EADS Defence and Civil Systems Division to receive cross-border structures
Amsterdam, le 21 décembre 2000
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Integration concept for first multinational defence company
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Losses to be stopped
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Basis for profitable growth
Only six months after the company's formation, EADS European Aeronautic Defence and Space Company is starting on the integration of its French and German defence businesses within its Defence and Civil Systems (DCS) division. It has developed a plan to stop losses and build the basis for profitable growth. All activities are to be rapidly combined within cross-border structures, EADS announced in Amsterdam on Thursday. From this restructuring will emerge the defence industry's first multinational and fully integrated industrial unit.
"We are determined to expand the defence business but in a focused manner. Only a healthy mix of civil and military activities can provide for long-term profitable growth of EADS," commented Philippe Camus and Rainer Hertrich, the EADS Co-Chief Executive Officers (CEOs). "The new, fully integrated structure of the division, combined with various business improvement programmes, is a prerequisite for an economic turnaround and for sustained growth and profitability in the future."
Thomas Enders, Executive Vice President and Head of the Defence and Civil Systems division, added: "Cross-border integration will allow for better resource allocation, which will enhance the products and services offered and provide an improved cost base. This is certainly good news for our customers and our shareholders. At the same time, we will make sure that our new structures are fully compatible with the requirements of our national customers in France and Germany, particularly with respect to nationally sensitive programmes and information."
The division will give increased focus to its broad portfolio of missiles, defence electronics, telecommunications and services, and will fully integrate the French and German units into joint structures. For the loss making part of its defence businesses, EADS has already launched comprehensive recovery programmes. "To reach our growth and profitability targets we need to achieve the turnaround quickly," said Enders. The new business concept will be set out in detail and discussed with the employees' representatives during the coming weeks.
To adjust its portfolio, DCS will adopt a strategy of both acquisitions and new partnerships as well as divestments. The stagnant or even shrinking defence expenditures in the German and French markets will make further reductions in the workforce necessary, going beyond the approximately 1500 people who have already left the division in the last 12 months. EADS estimates that it will have to reduce the workforce by at least another 1500 people if the market situation does not improve. This could lead to a reduction of approximately 550 employees on the German side and 950 on the French side. In addition, the new Defence Electronics unit is considering outsourcing up to 700 central functions. Site closures are also under study.
For Enders, the root cause of the current situation of the EADS Defence and Civil Systems division is clear: "Our business, and especially our defence electronics activities, are overly dependent on our home markets in France and Germany. The conclusion is clear: we need to expand our international business significantly and we will do this through acquisitions, joint ventures and other means."
The pillars of cross-border integration within the Defence and Civil Systems Division are four new business units:
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Missiles: MBD - the EADS missiles joint venture with BAe Systems, which soon will be enlarged by Aerospatiale Matra Missiles and Alenia Marconi Systems to MBDA - will be the centre of gravity for the missile business. EADS will now also prepare for the speedy integration of the German LFK-Lenkflugkörpersysteme GmbH into MBDA.
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Defence Electronics: German and French activities will be combined under one roof to take advantage of a growing airborne systems and C4ISR market (Command Control Communications Intelligence, Surveillance and Reconnaissance).
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Services: EADS will build on existing activities in France and Germany and will specifically address the emerging market of outsourced military and governmental services in its three home markets.
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Telecommunications: EADS Defence and Security Networks (EDSN), a JV with Nortel Networks, majority owned and managed by EADS, will be the hub of the EADS telecommunications activities. EDSN will be a provider of turnkey network solutions, based on civil technologies, for secured and defence applications worldwide.
"The new structure will allow us to bring more management focus and resources not only to the missile and defence electronics business but also to our fast-growing telecoms operations, specifically our very successful joint ventures with Nortel Networks and also to the increasingly important services business," commented Enders.
EADS was formed on July 10, 2000 through the merger of Aerospatiale Matra of France, DaimlerChrysler Aerospace (Dasa) of Germany and the Spanish CASA. With pro forma revenues of more than EUR 22.5 billion (1999), EADS is the third largest aerospace company in the world. In 1999, the Defence and Civil Systems division achieved pro forma revenues of EUR 3.8 billion, which corresponds to a 16 percent share of the EADS pro forma revenues.
Your points of contact:
Roland Sanguinetti
+33 1 42 24 24 26
Miguel Sanchez
+34 91 585 77 89
Dr. Rainer Ohler
+49 89 607 34 235
Website: www.eads.net
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