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BATTLESPACE meets Dr. Stefan Zoller, CEO EADS Defence & Security
BATTLESPACE travelled to Munich to interview Stefan Zoller about future plans for his Defence & Security segment.
In September 2003 Stefan Zoller gave BATTLESPACE a detailed description of the major reorganisation which had taken place to split the EADS Division Defence & Security into three separate business units, Defence Electronics, Defence and Communications Systems and Military Air Systems
He announced the formation of a new EADS Defence & Security Systems House to meet the growing needs of the Network Enabled Warfare Community in Europe. He said that given EADS' wide customer base in Europe and the rest of the world, the company was well placed to meet the demands of the defence community in Europe whose NEC capability was lagging far behind the US and the UK. part of this development was the establishment of a number of networked NetCOS Synthetic Environment laboratories linking EADS plants across the world.
The new segment Defence and Communications Systems, which would have sales of €1.2bn and approximately 5500 employees, has required a considerable investment from the parent to install the required simulation and advanced electronic equipment required to meet the demands of its new customer base.
“Have you achieved those 2003 aims?” The Editor asked.
“2007 was our best year to date,” Zoller said. “We have achieved the planned site and workforce rationalisations at the same time as increasing profitability by enhanced operational performance. At first sight, the figures look distorted. But with regard to the 2007 figures it has to be taken into consideration that from 2007 onwards we only consolidate MBDA at 37,5% (50% in 2006)."
A snapshot of the Balance Sheet showed the figures as below:
Defence & Security Financial Figures 2007
Total Revenues 2007*: € 5.5bn
Ebit 2007*: € 340m
Order Backlog 2007*: € 17.9bn
Order Intake 2007*: € 7.5bn
Employees 2007: 22,000
Revenues Breakdown by Business Unit
2007 in m€
Military Air Systems: 2,138 (39%)
Defence and Communications Systems: 1,328 (25%)
Defence Electronics: 836 (15%)
MBDA: 1,130 (21%)
EADS Defence & Security achieved a number of substantial successes in 2007.
These included:
1. A 72 Eurofighter aircraft order from Saudi Arabia
2. The Eurofighter Typhoon Tranche 2 role enhancement contract
3. The award as Prime on the European Advanced UAV Risk Reduction Study
4. A Euro Hawk development contract
A number of Command, Control and Communication Information systems, including:
1. Oman Joint Command & Control Information System; German Air Force Deployable
Control & Reporting Centre
2. Swiss Future Soldier System (IMESS); Spanish Future Soldier System (COMFUT)
3. C3I German Army (FüInfoSys Heer)
Defence Electronics:
1. Captor active electronically scanning radar (CAESAR) first flight on Eurofighter
2. Terrain/Obstacle Collision Avoidance System (HELLAS) in 16 new German civil rescue helicopters
3. 44,000 Transmit/Receive modules for MEADS Design and Development Phase fire control radar
Security:
1. Contract for Qatar’s National Security Shield
2. Contract for UK Fire and Rescue Control System
3. Professional Mobile Radio
(40 new contracts – incl. BOSNet)
EADS Defence & Security Revenues remained stable at m€5465 from m€5864 in 2006 allowing for the MBDA effect of m€377. The Order Book expanded to m€7540 in 2007 excluding the MBDA effect of m€315.
“How do you see the European Missile business developing, particularly in the anti-tank market. After all in the 80s Milan was the world’s top selling anti-tank missile. Now your top position has been usurped by Javelin and Spike?”
“MBDA has a very strong level of order intake but most of these are now in the delivery phase. Europe needs to take a concerted look at new missiles, particularly anti-tank missile systems, for the future and undertake concerted funding programmes. We need to be looking at a ‘Trigat-like’ Programme for the development of the next generation of missiles. For the new Milan system, in line with its development work on MILAN ADT- ER, MBDA recently conducted a series of three test firings, further demonstrating the reliability of the new technologies integrated within this new weapon system.”
“Can you rely on European Governments to come up with the required spending allocations?”
“No, Europe has a combination of weak defence spending, stretched budgets and a number of countries are at War. The first priority of any Government is to support the warfighter and give him the equipment he needs to sustain and protect the troops. Public Opinion will rebel if soldiers are killed using outdated equipment. There is the added requirement to develop defence technology for increased Homeland Security budgets.”
“Do you see R&D as a key part of the Company development?”
“R&D continues to play a key role in the development of our company. In 2007 EADS Defence and Communications Systems invested approximately 20 per cent of its Research and Development budget into developing new technologies and 30 per cent into new product development. We have identified nine areas of key technology: Communications, IT Infrastructure, Applications and Services, Security, Platform Integration, Sensor Integration, Weapons Integration, System Engineering and System Management. We have a very strong and unique product portfolio including PMR technologies like TETRA, TETRAPOL and P25. Our advanced product family also includes IT infrastructure to support surface-to-air missile, air defence and naval communication technologies. Our purchase of Nokia Defence was a key part of the development process for our network systems.”
“Can you sustain this type of R&D spend without Government support.”
“In certain areas we can continue, but in the big ticket items such as UAVs, EADS has invested considerable sums to bring innovative products to market. However the Barracuda Project showed just how expensive UAV programmes can be. UAV development is a key area which requires large sums of government funding if Europe is to stay in the game. We have lost many years in discussions, now is the time to invest and develop the next generation of air vehicles, we can’t afford to wait any longer.”
“Do you see the Eurofighter Tranche 3 being a victim of stretched budgets by either being cancelled or stretched?”
“All Governments are facing Budget problems but we must remember that Tranche 3 forms part of the Eurofighter contract for 620 aircraft. It will be very expensive for the Nations to cancel or stretch. There is a dedicated Production Programme, thus we need to secure Tranche 3 now to ensure the Supply Chain for 2012 Production of 236 aircraft; we have already delivered 144 aircraft.”
“Will the Saudi order take up any of the strain?”
“No, the Saudi deal is a separate Requirement as is any export contract. In India in particular we are looking at a Partnership with Indian industry to co-develop and build the aircraft as BAE did with Jaguar and Hawk.”
“What about EADS involvement in the Naval and Land Systems segments?”
“In Naval systems we purchased the BAE share in Atlas Electronik and formed a joint venture together with ThyssenKrupp. We now have a considerable expertise in naval systems integration. We aim to repeat the same in Land Systems. You don’t have to own a vehicle manufacturer to have a Land Systems capability. Another key area to develop is Product Support where the U.K. has developed a clear lead.”
“How does EADS foresee the growth areas in defence and security?”
“One of our key areas for development is global security and homeland security. We have been successful in winning a number of key contracts in this area. These include the€1bn German BOSNet network, the U.K.’s FiReControl and substantial security contracts in the Middle East from Oman and Qatar in particular. A number of these Projects cross-over into the defence arena, thus we expand our offerings to military Command & Control systems.”
“Does NetCOS contribute to the success of these contracts?”
“Yes, our NetCOS network of four Synthetic Environments (SE) enable our engineers to model customers Requirements using pooled expertise. In short NetCOS demonstrates the art of the possible and the impossible. We can take nodes out of the network to see if our systems will work and indeed we have improved the functionality of a number of our key systems by using the NetCOS technology.”
"We already have NetCOS labs in the U.K., Germany and France and we intend to further extend this network in Spain. When completed, this international network will be the world’s largest international network-centric simulation environment. Military missions, accidents, civil incidents, and natural disasters can now be simulated, tested and optimally prepared, for the UK’s armed forces and emergency services. In addition, NetCOS UK allows battlefield commanders to evaluate risks and model potential scenarios without having to expose their troops to danger.”
“Synthetic environments now form a key part of the Procurement Process; indeed some ITTs specify the use of SE as part of the process. The looming 2012 Olympics will require a number of security requirements for protecting the various venues and the competitors; Synthetic environments will play a major role in developing these requirements.”
Synthetic environments provide the ideal tool to analyse customer problems and support the development and deployment of optimised solutions to best meet their requirements and budget constraints. Through-out the conceptualisation, evaluation and development of new assets, prototypes and simulations can be analysed in a synthetic environment to allow their operational performance, potential benefits and risks to be assessed at low cost, in different scenarios, by real users. Synthetic environments can also be used to investigate alternative solutions to customer requirements such as the development and modification of existing systems and doctrine to deliver enhanced operational performance.
Synthetic environments can integrate any number of real and virtual assets, information and intelligence into a single setting, allowing users to consider the results of multiple scenarios, including those that could not be staged in the real world. These scenarios might include mission rehearsal, doctrine development and de-risking.
Exploiting synthetic environments enables users to interact within a safe but realistic environment, interacting with personnel and systems, executing orders that stimulate a true operational response.
“Do you see more European defence consolidation?”
“EADS is the benchmark defence company in continental Europe. Whilst we are looking at the European market, we see the key to success as developing our footprint in the U.S., India and the Middle East in particular either by partnership or acquisition. We have spent the last eight years looking at Europe, that is too long, we must become more global.”
“Finally, do you foresee the advent of a centralised European Defence Procurement system which would streamline products onto common platforms and systems and thus reduce development and Through Life Support costs?”
“It all comes down to a simple fact: The less money you spend, the more efficiently you have to do that. So without any doubt, the shrinking defence budgets and the need for interoperability increase the importance of a joint European procurement system. Today, EDA already contributes to that goal by setting common technology standards and by providing a platform for common R&T and procurement efforts. Of course, we all know there is still large potential for improvement. But I do think that we have already made the first steps into the right direction and in the long run, I don’t see a viable alternative to that process. And if a single procurement should be realized, we feel that EADS is very well positioned: we are already present in the different nations, and we can also create the synergies within the company to ensure their requirements." Stefan Zoller concluded.
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