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EADS Reorganization: Too Little, Too Soon?

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Damned if you do, damned if you don’t * Giovanni de Briganti argues that EADS’ 5,800 job cuts look like a red rag to a bull to the French and German governments since the company has a strong balance sheet, a huge backlog, and is creating jobs in Poland. Germany will face more cuts as it hosts the vast majority of defense-related jobs, but pushback will be strongest in France, where Minister of Labor Michel Sapin said [in French] that EADS’ announcement was “scandalous” and that the company had a “duty” to avoid redundancies. These are not the words of a lightweight underling: labor is one of the most prominent ministries in French cabinets, and Sapin first met President Hollande while they trained together as reserve Army officers 4 decades ago. And the French government remains a shareholder of the company, even if its influence and the size of its holdings have both diminished. * However, Briganti also notes that an internal memo leaked [in French] to the Challenges monthly magazine showed that the defense book-to-bill ratio at EADS is expected to slide to 0.8 by 2018, i.e. by then they’d replace each dollar of past sales with only 80 […]
Damned if you do, damned if you don’t

* Giovanni de Briganti argues that EADS’ 5,800 job cuts look like a red rag to a bull to the French and German governments since the company has a strong balance sheet, a huge backlog, and is creating jobs in Poland. Germany will face more cuts as it hosts the vast majority of defense-related jobs, but pushback will be strongest in France, where Minister of Labor Michel Sapin said [in French] that EADS’ announcement was “scandalous” and that the company had a “duty” to avoid redundancies. These are not the words of a lightweight underling: labor is one of the most prominent ministries in French cabinets, and Sapin first met President Hollande while they trained together as reserve Army officers 4 decades ago. And the French government remains a shareholder of the company, even if its influence and the size of its holdings have both diminished.

* However, Briganti also notes that an internal memo leaked [in French] to the Challenges monthly magazine showed that the defense book-to-bill ratio at EADS is expected to slide to 0.8 by 2018, i.e. by then they’d replace each dollar of past sales with only 80 cents of new bookings. In that light the consolidation of very different product ranges under one umbrella may not be enough to solve Airbus Military’s issues.

* In the ramp up to cutting jobs at EADS, Tom Enders had made it clear that cuts in German military orders would have consequences. The US Senate is worrying – but not doing much else – about the future of the industrial base dedicated to manufacturing military helicopters, given the Pentagon’s declining and highly uncertain acquisition pipeline.

Rapid Prototyping

* The US Army’s Rapid Equipping Force is hosting a Make-A-Thon workshop this week in Fort Benning, GA, to develop a mobile command post mounted on Army Lightweight Tactical All-Terrain Vehicles. This follows the crowd-sourced collection of design ideas and blueprints on the ArmyCoCreate website.

UK: No GoCo

* With just one bid on his desk, UK Defence Secretary Phillip Hammond had little choice but to give up on a controversial plan to put Defence Equipment and Support (DE&S) under a Government-owned, Contractor-operated (GOCO) model. Instead, procurement will be put at arms length from the rest of the ministry, and given financial and human resources flexibility.

Asia/Pacific

* Lockheed Martin has delivered their first 2 MH-60R naval helicopters to Australia, at a ceremony in NY. Sikorsky makes the helicopters, but Lockheed installs the advanced equipment. All 24 helicopters are scheduled for delivery by the end of 2016.

* Taiwan’s military recruitment fell far short of its 2013 target.

The Arctic, In Maps

* Dr. Bjorn Gunnarsson, Managing Director at the Centre for High North Logistics (CHNL) kindly sent us his slides [PDF] for the presentation on new logistics opportunities in the Arctic whose video we posted yesterday.

Africa, Sort Of

* USAFRICOM will host an industry day on January 29-30 2014 in Stuttgart, Germany – which is, believe it or not, the location of their headquarters.

Euro Artillery Gets More Precise

* After signing the Convention on Cluster Munitions, France had to upgrade its LRM launchers. Cue in the LRU (lance-roquettes unitaire), which just went through a successful test. Work on the launchers is done in cooperation with Germany and Italy, while the US Army contributes M31 GMLRS-U rockets. Operational deployment is to start next year. Video below [in French]:

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