EU ponders £30bn BAE-EADS mega aerospace-military borg Questions remain over the likely outcome of a proposed £30bn merger between BAE Systems and EADS which would create the world's second-biggest aerospace and defence company. Securing government approval for the deal from the French, German and British governments is considered to be pivotal to the merger going ahead. While …
"good for the EU, good for big business"
I beg to differ. The French and Germans will take narrow, parochial, nationalist views on the merger (although EADS is for all practical purposes French controlled now). If it results in greater French control over the European defence sector, then it'll go ahead, if it doesn't then the deal will be off. When it comes to Europe, the French have always advanced their own interests.
On the "good for big business", I very much doubt it. Mergers and acquisitions are a proven technique for destroying shareholder value (in the tech sector, ask HP about this, as a fine example, or look at what happened to GEC trying to build a global defence business by over-paying for comapnies).
The only people this is good for is the advisers (lawyers, management consultants, investment banks), plus being good for the egos of the boardroom clowns who think this a good idea.
As the article notes, a Euro-monopolist defence combine will struggle to win business in the US (look at how Airbus won the US air tanker contract, then had the win cancelled, or how EADS was squeezed out of the Marine One contract). Curiously, the article notes that the competition problems arise on the civil side, when these companies are already mostly a single product company in the form of Airbus.
Some years ago, not long after shedding its BAe moniker, BAES had to make a decision between pursuing American interests in partnership with Lockheed et al, or collaborating more closely with the Europeans, in particular EADS.
It chose the former. Since then it has made significant efforts to divest itself of at least two things: aerospace, and British manufacturing. Both have been relatively successful.
Whilst there are many things wrong with the supermerger, a negative impact on Britain is not necessarily one of them. BAES already does that itself.
"made significant efforts to divest itself of at least two things: aerospace, and British manufacturing"
I'd argue that it hasn't been a proper aerospace company since, well, ever. I tried to think of the last aircraft BAe was wholly responsible for, and quickly found myself also searching for the first aircraft it could claim whole responsibility for, and found a list of.....nothing.
The criminal vandalism of the Labour party formed BAe by the nationalisation of the UK's rather competent aircraft industry, and since then everything it has been associated with was either a joint effort (Tornado, Typhoon, Jaguar), or designed by a proper aircraft company in decades gone by. Under the BAe/BAES monikers, and in the past thirty years the organisation has not put a single wholly designed aircraft into the air, nor has it developed any aircraft in the past thirty years on a proper commercial risk taking basis.
Good riddance to BAES: You've been responsible for a range of vast cost-overruns on crappy antiquated kit, which have meant that not only have our servicemen had worse equipment, but they've had much less of it. In every other sector, technology advances mean that things get cheaper in real terms and better, and that new and innovative things get produced. In defence it means they get more complicated, less reliable, and vastly more expensive. I doubt BEADS (or whoever) will be any better, but at least the ghost of BAe will have been exorcised - certainly it will when Airbus wing making gets moved to Germany or Toulouse, and the missile business finds itself in France too.
I don't think we should be ashamed of joint projects. Whatever you think of the often awful politics and economics, Jaguar, Tornado and Typhoon are - in engineering terms - endeavours we can be proud of, in that they are very good aircraft put together by talented engineers.
In the last few years both this and other areas like civil aviation have been cheaply sacrificed for ...I don't even really know what, some attempted political gain. JSF and the other recent projects of note carry very little forward for Britain's future; just some temporary jobs and cost savings.
It wasn't inevitable: the other side of the coin would have been greater involvement in Airbus/EADS, which is apparently not mutually exclusive to US sales, and would appear to have far greater long term returns.
Well, the joint projects (and I forgot a dishonourable mention for A400M) weren't really that good engineering wise. The Jaguar was never a proper frontline contender, with inadequate avionics all of its life, and being sufficiently poorly made that the ground crew needed paraffin proof umbrellas (plus being too slow for a fighter, and having insufficient carrying capacity or loiter time to be a useful strike aircraft).
Tornado has always had reliability issues, and never succeeded in trying to be two things - a robust (and therefore heavy) ground attack aircraft, and a fast agile fighter. So too heavy to be a fighter, not big enough or rangey enough to be a weapons platform.
Typhoon is a pure air defence fighter, and we can now laugh as MoD try and cobble up a half billion pound programe to make it into a bomber, where they forgot to order a Tornado strike replacement twenty years ago. As a fighter, it is reputedly a fabulously manoevrable machine that can out-dogfight an F-22. But there's the rub, nobody dogfights for real any more. So in the head to head contests, F22s would always "shoot down" the Typhoons as they came over the horizon, long before visual range or even medium missile range. The F22 costs twice as much as a Typhoon, but we're more likely to lose Typhoons than they are to lose F22s. A similar situation prevailed with Tornado in the Gulf War, where despite their low flying capabilities, they suffered disproportionate losses compared to American aircraft which were capable of doing stand off attacks.
In my view that does tend to support going with the JSF. MoD having forgotten to order a Tornado replacement (and BAE not having the wit to see this coming and develop a commercial prototype), we have to buy the F35 (or some F18s, or similar). And the lesson of Typhoon is that European countries want different things. Germany doesn't want a weapons platform capable of foreign operations. We on the other hand want a weapons system that would support the sort of war that we and the Yanks have been pursuing for years now, be that the Falkands, Gulf War, Sierra Leone etc etc.
I'd like us to be able to build our own aircraft, but BAES evidently can't alone, and the Euro projects haven't been beacons of success.
"MoD having forgotten to order a Tornado replacement (and BAE not having the wit to see this coming and develop a commercial prototype),"
A fine jest sir.
BAe actually spend *their* money and take some sort of (what's the word ?) *gamble* that they might loose?
BAe is a government con-tractor. It develops stuff when a govt puts *their* money on the table for BAe to use.
BAe operates as much like a normal engineering manufacturing company as the operator or a p()rn site operates like IBM.
"BAe is a government con-tractor. "
We agree. But the tragedy is that it didn't used to be that way before it was all nationalised. The Hawk, for example was developed as a speculative prototype by Hawker Siddeley, as was the 146 regional air liner, and even the Harrier wasn't initially developed with government money or in the first place to a specific government requirement.
programme.
Whatever it's called this week.
BAE could not seem to dump it's *civilian* parts (aribus and IIRC some regional short haul airliners) quickly enough to become a true military industrial con-tractor.
It's *no* surprise BAE is just big chums with LockMart.
EADS shareholders will soon feel the fail.
Seems strange that they sold their share in Airbus so cheaply and now want to merge with EADS a very short time later. It's also strange that they want to merge now, when there's no serious war fighting going on.
They should have kept their Airbus shares and then merged when the US is setting out on one of its regular crusades, to take advantage of the resulting increase in their share price.
The US will shut this down to prevent any unwanted European involvement.
I only see 2 outcomes
1 - The US lets this thing go ahead, and as such BAE is shoehorned out of plenty potentially lucrative deals with the US and loses a fair chunk of their income.
2 - The US slams the door on the whole idea
It's only REALLY going ahead because EADS wants an "in" in the US civilian aerospace market which won't go anywhere anyway. With a company like Boeing right on your doorstep are you going to outsource to Europe? The media would LOVE that idea (!).
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