# Presentation: 593565

## U.S. Commercial Service CS France

- Aerospace and Defense in France
- 	Presented by:
- 	Robert Connan, Senior Commercial Officer, Paris

## France’s Aerospace Industry in Europe: Market Facts 

- There is NO larger market in the world for US aerospace products than Western Europe as a whole, (parts, not aircraft) .
- France is the second largest Aerospace industry in Europe with total turnover of 28 billion Euros, employing 119,000 people.
- US Firms have an obvious advantage there because of their experience and disparity between  Euro-Dollar.
- However, US firms must keep in mind that French  companies including Airbus are exploring subcontracting manufacturing to China, Russia, Eastern Europe and other emerging markets.
- Best export opportunities for U.S. SMEs lie as sub-sub contractors to the production of Airbus aircraft- as second or third tier suppliers*
- European suppliers are both competitors **and **partners to US firms.

## France in Europe (cont.)2006 Aerospace Industry Revenues by Country

**Notes:**
France has the second largest Aerospace Industry in Europe after the UK.

United Kingdom, 45 Billion Euros
France,	28 Billion Euros	
Germany,	16 Billion Euros
Italy	10 Billion Euros
Spain	4 Billion Euros

## France’s Civilian Aerospace Sector

- Five manufacturers account for the majority of the French market: Airbus (large commercial aircraft), Eurocopter (light-to-heavy helicopters), Dassault Falcon Jet (high-end business jets), ATR (regional turboprop aircraft), and Socata (business turboprop aircraft).
- France has a rich Aviation History – Important to keep this in mind when doing business here.
- Successful companies with World Class Products
- Very Strong Industrial Base - The Supplier base there is so strong that all these firms don’t need to look outside of France much less Europe to build their products.  However, the Dollar-Euro exchange rate is now more than ever the reason to do so.
- Many of the equipment systems firms do business with both Boeing and Airbus: Liebherr Aerospace, Latecoere, the Safran Group (Labinal, Snecma Motors), the Zodiac Group, to name a few.

**Notes:**
France has a rich Aviation History- Important for companies to keep in mind when doing business here.
Many of these companies have had first ever achievements in the industry.  Airbus: First twin engine widebody, first 2 person cockpit, the first fly-by-wire in commercial aircraft.  Prior to it being called Airbus, Aerospatiale produced the Caravelle (first rear engine pass. jet) and the Concorde (first supersonic).  Eurocopter: First to civil heli to use carbon rotor blades, widespread use of a Fenestron tail, first fly-by-wire in a civilian helicopter.  Dassault- first fly by wire in a business jet with its new 7x.   Socata:  Fastest single eng. turbo prop business aircraft.    
Successful companies with world class products 
This market can be characterized as having companies that are if not already #1 in their field in terms of market share, they’re close to being #1.  Due to the many projects in the works, this is a huge export market that’s here to stay and one that U.S. companies need to be in. 

Best Prospects:
The best prospect for American aerospace firms in this market continues to be opportunities associated with the manufacturing of new aircraft, notably, the Airbus A350, the A380 and Airbus Military Company’s A400M (to a lesser degree as it is a military program).  Additionally, many OEM and equipment manufacturers have adopted a “U.S. Dollar” strategy on existing and new programs to take advantage of the cost savings offered by the rate of exchange.  In that regard, the U.S. Commercial Service office in Toulouse works to help identify the appropriate channels for American small and medium-sized companies wishing to do work on these programs.  After a careful analysis of your company products or services, they will put you in touch with a qualified buyer, able to make a purchasing decision.

  It is important to keep in mind, however, that as part of a new cost reducing strategy called Power 8, Airbus is continuing to reduce the number of its direct suppliers by increasing the sourcing of whole assemblies and work packages.  Exceptions to this trend may be made in cases where a potential supplier is able to propose technical innovations, or where delivery or quality problems exist.  

## Global equipment sourcing, an example: A380

**Global equipment sourcing, an example: A380**

***Water/Waste***

**Notes:**
To stay competitive with international products, procurement departments on the civilian side, including Airbus’, have been forced to adopt a business model based on economic, rather than nationalistic merits, with cost and quality becoming key requirements for selecting suppliers.  As this slide demonstrates, this is not the same company it was 20 years ago.  

The best prospect for American aerospace firms in this market continues to be opportunities associated with the manufacturing of new aircraft, notably, the Airbus A350, the A380 and Airbus Military Company’s A400M (to a lesser degree as it is a military program).  Additionally, many OEMs and equipment manufacturers have a “U.S. Dollar” strategy and are seeking to take advantage of the cost savings offered by the rate of exchange.  In that regard, the U.S. Commercial Service office in Toulouse works to help identify the appropriate channels for American small and medium-sized companies wishing to do work on these programs.  It is important to keep in mind, however, that as part of a new cost reducing strategy called Power 8, Airbus is reducing the number of its direct suppliers by increasing the sourcing of whole assemblies and work packages.  Exceptions to this trend may be made in cases where a potential supplier is able to propose technical innovations, or where delivery or quality problems exist.  

## How to do business with Airbus

- For SMEs, the points of contact will be the 1st and 2nd tier suppliers. Contact US Commercial Service office in Toulouse for a complete listing of Airbus suppliers.
- For potential 1st tier suppliers or if you have technical innovations to propose, you may contact us and register through the Airbus Sourcing Tool website at **http://www.airbus.com/procurement**

**Notes:**

 “Selling to Airbus” is no longer a viable goal for many, due to the fact that Airbus and their major contractors have drastically pared their supplier chains.  This has caused a long sub-supplier chain with many links, each feeding the next link up in the chain.  Companies must be prepared to realize that their true bottom line goal is getting their products on Airbus aircraft, and then locating and selling to the appropriate sub-supplier in the supplier chain.   CS Toulouse has been working to identify these links.  Contact them for further info.

## Airlines and Maintenance

- Air France-KLM : Europe’s largest airline, in terms of passengers delivered.
- Aircraft maintenance primarily handled by two companies: Air France Industries (at Paris CDG and Toulouse airports) and EADS Sogerma (at Bordeaux airport)

**Notes:**
The semi-privatized national carrier Air France is still the dominant French airline and reported positive net profits of more than 1 Billion Euros for its 2006 fiscal year, contrary to the worldwide industry trend for similar-sized carriers. In May 2004, Air France merged with KLM, and the group is now not only the leader of European airlines in terms of number of passengers, but it is also a world leader with 21 billion Euros of turnover.  Smaller, particularly foreign, low-cost carriers that use secondary regional airports are experiencing rapid growth in response to the EU directive for national market liberalization and an increased consumer confidence in on-line booking.  With local government incentives, foreign low-cost airlines such as EasyJet and Ryanair have won significant advances in the market by offering both short-haul international and, in some cases, national point-to-point routes to otherwise infrequently visited regions.

Maintenance support for both American and European aircraft is a large industry in France which is primarily handled by two companies: Air France Industries, based outside of Paris at Charles De Gaulle Airport; and Sogerma, located in Marignac at the Bordeaux airport.  In 2004, Air France Industries inaugurated its 40-million-Euro Toulouse facility in Aeroconsellation, adjacent to the site where the Airbus A380 is assembled.  This facility is dedicated to the refurbishment of their own and other customers’ single-aisle Airbus aircraft.

## Engines and Equipment Systems in France

**Safran (formerly Snecma): Largest engine and equipment manufacturer in France**
**SAFRAN PROPULSION COMPANIES:**
- Snecma (rocket and turbine power plants for aircraft and space launch vehicles),
- Snecma Services (a maintenance, repair and overhaul operator not limited to Snecma products),
- Turbomeca (helicopter turbines),
- Microturbo (small jet engines for missiles, drones and auxiliary power units),
- Techspace Aero (a manufacturer of engine components and test equipment)
** ****SAFRAN EQUIPMENT COMPANIES:**
- Aircelle (nacelles and thrust reversers),
- Hispano-Suiza (power transmissions and computerized engine control),
- Labinal (wiring and equipment),
- Messier-Dowty (landing gear),
- Messier-Bugatti (brakes),
- Messier Services (landing gear MRO),
- Techos (engineering services)
- Technofan (a ventilation systems for aircraft),
- Sofrance (filtration systems for aircraft)
- ACARB (a Kentuky-based manufacturer of carbon brake heatsinks),
- Cinch (connectors for applications in several industries) and
- Globe Motors (an Ohio-based electric motor manufacturer).

**Notes:**
The Safran Group is the leading aerospace equipment manufacturer in France and one of the most important in Europe, with a dominant position in providing key systems to Airbus, Boeing, Eurocopter, Dassault and Arianespace, among others, both in civil and military applications.  It also has important links to the U.S. market and U.S. companies, both as a supplier, and as an equity partner or owner.  Safran, a multi-faceted business group created in 2005 by the merger of two diverse and well-established majority state owned companies (Snecma and Sagem), has two branches that should be of interest to American suppliers.  These two divisions--aerospace propulsion and aerospace equipment-- are headquartered in Paris, employing 40,890 people worldwide and generating approximately 7.7 billion Euros in 2006 revenue.  In total they comprise 13 individual companies, many of which have captured, alone or in partnership, significant or leading market share in various different sectors of activity.  Most have invested in numerous projects and expanded their global presence through acquisitions and partnerships.

The US Commercial Service office in Toulouse can help you get in contact with any of these companies.

## U.S. Defense Sales to France

## Major French Defense  Contractors 

**EADS**** : ****Europe’s largest aerospace and defense company. Turnover was approx. USD 45 billion in 2005.**
**Thales**** : ****50% of its business is defense (air, land & joint systems, naval). USD 16.8 billion annual revenue. Provides equipment & systems, systems integration and prime contracting.**
**Safran Group (Defense)**** : Defense Security, Communications. **
**(cont’d)**

**Notes:**
EADS
Divisions include Airbus, Military Transport (A400M) Division, Astrium Division, Eurocopter Division, Defense & Security Division.
EADS NA supports 190,000 US jobs – contributes about 10 billion USD to US economy annually. 12 operating companies in 30 cities in 17 states. 
EADS (through Eurocopter) is now a major contractor to the US Army, via its Light Utility Helicopter.  EADS NA is partnered with NG to offer the KC-30 tanker for Air Force’s aerial refueling fleet.  Also partnered with NG to offer NATO Air Ground Surveillance support, as well as to provide radars for the Global Hawk high altitude, long-endurance unmanned aerial vehicle. EADS North America also has joined with Lockheed Martin on the Medium Range Extended Air Defense System (MEADS).
Teamed with LM on the deepwater program, and through its Eurocopter division, provided helicopters to the US Coast Guard.

THALES
Thales has core businesses: aerospace (25%), defense (50%), security (25%).
68,000 employees in 50 countries (3,000 in the US). 
Air Systems capabilities : 
weapon, surveillance and detections systems
radar, command & control and battlefield radar solutions through JV with Raytheon – ThalesRaytheonSystems
Air traffic management solutions
References include European anti-missile defense programs such as FSAF, PAAMS and SAAM.

Thales Land & Joint Systems capabilities:
Land “one stop shop” from sensor to shooter, on all platforms
References include Future Soldier Systems – FIST (UK), Normans (Norway), IdZ (Germany, NSS (Netherlands);
Expeditionary Fire Support System (EFSS) for US Marine Corps; Syracuse III satellite communications system....

Naval capabilities:
Partnership with France’s DCN major step in naval systems consolidation.
Above- and under-water systems and equipment
Services (fleet support)
References include FREMM program, future Aircraft carrier, Horizon and LCF frigates, Scorpene submarines...

SAFRAN GROUP: In addition to Aerospace propulsion and Equipment, Safran has Defense security and communication division which represents a significant part of their activity.

SAFRAN in North America has: 
- Annual sales over $2 billion
- 6,700 employees
- 35 companies
- 40 offices and facilities in 16 U.S. states
- 5 sites in Canada and 6 in Mexico

## Major French Defense  Contractors (cont’d)

**Dassault**** ****Aviation****: ****Rafale & Mirage fighter jets, UAVS. Turnover in 2006 was about USD 4.5 billion.  **
**DCNS**** : ****Naval shipbuilder and integrator, and sole French prime contractor for warships. Turnover 2006 : USD 3.7 billion.**
**Nexter Industries (was GIAT)**** : ****Land defense systems manufacturer and integrator.**** ****2006 turnover was USD 986 million.**

**Notes:**
DASSAULT AVIATION
Present in 70 countries across 5 continents. Dassault is the European leader in complex airborne systems, world leader in top-of-the-range executive jets.
Products: Mirage and Rafale fighter jets, Falcon business jets, nEUROn UAV. 
Dassault Aviation is present in the US through its subsidiary – Dassault Falcon Jet – which has four facilities: Teterboro (New Jersey), Little Rock (Arkansas), Wilmington (Delaware) and Aero Precision Inc. (Florida).
Dassault Aviation is a French group, 50.21% held by the private Groupe Industriel Marcel Dassault, which in turn is owned by the Dassault family. The other shareholders are EADS France (46.30%) and private investors (3.49%).

DCNS: (was previously know as just “DCN”).
DCNS recently integrated with Thales Naval France/Armaris. 
Products include Integrated warships (surface and submarine), critical systems and equipment, underwater weapon systems, upgrade & maintenance services.

NEXTER INDUSTRIES
Formerly known as GIAT, Nexter is a French government-owned corporation. 2500 employees.
Main products include the Leclerc tank, VAB Armored personnel carrier, FAMAS assault rifle, FRF2 sniper rifle, LGI Mark II howizter...
Four subsidiaries: Nexter Systems, Nexter Munitions, Nexter Electronics, Nexter Mechanics.

## What does this mean for U.S. firms?

- Very sophisticated, extensive defense infrastructure
- High level of local competition
- Teaming with French firms is essential to succeed in the Defense sector here

## How to Succeed in France’s Defense Industry

- It’s an advantage to “Look French” or at least European if you can
- Find a partner – JV or representation

**Notes:**
France’s goal is to minimize US defense dominance by pushing for greater European defense cooperation.  To buy French or European made goods is a stated preference, which is why the French have a deepening commitment to European cooperation. This trend creates a challenging environment for American companies wishing to compete for DGA solicitations. But it is NOT impossible, and there are many examples of success.

Joint ventures or partnering arrangements are important to get a foot in the door; advantages of a joint venture include benefiting from the experience of the French company (instead of being a competitor) in its own market, sharing costs on the programs, and penetrating the French market under a French label.  

Two joint ventures in particular, that of CFM International (Snecma Moteurs and GE Aircraft Engines) and ThalesRaytheon Systems (who partnered to provide the DGA and other European customers with air defense and air command and control systems) have been depicted as models of transatlantic cooperation.   Joint ventures increase the possibility of being awarded a contract as prime contractor for important French military programs that would not be offered to a strictly American company.

Many small and medium sized U.S. firms do business successfully in France every day; they have found a local French representative, distributor or consultant to be their eyes and ears.  The US Commercial Service has been successful matching up complementary American and French firms in the defense arena.

Finally. don’t overlook the in-country political assets you may have – If you are a big firm with offices, subsidiaries, employees in France – make sure the French know this.  The Business Development Manager for a major US defense prime recently realized that in fact his firm employed several thousand Frenchman through a little known non-defense subsidiary which had been set up years before to fulfill an offsets agreement.  They are now focusing hard on creating a multi-domestic image.  

## US/FR cooperation in the Defense sector

- French MoD operates a fleet of Boeing AWACS surveillance aircraft, Lockheed-Martin C-130s cargo aircraft and Northrop-Grumman E2C Hawkeyes
-  Lockheed Martin competing to equip the Tigre (French Army) with Hellfire missiles
- General Electric selected by DCN to provide gas turbines for the Franco-Italian FREMM multimission frigate, Europe’s biggest warship program since World War II.
- May be many opportunities if France’s second aircraft carrier proceeds as scheduled

**Notes:**
The French MoD has an ongoing relationship with U.S. industry.  Communications capacity and INTEROPERABILITY with US forces are main concerns.

Unless politics intercede, France’s second conventional-propulsion aircraft carrier will be built by a consortium composed of DCN and Thales, and is now proceeding in cooperation with the UK (BAe). The design was originally though to be for a ship of about 58,000t, but detailed design work has pushed it up into the 74,000t range, fully 72% larger than the FNS Charles de Gaulle. Unlike the problematic nuclear-powered de Gaulle, however, the PA2 will be a conventionally-powered ship with an all-electric power system driven by Rolls Royce gas turbines. There may be many opportunities for US firms to participate on this project.

## DGADelegation Générale pour l’Armement

**The DGA is the French MoD’s multi-service armed forces procurement agency**
**DGA currently manages 78 defense programs in design or manufacture phases**
**Nearly USD 12 billion in orders to defense industry in 2006**
**Two Embassy points of entry to the DGA:**
**US Commercial Service and the Office of Defense Cooperation**

**Notes:**
The DGA’s missions 
Equipping the armed forces : Leading Defense programs including procurement, testing and evaluation. 
Preparing the future : Imagining possible future scenarios and guaranteeing that required technologies and expertise will be available. 
A major player in research and economic development: to prepare the future, DGA invests €1.4 billion per year in defense activities
€600 million worth of industry contracts for upstream research programs
Promoting defense equipment exports 

At the US Embassy in France, ODC and USCS work hand in hand in helping US defense companies enter the market.  ODC is the Embassy’s main interface to the French MoD – DGA – and USCS works to help US firms find local representation.

## E-Procurement Defense Portals

**For Weapons, Munitions, and Combat Systems:**
**www.ixarm.com**
**(English/French)**
**Covers contracts relating to advanced research, and procurement and in-service support of defense equipment**
**Register on-line to consult tenders **

**All other MoD purchases: infrastructure, accommodation and administration-related aspects, fuel and oils, medical, support...**
**www.achats.defense.gouv.fr**
**(French only)**
**Register on-line to consult tenders **

**Notes:**
The two e-procurement portals represent more than 10,000 consultations/tenders on behalf of more than 200 buying offices.  Value of purchases is estimated at about 15 billion euros per year.

## The 2007 global French Defense Budget is 47.7 billion euros (an increase of 2% from 2006). 10.5 billion euros for equipment

This represents approximately 2% of GDP annually.  With UK, highest in Europe, much lower than U.S.

More Cooperative Programs in Europe to rationalize expenditures

**The 2007 global French Defense Budget is 47.7 billion euros (an increase of 2% from 2006). 10.5 billion euros for equipment**
**This represents approximately 2% of GDP annually.  With UK, highest in Europe, much lower than U.S.**
**More Cooperative Programs in Europe to rationalize expenditures**

**Notes:**

In the future, a greater number of French defense procurements will likely be made in concert with their European partners.  In fact, about 26 percent of DGA’s total budget is set aside for cooperative programs.  Joint-procurements have the positive benefit of decreasing the costs of new technologies for the nations involved as well as supporting European (and French) defense firms. 

Many people don’t realize that France is a major NATO player.  While France withdrew from the integrated military command in 1966, it remains a member of NATO's political structure.  France is among the five largest member states contributing to NATO operations .

Regarding cooperative programs: examples are numerous: FREMM multi-mission frigates, future French aircraft carrier, A400M military transport , NH 90 transport helicopter...

## Major French Trade Associations

**GIFAS****: the French aerospace industries association. 250 members, from major prime contractors and system suppliers to small specialist companies. **
**	****Website : www.gifas.asso.fr/en/**
**GICAT****: the French land defense industries association.**** 83 members**
**	****Website : www.gicat.com**
**GICAN****: the French naval industries association. 130 members. **
**	****Website : www.gican.asso.fr**

**Notes:**

The members of these trade French trade associations may be interesting if you are looking for info on the major local players.  Also the sites provide information on the sectors.

## Detailed Market Research Reports available on www.export.gov

- France: Civil Aircraft Industry Manufacturers
- 11 pages, 10/06 Author: Christopher Mente
- France: SAFRAN Group Member Companies
- 6 pages, 01/07 Author: Christopher Mente
- France: USCS/Defense Business Overview
- 26 pages, 06/06 Author: Cara Boulesteix
**International market research from around the global USCS network is available on www.export.gov**

## Contacts at the US Embassy

- Office of Defense Cooperation
**(Defense only)**
**Tel: (33-1) 43 12 48 31 **
**Fax: (33-1)  43 12 45 61 **
- _[http://www.amb-usa.fr/odc/home.htm](http://www.amb-usa.fr/odc/home.htm)_
**Contact:****	****COL “EJ” Herold, ODC Chief **
**	**

- U.S. Commercial Service
**(Civil and Defense sides)**
**Tel: (33-1) 43 12 23 57**
**Fax: (33-1) 43 12 21 72**
- _[http://www.buyusa.gov/france/en/](http://www.buyusa.gov/france/en/)_
**Contact: Robert Connan, Senior Commercial Officer**