The trustees of Airbus España, GMV, Hispasat and Navantia speak out on defence industrial Europe
The patrons of four major Spanish aerospace and defence companies have recently met in a forum for dialogue, in which they have loudly expressed their respective points of view in relation to the military capabilities required to fill the saddlebags of the longed-for European strategic autonomy.
The meeting entitled ‘Dialogues for Security’, organised by the newspaper El País, brought together on the same discussion panel the President of Airbus Spain since 1 October, Francisco Javier Sánchez Segura; the veteran CEOs of the technology company GMV, Jesús Serrano, and of the commercial communications satellite operator Hispasat, Miguel Ángel Panduro; and the President of the state shipyard Navantia, Ricardo Domínguez.
Miguel Angel Panduro (Hispasat) argued that Europe ‘must have its own capabilities if it wants to achieve its own strategic autonomy’. He said this from his profound knowledge of the space sector, which is undergoing a ‘real revolution, accelerated by a brutal technological disruption’, which has caused ‘the European Union to lose its footing’, he said.
Aware of the situation caused by Elon Musk with SpaceX, Starlink and other initiatives underway, Brussels is trying to recover the lost pace with the IRIS² programme, an initiative worth more than 10 billion euros that aims to ‘complement our communications needs in the civil sphere, along with an important defence and security component’. For the head of Hispasat, placing value on European strategic autonomy also means ensuring that Spain occupies the place it deserves, and that means ‘leading programmes’, Panduro stresses.
In this context, we are ‘proud that Hispasat is one of the three European companies - together with Luxembourg's SES and France's Eutelsat - leading the SpaceRise consortium, which is going to make the IRIS² programme a reality, a constellation of satellites in low and medium orbit whose objectives are to ‘guarantee the security of Europeans and give the industry of the Old Continent the opportunity to continue living’. On a personal level, he stressed that IRIS² also ‘wants to be the catalyst for a reorganisation of the industrial sector in Europe’.
A company like GMV which, in the words of its CEO, Jesús Serrano, ‘doubles in size every five years and aims to continue growing’. He agrees with Panduro that Spain must strive to occupy its rightful place, but ‘not only at European level, but also on a global scale’. He pointed out that the EU treaty keeps defence planning in the hands of the member states and, therefore, the role of each nation is ‘fundamental’, as it has the prerogative to ‘identify objectives and priorities in terms of capabilities and establish operational requirements and needs’.
If mistrust continues, we will get it wrong
An example of European cooperation in the military naval field was provided at the beginning of November by Ricardo Domínguez, head of Navantia, who signed an agreement with his competitors in France (Naval Group) and Italy (Fincantieri) to continue working on the European patrol corvette. If we seek strategic autonomy, ‘collaboration is necessary, which will allow us to optimise production costs and open up to the international market’. But, he asks, will we manage to be totally independent? And he answers: ‘My opinion is that we won't. We depend on the United States, which invests heavily in defence technology and where we will continue to buy’.
Regarding Trump's arrival in the White House, Jesús Serrano (GMV) considers that it could be ‘an opportunity for Europe and also for Spain to take its rightful place in defence matters’. It means making an ‘important effort, not only at the industrial level, but also at the level of the Spanish public administration, which must take a step forward, get out of our self-limitations and aim to achieve the greatest possible influence in the European sphere’.
Panduro (Hispasat) recalls that ‘we have been talking about European collaboration for 20 or 30 years, but now we are at the moment of truth’. He points out that ‘when you move around countries in Europe, you don't quite see it... you don't trust the person next door. But if that distrust continues, we will be wrong. ‘Now it is no longer just a question of investing, now there is a real threat’, and he stresses that today ‘the great powers are fighting for military capabilities and therefore we cannot continue to invest in the way we do’. He concludes that, in Europe, ‘we are close to being late and our weight in the world will depend on the weight of our military capabilities’.
The Airbus representative puts on the table what he identifies as ‘two major problems that defence industrial Europe needs to reduce: fragmentation and dependency’. He points out that the defence budgets of all European countries ‘are less than half that of the United States’ and, in addition, between 70 and 80% of the weapons systems that are needed are bought from abroad, many from the US industry. In his opinion, the solution lies in ‘having a vision of the capabilities in which we need to invest and translating them into an industrial policy of collaboration that will lead to European programmes in the medium and long term’.
But trying to unify fragmentation is complicated. However, for Ricardo Domínguez ‘the need is there, although from the point of view of European shipbuilding, I see it as complicated’. ‘We are a 100% public company and Navantia's products are developed mainly with the Spanish Navy in mind. Naval Group will do the same with its Navy because, although it is not public, for the French government it is as if it were’.
‘We are going to be able to invest collaboratively in R&D, in developing a joint warship, but in the end it will always be the local economy and the local company’. Domínguez points out that ‘we have a country with great technological capabilities and we know that we need to invest more in security and technological sovereignty for the defence of Europe. But we also want a return that will generate the economy and employment in Spain’.
Cooperation does not go against consolidation
Francisco Javier Sánchez (Airbus) stressed that the war in Ukraine has been ‘a big wake-up call’. The first reaction of European nations has been to increase their defence budgets. Previously they had been ‘very sovereign, each one had had its own defence industrial policy, and today the concept of European sovereignty and defence is finally being born. We have to continue on this path’. In Spain, the aim is to reach 2 per cent of GDP by 2029, ‘the problem is that what needs to be recovered is very large in certain capacities’.
The European defence industrial strategy ‘advocates investing more, better, together and with a European perspective’, says Miguel Ángel Panduro (Hispasat). ‘That's very nice and all very well, but what we need to know is how the European Defence Fund, which generates the major programmes, is going to be endowed’. In his opinion: ‘The risk is that the main countries, meaning Germany and France, or the corporations of these big countries, will be the ones to bring together the whole Fund. And that is where mistrust arises. That's why it's important to have Spanish companies leading programmes’.
Should the European defence sector move towards a consolidation of companies to form larger ones? Panduro (Hispasat) points out that the Draghi and Letta reports recommend this. ‘But the first thing we have to ask ourselves is whether we also have to do our homework at the national level’. In the case of Spain, ‘we are the subject of a potential operation. I won't add anything else’. Jesús Serrano (GMV) notes that ‘there can be consolidations, but we are against consolidating for the sake of consolidating. For us, competitiveness is fundamental, and cooperation is not against consolidation. It is a way of coming together to join forces and do something more important without having to be a single company’.
Along these lines, Francisco Javier Sánchez (Airbus), who contributes three ideas that he considers to be key. To consolidate, ‘first you have to show that you can collaborate, otherwise consolidation is very difficult. Second, ‘consolidation has to result in a new entity that is more competitive than the sum of the previous ones’. And third, ‘we are a global player and right now, in order to export, the industrial return demanded by each of the countries is an important factor’.
The president of Airbus Spain reiterates that space ‘is a strategic high-tech world, a business that ’is undergoing a major transformation that comes from the United States, with Elon Musk, SpaceX and Starlink breaking the classic paradigm with which we were living in Europe, especially the large satellite manufacturers’, one of which is Airbus. Starlink has deployed around 6,500 satellites in space and services more than 6,300 that provide internet around the world.
Such a drastic change ‘is leading us to assume an unprecedentedly high technological risk’, which is why ‘the future of European space, as we see it, involves thinking about how we are going to face the threat coming from the United States’. From Hispasat, Panduro shares the vision of Airbus‘ top manager and exclaims that what Elon Musk has done is 'break with the entire organised value chain that exists in the world'.
Panduro sums it up: ‘There were manufacturers of launchers and satellites, companies that operated them in orbit and companies that provided services... Musk comes along and has disrupted everything!’ And he warns: ‘But behind him comes another man called Jeff Bezos, with a new proposal called the Kuiper project, which is going to cause a fight between billionaires’. Kuiper is Amazon's satellite internet network, which will consist of more than 3,200 devices positioned between 590 and 630 kilometres above the Earth's surface. The first batch is scheduled to go into orbit for commercial purposes at an unspecified date in 2025.