The enlarged business, due to be formed next year after completion of complex due diligence and the privatization of Nexter, will feature a holding company most likely based in the Netherlands. There’ll be two CEOs, one in each country — most likely Haun himself and Nexter counterpart Philippe Burtin.
The company will have a combined order book of more than 6 billion euros, including KMW’s most recent Leopard 2 contract from Qatar won last year. Nexter meanwhile aims to upgrade the Leclerc for the French army and is pitching for a new light fighting vehicle and a troop carrier.
The Leclerc could be improved with technology from the Leopard and vice versa, Haun said. The French model features an automatic loader and needs a three-man crew versus four in the Abrams, Challenger and Leopard, while the German tank has better camouflage systems and on-the-move firing accuracy.
Like Airbus, which was formed by France and Germany and later incorporated British and Spanish companies, the combination is intended to be “scalable” should further consolidation be possible, KMW said.
Europe’s land-defense manufacturing industry has 17 active production lines for main battle tanks, armored fighting vehicles, personnel carriers and self-propelled howitzers, according to a study by the Brussels-based Centre for European Political Studies. That compares with just two sites in the U.S.
Italian, Spanish Options
“We have no standardization, so every order means we essentially develop and built a new vehicle,” Haun said. “That costs taxpayers a fortune.” Joint procurement could bring down unit costs by 30 percent, the executive said.
Any consolidation in Europe could affect the region’s main producers including Oto Melara SpA of Italy, part of Finmeccanica SpA, which makes artillery systems and armored vehicles and developed the Ariete tank, and Spain’s Santa Barbara Sistemas, owned by General Dynamics since 2001.
Britain, which used the world’s first tanks in the Battle of the Somme during World War I, will lose its last assembly line with the shuttering of an historic BAE plant in Newcastle upon Tyne in the second half following final deliveries of Terrier combat-engineer vehicles. That will cast doubt on further development of the Challenger 2, a model that’s intended to see service until 2035.
The combined KMW-Nexter will be better placed to be able to plan for Europe’s next generation of heavy armor beyond that period, aided by French strategic planning, Haun said.
“Who in Europe thinks about the kind of equipment we may need in 10 or 20 years — the ‘Leopard 3,’” Haun said. “The French do. They think strategically.” (Bloomberg)[eap_ad_3]