The defense industry is facing strong political headwinds in Germany. Economy Minister Sigmar Gabriel wants to limit arms exports and Defense Minister Ursula von der Leyen blames the industry for the military’s equipment problems. Airbus CEO Tom Enders took stock at a recent Handelsblatt conference on the defense industry.
Handelsblatt: Mr. Enders, the relationship between policymakers and the defense industry has seen been times, right?
Tom Enders: As far as I remember, there has actually never been an easy time, at least not in Germany. I think the current debate is very positive. We need relaxed dealings between industry and politics.
Has industry contributed to the tensions? You yourself acknowledged mistakes, such as with the transport aircraft, A400M, which was delayed for years.
We bear our fair share of responsibility. But we must also look at how it came to this difficult situation. Both sides overburdened themselves and did not handle things openly from the beginning, but instead only pursued short-term goals. We can do better. I am optimistic that the defense minister will approach this with new vigor.
What went wrong with the largest defense projects?
When you tackle a large defense project you should openly talk about the risks at the very beginning. We must clearly differentiate here: If a product is already more or less finished, then the risks are naturally small. But if it involves completely new requirements and the technology still needs to be developed, then the industry cannot actually say that this will be functionally available six years later in the fourth quarter. We will not agree to a fixed price for a project like this again, and in doing so assume all the risk ourselves.
German Defense Minister von der Leyen also criticizes these “white lies.”
Let’s take the case of the A400M again. At the moment of signing the contract, one party worries that if they put numbers on all of the risks, then the final figure will be off-putting. Hence we get these “white lies,” this attitude that “we will somehow make it up.” It is not the case that industry knowingly deceived. But they were very, very ambitious targets.
The defense minister has sparked a contentious debate with her suggestion of more closely monitoring the core competencies of the industry. Is that too much?
First of all, I see that as a tactical maneuver by the federal government. Our aerospace industry hasn’t operated at a national level for years. That there’s now a discussion about core competencies is part of taking a closer look at the armed forces. But I wouldn’t view it as being extremely important.
Mr. Gabriel wants to encourage the consolidation of the national industry. What’s your view of that?
This discussion is too narrow. There’s a lot of mistrust, along the lines of: if we don’t consolidate nationally, we will be dominated within Europe or internationally. I had to fight this balance mentality at Airbus for a long time. For me, they’re attitudes from the 19th or 20th centuries. If at all, we need robust European mergers.
Why do we consider it preordained that we can’t even defend European territory and that we still need the Americans, who are slowly growing tired of doing it for us?
The tank maker KraussMaffei Wegmann is in merger talks with Nexter from Paris.
It makes sense to me that KMW wants to merge with Nexter, because it will open new markets. Consolidation at the national level might make sense in some exceptions, but it’s driven more by a political rather than business motivation.
Is the climate for the defense sector better in France than in Germany?
In Germany, a well-known minister called it “shameful” that the country’s defense industry was relatively successful. In France, the defense minister calls a press conference to announce happily that the industry has increased its exports. If you’re pushed into a corner here, no one should be surprised at the consequences.
Airbus has plenty of experience with political influence. Do Berlin and Paris meddle less than they used to?
Both countries still hold parts of the firm out of old habit, but they no longer wield a veto over our investment decisions. That’s important, especially since we need to strengthen our position internationally. We are strongly represented in Europe, but the markets of the future are elsewhere.
Should Germany spend more on defense? We’re far below NATO’s two-percent of GDP target.
Not just Germany. Why should Europe as the largest economic bloc in the world not be able to spend two percent of its gross domestic product on defense? Why do we consider it preordained that we can’t even defend European territory and that we still need the Americans, who are slowly growing tired of doing it for us? It’s a question of priorities. That’s why I consider it a positive sign that a majority of Germans support spending more on defense.
The interview was conducted by Handelsblatt’s deputy editor in chief Sven Afhüppe. To contact him: email@example.com