Rome '08 Workshop

A Vision for the European Defense and Security Industrial Base: From Fragmentation to Integration 

Mr. Thomas Homberg

Senior Vice President, EADS 

Mr. Thomas Homberg

My theses are these: First, because today’s threat scenarios are global, purely national security approaches are definitely insufficient. Second, because we have to internationalize and integrate security, we have to do the same for policies and for the industrial setup. With these two theses in mind, I will comment on the integration and further consolidation of the industrial base in close coordination with politics and with defense and security forces. 


All societies require an adapted security toolbox, i.e., defense and security forces equipped with the latest available technology and the equipment to match today’s threat complexity. To ensure this, we need a performing, competitive, and sustainable industrial base. But how does this base look today? Today’s defense and security industrial landscape is rather fragmented. In particular, there is fragmentation: 

  • Of the industrial and technological capabilities within EU member-states and in the transatlantic context 
  • Of product specifications answering diverse national requirements—this nonalignment leads to redundant, complex, and very costly developments, and the different national specifications also cause interoperability issues when we send our troops in theater 
  • Of funding for research, development, and procurement 

And all of this fragmentation is directly caused by the huge number of industrial players 

Let me give you just one figure to illustrate the lack of joint funding. According to the figures of the European Defense Agency, more than 70% of defense equipment procurement is nationally funded versus roughly 20% that is spent collaboratively in the European framework and just a marginal amount in the non-European framework. This phenomenon hurts particularly in Europe (although not exclusively), because our budgets here are, at least compared to U.S. funding, still rather low. 

Defense investment spending in Europe is lower than that in the U.S. by a factor of ~2.5, and R&D expenditure in Europe is even lower, by a factor of ~6. Too many national players in Europe lead to industrial inefficiencies, and it is rather obvious that we do not spend cleverly enough when accepting redundancies and overlaps, specifically in times of restrained resources. Europe has the obligation to improve competitiveness in order to preserve its capability to act as a credible and sustainable partner on an eye-to-eye level with all our U.S. and global friends as we take on global threats. If we believe in transatlantic cooperation we cannot afford asymmetry in that relation. 


For these reasons, the vision for the European industrial base and also for the transatlantic link should be comprised of at least the following seven points: 

1. Consolidation of demand to best use our European industrial strength, thereby contributing to a real transatlantic and global effort 

2. Harmonization of requirements to strongly support industrial rationalization; it would also be desirable to define strategic interest, including the industrial domain, on an international rather than a national level 

3. Establishment of common programs and real work sharing, based on centers of excellence 

4. More focus on, more coordination of, and more money for research 

5. Common programs based on common standards to optimize the warfighter’s efficiency; I think that organizations such as the European Defense Agency and the Network Centric Operations Industry Consortium (NCOIC) in the U.S. will be of good help in this area 

6. Good and open access to government defense and security planners and their concepts in order to ensure fast and cost-efficient development cycles 

7. Access to lessons learned from exercises and operations to step wise, push forward, and optimize industrial solutions in a spiral development. 


I would like to conclude with three points: 

1. We have to overcome the trend towards national industrial protectionism. If all parties insist on protecting the national champions first, the result will be reduced competitiveness, limited innovation capability, and, ultimately, the risk of erosion. 

2. Industry is being asked to support global security in various matters and it is obvious that mastering these challenges is not feasible alone on purely national grounds. 

3. It requires a dedicated industrial policy to ensure European industrial competitiveness and thereby strengthen the transatlantic link. This policy should target long-term sustainability and the capability to act as a partner on an eye-to eye level for the best possible European contribution to protecting against common global threats. 

The good news here is that the majority of the points I mentioned are well known. The bad news, however, is that we do not push sufficiently to make faster progress on the above requirements. 

Let me make a personal concluding comment. For nearly 20 years I served in the German armed forces in paratroop and airborne units and having experienced industry as well being the Head of Strategy of my group, I know a little bit of “both worlds.” I believe in the following principle: We are obliged to deliver the best available equipment to our forces in theater and in operations, since they take care of our security, putting their lives at risk. This incentive shall be the strongest of all, leading us to faster results. It is an obligation which must not become a victim of any industrial or political power game. 

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