By Pierre Tran
Paris – The land weapons industry faced a double challenge with the pandemic crisis hitting defense spending and army projects competing with air force systems, which were due to receive higher funding, Franco-German joint venture KNDS said June 14.
“The budgets of our most important customers are being significantly impacted by the consequences of the corona pandemic, partly at the expense of the defence budgets,” KMW and Nexter Defense Systems said in a statement on 2020 orders and sales.
“And within defence budgets, significant increases in spending on air systems are emerging, which in turn are putting pressure on much-needed army projects,” the 50/50 joint venture said.
Orders last year fell €1.1 billion ($1.3 billion) from the previous year, reflecting the budgetary impact on arms spending from the Covid crisis.
KNDS has formed an industrial partnership with German manufacturer Rheinmetall in a Franco-German project to develop and build a heavy tank and networked vehicles, including land combat robots, in a project dubbed Main Ground Combat System.
MGCS is due to replace German Leopard 2 and French Leclerc tanks in 2035.
The army must compete with the air force, which expects to win hefty funding for development of a European future combat air system, which includes a new fighter jet, as well as a European medium-altitude, long-endurance drone.
“Vigilance is needed because of the financial boost for aviation,” an industry source said, referring to spending earmarked under the French multiyear military budget law.
The next big step for MGCS was for the partners to reach agreement on how to share out work on the main technology demonstrator, the source said.
The partners needed to “converge” on which company will work on which key blocks of technology, which will underpin the program.
There was no timetable for an agreement, but the talks were sensitive as the deal was intended to be a 50/50 split on a Franco-German basis.
Krauss-Maffei Wegmann and Rheinmetall must agree how to organize the German 50 percent share of the work, while Nexter will want to assure its 50 percent share was upheld.
Generally, German political concern over losing industrial ground to French partners led the Bundestag parliamentarians calling for spending on MGCS to be tied to funds for the FCAS project, media reports said.
French and German industrial partners Dassault Aviation and Airbus are deep in talks with Paris and Berlin to agree a budget for development work on FCAS.
That €3.5 billion budget for phase 1B of FCAS may have an impact on funding for the new tank and connected vehicles.
KNDS reported 2020 sales of €2.4 billion, down from €2.5 billion in the previous year, with orders falling to €3.3 billion from €4.4 billion.
The order book rose to €10.3 billion from €9.6 billion. The company gave no details of profit.
“In 2020, we met or exceeded all our commercial targets,” Frank Haun, chief executive of KNDS, said in a statement with the results.
There was a new export client for the Caesar artillery, the company said.
That new client was Morocco, which ordered 30 155 mm/52 caliber Caesar cannons, mounted on a six-wheel drive Arquus chassis, Army Recognition website reported Nov. 21 2020.
Nexter was in talks with the Czech Republic for the sale of 52 Caesars, mounted on an eight-wheel drive Tatra chassis, Defense World website reported June 4 2020, in a deal then worth $249 million. The value of that deal was likely to have moved since then.
Other orders last year included 42 Jaguar combat and reconnaissance vehicles, 271 Griffon multipurpose troop carriers, and 364 Serval light armored reconnaissance vehicles in the French army’s Scorpion program, KNDS said. There was also an upgrade for 322 Fennek armored vehicles for the Dutch army and 24 Leguan bridge layers for the German army.
KNDS appointed as chief executive of Nexter Nicolas Chamussy, who took up the post April 1 and sits on the KNDS executive committee.
Chamussy was previously chief of staff to the chief executive of Airbus, and was director of space systems in Airbus Defence and Space division.
KNDS and Rheinmetall signed the first MGCS contract May 2020, the system architecture design study phase 1, launching the development work.