Like the United States, the major European countries came out of World War II with approximately 10 aircraft manufacturers apiece. They underwent considerable consolidation in the downturn of the 1960s, leading the United States in that regard, largely because of the greater pressures created by the smaller markets in which they participated. But in spite of all this, Europe today still has far more defense contractors than it can reasonably sustain. A few years ago, I proposed, rather presumptuously I suppose, a five-step formula for reengineering Europe's defense industry. Government ownership inevitably distorts the marketplace, preventing efficiencies and slowing innovation.
Defense is no exception.
The defense industries within individual European countries badly need to consolidate. This would reduce the number of players, as has been done in the United States, with important attendant benefits in efficiency. Similar efficiencies in the defense industry could also be gained as a next step by consolidating across national borders. These actions are all, of course, relatively easy. Restructuring is essential, and it should be undertaken without regard to political or national borders.