Chair in Defence Economics - IHEDN

Characteristics of French defence companies

For a company, defence activities generate greater financing needs than civil activities (R&D investment, personnel costs, financing of the operating cycle). It is more difficult to finance by traditional means, with companies self-financing part of their research and the public authorities making a significant contribution.

Defence companies perform better in terms of exports and value added. They therefore contribute both to the balance of trade and to general economic activity.

On the basis of an econometric study, we show that French defence companies do not have abnormal profits compared with other sectors, contrary to what is stated in some of the literature.

Defence companies at international level

With K. Hartley, we have brought together experts from the main international defence industries to describe and analyse the structure, conduct and performance of these industries since the end of the Cold War. Defence companies occupy an important place in the economic system of certain countries, they have a high impact on research and innovation and some are highly interdependent. In many countries, this industry has been privatised, market financing has been developed and their place in the innovation system has evolved. Each country has its own specific characteristics, but most are undergoing major restructuring of their industry.

In Europe, companies are restructuring their activities and are becoming increasingly export-oriented. The main European defence equipment suppliers are demonstrating strategic orientations that are now underpinned by industrial and commercial logics similar to those of companies in the civilian sector. In addition, 75 % of the European companies studied are now listed on the stock exchange, and include institutional investors among their shareholders, requiring the implementation of a shareholder-type mode of governance.

Information on the capital links between defence companies is difficult to obtain and care must be taken when interpreting the results. Nevertheless, the work carried out on the capital links between the Defence Industrial Base (DIB) of the European Union (EU) and the United States brings out some useful conclusions. In terms of the shareholders of defence companies, the national link is strong in Sweden, Spain and France, weaker in Germany and Italy, and particularly weak in the UK. Secondly, the links at European level are concentrated on Airbus, MBDA and KNDS, and are not very developed for the other companies. Finally, we note asymmetrical links with the United States and a significant presence of American investment funds.

Aeronautical subcontracting chains (civil and defence)

We are analysing the changes in the production process in the aeronautical sector, which has led to the emergence of major subcontractors (stock management, R&D, risk, etc.), but which has resulted in their fragility and lack of short-term profitability.

Technology transfer issues

Today, governments want to master sovereignty technologies, which means acquiring the necessary knowledge. As a result, companies have adapted their offerings to meet customer demands and therefore provide training. An assessment of the risks of knowledge leakage associated with training as part of technology transfer contracts has been carried out. This work shows a differentiated representation of the risk of knowledge leakage according to the different categories of trainers, as well as an over-reliance on upstream control mechanisms.