications in the workplace that enable employees to work while maintaining a distance of at least 1 meter between each other, about 30 percent of the workforce on production sites was back by April 23. Those able to work from home are doing so, they added.

More employees returned to work on May 11 when the lockdown was eased, but personnel who can continue to work from home are being urged to do, they said. Meanwhile, shifts are being modified to ensure workers don't arrive and leave at the same time, they added.

However, all three agreed that the supply chain had been interrupted, most notably in the aeronautical sector because of its dual military-civilian role and the near-total halt in air traffic, which negatively affected imports.

They explained that during the lockdown, defense industry leaders and the French procurement office DGA jointly set out priorities for programs and established what activities must be maintained to ensure the military continues its missions within France and in foreign theaters.

How are exports performing?

All three were also unanimous in their analysis that the French defense sector could take a hit in the export market, noting that German companies never completely stopped their activities; China was quick to reconnect with potential export clients; and the American defense sector benefits both from the continuation of much of its production capacity and massive support from the federal government.

This was later repeated by Guillou at a video conference organized this week by the Foundation for Strategic Research think tank.

“None of us can survive unless we have 50 percent of our order intake from the export market," Guillou said. "Even if the French market returns to normal, we still have that 50 percent export segment to worry about. If we want to remain competitive on the world export market, keeping in mind that the Chinese ramped up before we did, that the Russians, Germans and Dutch never stopped, we will have to restore our competitivity extremely quickly ... to stay in the race and not lose a part of this market forever.”

He also stressed that the need to catch up is a major concern of the French defense industry.

What about the supply chain?

The supply chain in France is largely made up of small and medium-sized enterprises. Eric Beranger, CEO of European missile-maker MBDA, told French Armed Forces Minister Florence Parly on May 6 that some of the 1,200 French suppliers that work for the company are now very fragile due to the developing economic crisis.

Guillou remarked during the video conference that the “terrific solidarity” among the supply chain and subcontractors, as well the prime contractors in the naval sector, is something he'd never come across in his 40-year career. But he added that the small and medium-sized enterprises serving the aeronautical sector are suffering more.

The Armed Forces Ministry began slowly ramping up on May 7 based on two principles: preserving the health of staff and their families (all personnel, civilian or military, have been given masks, which must be worn by those who work in confined spaces such as workshops, restaurants or vehicles); and continuing with the ministry's essential mission. This includes programs meant to keep fielded weapons and equipment in operational condition, but it also concerns the delivery of new materials.

“The reversibility of the procedures means that were the epidemic to break-out again within the ministry we would be able to handle it,” a May 7 ministry statement said.

https://www.defensenews.com/industry/2020/05/21/french-defense-industry-plays-catch-up-as-lockdown-partially-lifts/