An Update on the Impact of the Coronavirus Crisis on French Defense Industry: April 23, 2020


By Pierre Tran

Paris – Naval Group seeks to cut costs in a “savings plan” and conserve cash in response to a slowdown in shipbuilding due to the Codevi 19 crisis, the company said.

“While the productive activity of all Naval Group’s shipyards has been reduced, Naval Group is launching a savings plan to prepare for the future and to preserve the group’s investment capacity,” the company said in an April 16 statement.

That savings plan relies on cutting the cost base in view of a “foreseeable reduction of the revenues,” said the company, which is keeping its workforce on full pay while on furlough.

To sail through an economic storm, Naval Group has adopted “cost saving and cash management measures,” including cancellation of seminars and conventions, cutting back on travel, and less use of temporary staff and subcontractors.

Training and recruitment will focus on production and skills deemed to be critical, while  reliance on external services will be cut to the “strictly necessary,” the company said.

Non-priority projects will be postponed.

Keeping Staff

Naval Group, along with other French arms companies, is keeping on its workforce, relying on the 70 percent government-backed pay for temporary leave due to the national lock down. That lock down, now in its sixth week, started midday March 17 and runs to May 11.

The French government offers to pay 70 percent of salary to workers on furlough. The UK government offers 80 percent financial support to British companies.

Due to the slowdown of its activities, Naval Group has filed applications for partial activity and is committed to maintain employees’ revenue for the second half of March, as well as their base salary and variable pay elements,” the company said.

That full payment to staff includes April, a spokesman said.

The company and three labor unions agreed April 2 a new work schedule and to set up a “solidarity fund,” with the company contributing half and the rest based on staff contributing  their paid holiday. The executive committee is contributing five days of leave.

In April, staff who are not required to work full time must take days off, the company said.

Under a statutory regime of the 35-hour work week, employees are entitled to a set number of days off on top of the five weeks’ annual leave required by law.

“The ramp up in activity will be gradual,” Naval Group said.

Most of Salary Paid

Arquus, which builds light and medium armored vehicles, is paying 92 percent of salary to workers on furlough, based on a “solidarity agreement,” a company spokesman said.

The company has gradually restarted production at four factories, with some 300 workers returning to work since April 6, the spokesman said. Some 100 workers had stayed on during the shut down, bringing the total to around 400 at the work place, with some 10 workers returning each day. There have been no permanent lay-offs in the 1,300 strong work force.

It was too early to estimate the cost of the shut down, the spokesman said. The company  saved money in the cancellation of the Eurosatory trade show, which had been due to run June 8-12.

Dassault Aviation is also paying 92 pct of salary to workers and office staff on furlough, the company said in an April 15 note to staff on its website.

That level of payment was agreed following April 2 and April 9 meetings with three labor unions, and reflected a differential between workers who were entitled to 84 percent and executives entitled to 100 percent of salary.

“These new measures should help us get through this worldwide crisis which is hitting dramatically our country and our industry,” executive chairman Eric Trappier said.

Airbus Restarts Work

For Airbus, work on the A400M airlifter and other military aircraft has restarted in Spain since the government eased a lock down on non-essential work, a company spokesman said. Work is organized into two shifts – red and blue – to cut the number of workers on site.

A shift is to avoid contact with the other shift, with the work place disinfected between shifts.

In the close lock down, which included industry, Airbus continued work deemed to be essential, providing service for C212, CN235, C295 and A400M aircraft for the Spanish air force, as well as Super Puma and H145 military helicopters.

There was also support for the French and German air forces.

Spain, one of the countries worst hit by the virus, ordered March 14 a strict lock down. The prime minister, Pedro Sanchez, is seeking a third 15-day extension of the lock down to May 9. Spain has seen more than 20,000 people die due to the pandemic.

For MBDA, in France, almost 20 percent of the workforce had gone back to the factory, 70 percent were remote working, and 10 percent on furlough, a company spokesman said.

Rise in Cyberattack

The increase in working from home has seen a rise in cyberattacks by hackers seeking to benefit from the Covid 19 crisis, Sophie Le Pennec, Thales vice president for occupational health, safety and environment, said on the company website.

The Defense Innovation Agency has called for projects to fight the pandemic, with Thales submitting some 12 projects including crisis management tools, patient admission in hospitals, rapid diagnosis, and teleworking.

Across France, 10.2 million workers are on furlough, with nine out of 10 staff at restaurants and hotels laid off, afternoon daily Le Monde reported April 22. Some 93 percent of the building trade have registered as unemployed.

Some 20,796 fatalities due to coronavirus have been registered, with 531 deaths over the last 24 hours, Le Monde reported.

The admissions to hospital and those in intensive care are falling, but the spread of the virus remains at a high level, said Jerome Salomon, number two at  the health ministry.

President Emmanuel Macron went to Brittany April 22, to show support to farmers in the western region.

The agricultural sector is effectively the second line of defense in the “war” against the virus, protecting France from want, the head of state has said, Le Monde reported.

Featured Photo: First of class submarine Suffren”, at the Naval Group site in Cherbourg, France, July 5, 2019. Picture taken July 5, 2019. REUTERS/Benoit Tessier