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THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

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Defense Leaders is an exclusive series of in-depth magazines and books aimed specifically at military and homeland security authorities as well as private sector professionals, including corporate security, competitive intelligence, financial and legal services, among other specialized sectors.

Our publications introduce the movers and shakers of the military and homeland security authorities. Made by leaders, for leaders, Defense Leaders is comprised of the Who’s Who within the global defense and private security industry.

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THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

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France 2013 Defense and security industries have recently faced a reduction in budget allocation, namely those pertaining to the United States and Europe.

Although the risk of a global conflict does not seem to be imminent, the world is still facing three major lingering threats: Regional tensions that can degenerate and spread uncontrollably Political- and religious-based terrorism Small-scale security threats with major impacts (piracy & hijackings, cyberattacks, economical warfare) To address these new threats, governments should not disarm, but rather adapt and modernize their military strategy and equipment.

Defense and security professionals thus have a crucial role in ensuring increased security levels by constantly developing innovative and effective solutions. DEFENSE LEADERS has the ambition to highlight their determination in its publications, distributed to key political, military and economic stakeholders of the industry worldwide.

In this current context of international instability, France has a prominent role to play within the global security and defense industry. Indeed, France is one of the few Europeans nations holding a strong consensus on the necessity to maintain a robust defense sector, an autonomous arms industry and a capacity to intervene on foreign ground. As a result, France has to remain a pillar not only of international security, but also of European defense.

DEFENSE LEADERS – FRANCE 2013 is dedicated to the country’s defense and security industry, highlighting the nation as a firm contender within an ever-growing international need for a safer world.

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DEFENSE LEADERS • FRANCE 2013

Institutional Partners GICAT, the French Land Defense Manufacturers Association was formed in 1979 by land armament industrial organizations. Its two main aims were to bring together this sector’s interests in a cohesive way and to represent the land and air land sector to public ministries.

GICAT brings together companies, associations, organizations and individuals whose activities are dedicated to: Study, development and manufacturing of land, air land and security equipment Supplying of various services for logistical support Promotion and marketing of this equipment manufactured in France GICAT’s objectives are: To supply its members with common information and a platform for discussion To define and conduct actions of common interest in various industrial and economic activities associated with land, air land and security defense equipment

GICAN, is the professional group representing the French marine industry. GICAN members are involved in naval defense, maritime security, safety and environment, and commercial shipbuilding.

GICAN was created in 1992 by companies involved in the naval industrial sector, under the sponsorship of the French Ministry of Defense. Since then, GICAN has broadened its scope, now encompassing maritime safety and security and commercial shipbuilding. As a result, the organization has been granted the sponsorship of the Ministry of Transport, Public Works, Tourism and Sea.

Event Partners

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

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Contents

46

Published by: Frontline Publishing Limited

PROVIDING

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34, avenue des Champs Elysées 75 008 PARIS - FRANCE Tel: +33 9 77 19 50 22

47

Arming Up or Arming Down?

48

Dassault Aviation

Editor-in-chief: Johan Mlouka

51

Alkan • Armand Carlier

52

Airbus Military: Taking it to the Next Level

54

Eurocopter

56

Snecma

57

Turbomeca

58

Orolia Group • Jean-Yves Courtois

61

Hispano-Suiza

62

Titan Aviation • Laurent Pourprix

64

Herakles • Philippe Schleicher

66

Eurenco

67

Roxel • David Quancard

Country Director: Martin Aurenche

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Editor: Rachel Morris Sub-Editors: Ritika Passi, Hanna Woodhead, Gemma Aixandri Fontova, Guy Sephton

POLICY MAKING

Contributors: Alain Bianchi, Matthieu Creux Art Designer: Anais Lailler

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François Hollande

10

Jean-Yves Le Drian

Main enquiries: office@defense-leaders.com

13

Advertising opportunities: sales@defense-leaders.com

Return to NATO: the French Perspective

14

Claude Guéant

68

MBDA

16

French Armed Forces Deployment

70

State Shareholding Structure

18

Jean-Louis Carrère

72

DCNS • Patrick Boissier

20

Budget Brouhaha

74

STX France / CMN Naval

21

The Nine to Watch in 2013

75

Raidco Marine / Sillinger / Nautiraid

22

DGA • Jean-Pierre Devaux

76

Nexter • Mike Duckworth

24

Workforce

78

Renault Trucks Defense • Gérard Amiel

26

Main Equipments

79

Texelis • Jean Vandel

28

The Year in Review

80

Optsys • Jean-Marie Mathelin

30

H.E. José Maurício Bustani

81

32

H.E. Mohamed Meer Abdallah Al Raeesi

Sofema • Guillaume Giscard d’Estaing

82

Elno • Thierry Gaiffe

Cover picture: the naval version of Dassault Aviation Rafale fighter parked on the deck of the french aircraft carrier Charles de Gaulle. It is equipped with MICA EM air-toair missiles from MBDA and the Damocles laser targeting pod made by Thales Group to guide a GBU-24 bomb.

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H.E. Tan Sri Abdul Aziz Zainal

84

Strerela • Franck Aglietta

36

Betting on Exports

85

Etienne Lacroix Group

38

French Military Exports Between 2007 and 2012

86

EDEN Cluster Federation • Jean-Luc Logel

© Dassault Aviation - S. Randé

40

GICAT • Christian Mons

88

Asteelflash • Gilles Benhamou

ISSN in the process of being assigned

42

GICAN • Jean-Marie Poimbœuf

90

Défense Conseil International (DCI)

44

GIFAS • Jean-Paul Herteman

91

Odas • Admiral (RET.) Alain Oudot de Dainville

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The views and opinions expressed in this magazine do not necessarily express the views of the publishers. While every care has been taken to ensure that the content of this publication is accurate at the time of printing, the publishers make no warranty, nor do they assume any legal liability, direct or indirect, or responsibility for the accuracy, completeness or usefulness of any information contained in this publication.

The entire contents of this publication are protected by copyright. No part of this publication can be reproduced or transmitted in any form or by any means, electronic, mechanical photocopying, recording or otherwise, without the prior permission of the publishers.

FRANCE 2013

His horizon...

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

FRANCE 2013 POLICY MAKING PROVIDING PREVENTING PROTECTING

…our shared horizon

DEFENSE LEADERS

SERVICES

eaves no room for error. Our customers the best in aeronautic expertise and cutting chnology, and they know that is what we Our experience in producing both civil and aviation allows us to blend the designs of o creating exceptional aircraft.

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DEFENSE LEADERS • FRANCE 2013

92 PREVENTING 93

Knowing the Unknown

94

Sofradir • Philippe Bensussan

96

CS Group • Didier Gardet

98

Adetel Group • François Sébès

100 Male Drones: Options for France 102 Sagem • Philippe Petitcolin

122 PROTECTING 123 France: Defending its Interests 124 Losberger RDS • Philippe Doucet

104 Cassidian

126 Cilas / Alyotech / Amphenol Socapex

105 Survey Copter • Jean-Marc Masenelli

127 Acoem • Alain Donzier

106 Thales Group

128 SEMA World • Charles Laubie

107 CNIM-Bertin Technologies

130 RDS Industries / PGM Precision / Protecop / Groupe Marck

108 Paul Boyé Technologies / Proengin / NBC-Sys

131 Dirickx Group • Hervé Maugeais

109 GIE Defense NBC / Mirion Technologies / Ouvry

132 Sorhea • Eric Thord

110 Gearing up to Take on Evolving Threats in Cyberspace

133 Alcea • Francis Bensoussan

144 SERVICES 145 Eurogiciel • Daniel Benchimol 146 Ausy • Philippe Morsillo

134 France: Protecting its Borders

148 Akka Technologies • Maurice Ricci

112 Bull • Olivier Bohbot

136 Civi.Pol • Rémi Thuau

Legal and Banking Services

114 Sysdream • Olivier Franchi

138 Morpho

115 Network and Information Security Agency (ANSSI)

139 Erys Group • Arnaud Dessenne

150 Crédit Agricole CIB • Emmanuel Bouvier d’Yvoire

116 iStrat • Arnaud Dassier

140 Amarante International • Alexandre Hollander

118 CDSE • Alain Juillet

142 Gallice • Gilles Sacaze

120 IHEDN • Lieutenant-General Jean-Marc Duquesne

143 Geos • General (RET.) Jean Heinrich

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

152 Cabinet Arcole • Jérôme Rivière 154 Business Accommodation 157 Index and Credits 158 Defense Leaders Distribution 5

POLICY MAKING

POLICY MAKING

“We represent interests that are not just our own but those of the entire world” François Hollande President of the French Republic Few nations have been implicated in so many operations in so little time as France. I am speaking of the Indian Ocean where we are fighting maritime piracy, but also of Afghanistan, the Ivory Coast, Kosovo, Lebanon, and of course France – with regards to the fight against narcotic trafficking in the Antilles Arc, and against illegal gold digging in French Guiana, which has cost the life of two French soldiers, endangering our air and maritime space.

Here are our army’s responsibilities: protect our territory, defend our values and interests everywhere in the world where they are threatened, defend our citizens where they are at risk, for example in the Central African Republic where we are vigilantly following the evolution of the situation. We are also keeping an eye on other zones of the African continent. This represents a major threat that we will have to deal with once again.

Terrorism, this kind of barbarism that has declared war on all civilizations, has taken root in the Sahara and in the north of Mali.

The Security Council, not only at our request but the majority's, unanimously adopted a resolution authorizing the deployment of an international mission under African control, “initially for one year”. The mission will aid in the reconstruction of the Malian army. France, with the rest of the European Union, will contribute to the training of armies, and at the same time the training of the Malian army and other African armies for operations that only they will be able to orchestrate.

reinvent the way in which we ought to think about our security and even our defense. This is one of the missions that I have handed to the Ministry of Defense and the Ministry of the Interior.

A second threat – even more terrible – is nuclear proliferation, which exposes all of humanity to the most destructive effects of these weapons given that some countries can obtain nuclear weapons or seek to obtain them in order to threaten world peace.

This means that we must once again develop and diversify our means of protection, but also be at the forefront of international diplomacy and politics as we are a permanent member of the United Nations Security Council.

The risks are also taking on new dimensions. We are now facing what we call “hybrid” adversaries or enemies who, through crude methods, have obtained capabilities that prior to today were reserved for nations. And there again, we must confront this through crisis management, and we must prepare ourselves.

The mission will aid in the reconstruction of the Malian army.

Other threats also exist, and they too require that we take action.

Some are more perverse than others: I am referring to cyberattacks, intrusions in cyberspace. We must prepare ourselves for this kind of aggression. The threat is directed against states but also against the economic sector, against our companies. This threat requires that we THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

All of these issues, these risks, these threats, these means of protection must be confronted while bearing in mind our alliances. Concerning this, I would like to emphasize the conclusions of a report I asked for from the former Minister of Foreign Affairs, Hubert Védrine. It concludes that the French must move towards fully assuming their role in NATO in order to remain at the forefront of initiatives taken by the organization and establish greater French responsibilities in this alliance.

Important steps have been taken in the last seven months towards the advancement of a European defense. I heavily insist that we gather our capacities, that we reinforce the European defense industry, but also that we work together in operations.

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POLICY MAKING

The year 2013 will also be marked by the preparation of a very important European Council that will take place at the end of this year, where we will have to take a stand for the advancement of European security and common defense policies. France will be fully involved.

What must we do? First, we want to maintain our nuclear deterrence strategy with two essential components: submarine and airborne capacities. Our effort in the nuclear domain is the product of constant political engagement dating from the time of General de Gaulle to today. This is a consensus that we must preserve.

It is not simply founded on habit, on custom, on rites, on national pride that we need dissuasive power. This consensus is founded on the same certainty: it is dissuasive power that also allows us to carry weight in the international arena. I will thus do all that I can to ensure that this asset is protected.

In the same spirit and beyond dissuasive power, we must be able to project power outside of our borders, meaning the ability to take action elsewhere, either in high intensity armed conflicts or in stabilizing and peacekeeping operations.

To do this, in order to be engaged in this arena beyond our borders, we must be ready. Our forces must be comprised of men and women trained and equipped at the right level, ready at any moment to face threats. This is why the importance of secret services will become the object of a particular focus especially after the launch of the observation satellite PlĂŠiade, which took place recently and which falls perfectly in line with these objectives.

The main concern for France is also to stay influential in the management and handling of crises that put international security and our strategic interests at risk. We must have a coherent strategy based on the evaluation of our objectives, based also on the analysis of the permanent difficulty of outlining the future of our armies over the next ten or fifteen years. This is the object of the National Defense and Security White Paper. The policy that will follow the White Paper will be discussed in Parliament this summer. It will lay down yearly objectives. Often, these laws over time are not well respected. Let us try to do differently than our predecessors. Let us have more realistic objectives, and let us be sure to reach them.

We must be able to project power outside of our borders either in high intensity armed conflict or in stabilizing and peacekeeping operations.

As President of the French Republic, I am the commander of the armed forces.

My mission is thus to ensure the lasting capabilities, forces, and thus countrywide security. The essential part of the defense budget was secured by the finance law for 2013. But everyone knows that the times call for better management of public funds and dedication to reducing the deficit.

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DEFENSE LEADERS • FRANCE 2013

POLICY MAKING Some may wonder what will become of the Ministry of Defense budget in this case. I remind you now: the Ministry of Defense will contribute to the national effort at the same level as other ministries, no more and no less, and will not be an exception to the state budget adjustments for reasons which are simple to understand and which are not strictly shared by defense personnel.

The first reason: because this budget is part of our sovereignty and our security.

The second reason: because we are in a system of alliances with strategic considerations. We represent interests that are not just our own but those of the entire world. Our defense sector plays a decisive role in the economic recovery of our country. Our defense industry represents 4,000 companies employing 150,000 people directly and 300,000 people indirectly through subcontracting. It is thus an essential issue for the location of our industries on the French territory, but also for investment and technology. The Ministry of Defense wanted to establish a pact with small to medium-sized companies to secure their business activity in order for them to fully participate in the defense sector of the country, and also so that they be reinforced by large companies in the domain of technology.

Several times now I have underlined the importance of innovation and reinvigorating French growth. This innovation, this research, will be found in the defense sector. There is a strong link between the civil and military industries, a link that is not only to be found in France, but also in the United States. Look at the aeronautics and space sectors: the successes of Airbus and the Ariane space launcher are based largely on their technological advancement, which was discovered as a matter of defense. Between the civil and military industries the links are strong and numerous. Our duty is thus to offer the means of conquering even more market shares to French industries necessitating that public power allow these links to grow.

There is, of course, competition in every domain, including in the creation of military equipment. We have certain neighbors, whom I will not name, who in this regard have gone to great lengths to promote their exports. We have principles, and we will not sell to certain countries – but when we decide to sell, we will be sure that we sell only to the best countries in order to get the full worth of the high quality of our materials. I will personally make sure of this.

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

Our defense industry represents 4,000 companies employing 150,000 people directly and 300,000 people indirectly through subcontracting.

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POLICY MAKING

“A New Armed Forces Model”

Jean-Yves Le Drian Jean-Yves Le Drian was named Minister of Defense and Veterans Affairs on May 16, 2012 under the Prime Minister Jean-Marc Ayrault. During his time in office, Mr. Le Drian notably led the withdrawal of French fighting troops from Afghanistan as well as the French military intervention in Mali.

The White Paper on Defense outlines a general strategy which is characterized by the new articulation of three main missions: the protection of France, French nuclear deterrence and external intervention. It is a clear and simple definition, I think, of our priorities.

The protection of the territory and the population is first in our strategy, but it cannot be achieved without the ability to deter and respond.

Deterrence is in turn the ultimate guarantee against state-based aggression or threats of aggression that target our vital interests – and we cannot exclude it for the foreseeable future. It allows us in particular to avoid blackmail which would paralyze French discretion, decision and action. Intervention by our armed forces outside the country, finally, reinforces the security of France’s strategic depth that is essential beyond our borders. It thereby reinforces the credibility of deterrence and protects our security interests in the world.

The viability of this model requires the inclusion of an industrial imperative. The choice was made to preserve the integrality of critical industries that make our industrial and technological base an instrument of French sovereignty and strategic autonomy.

With 4,000 companies, nearly 15 billion euros in revenue, an ability to export and energize industrial employment for about 165,000 people, of which a large proportion is highly skilled, the defense industry is a key player for the competitiveness of the French economy and employment. Finally, it is and must remain a player in the development of our regions.

For all these reasons, the President of the Republic has decided to maintain a significant amount of public funds to equip our forces until 2025. We have also included in this model an ongoing priority,

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Minister of Defense and Veterans Affairs

throughout the timeframe of the White Paper, for preliminary studies and research: they will be maintained at the level achieved in 2013.

While the modernization of our facilities (many of which, I know, are aging) will occur at a slower pace than what was planned for in 2008, the level of resources chosen as well as the guiding principles for an armed forces model I set out will progressively ensure the renewal of all critical abilities essential to our armies. This path must respect the priorities clearly held by the President in favor of deterrence capabilities, intelligence and power projection.

By preserving the industrial base, we maintain our strategic autonomy and thereby our ability to revitalize the French economy.

This is also why I will engage myself to resolutely support the export of our defense policy, seeking partnerships, especially with countries wishing to establish strategic relations with France. This is also why we are actively undertaking the preparation of the European Council at the end of this year, which will include an ambitious role for France in the European defense industry. France must indeed make the most for its own defense from the European project and its integration within alliances.

The 2013 White Paper outlines the historical commitment of France and its European partners to a common destiny. European integration is an important part of our strategy; I myself have dedicated a lot of energy to it for months. This is a major challenge for operations, as seen with Mali and the European Union Training Mission (EUTM). Similarly in the capacity to share, as I said about the principle of sharing, and as we intend to do in the field of inflight refueling, air transport, aviation, drones or space. There are important fields for future cooperation. Finally, the combination of our industries must be given a boost in the coming years.

DEFENSE LEADERS • FRANCE 2013

POLICY MAKING The Franco-British initiative, launched by the treaties of Lancaster House in November 2010, is an excellent example for others to follow, I hope. I extended the agreements from last July to the field of future combat drones and tactical drones, and by including new, antiship light missiles in our program to accelerate the integration of our missile industries. We have everything to gain from consensual interdependency. As you can see, it is not to spur an ideological revival of European defense, but rather to offer our partners in the European Union a pragmatic approach, based on concrete projects, a policy approach and a desire to optimize the management of our resources.

This commitment and shared research interest between Europeans goes handin-hand with, and I must say unashamedly, the full commitment of France in the military structures of NATO. NATO is an essential component of the strategy of defense and national security.

This is consistent with the findings of the mission entrusted to Mr. VÊdrine by the President of the Republic, already made public. The White Paper of 2013 was the first to affirm the consequences of France’s full participation in NATO. France intends to play an active role, assuming responsibilities at all levels of the military command, with contribution to operations, planning, doctrine, and finally through our vision for the role of this military alliance that we aim to promote.

The White Paper outlines with precision, by clarifying and renewing, the vision of France in a changing world. I draw your attention to developments in Africa, the environment of Europe, and Asia. Our presence in Africa is based on the tremendous growth potential of the continent, along with the consideration of the security challenges that also arise. As stated by the President of the Republic in Dakar last October, our military bases have all become instruments of cooperation, but they also support flexible and responsive services to address real security needs of the continent. The White Paper makes stabilization of the space in the vicinity of Europe, on its eastern and southern markets, a geostrategic priority. I hope this results in a common and balanced approach shared by all members of the European Union for their security interests.

Asia, meanwhile, is clearly located at the crossroads of strategic issues for Europe. It is therefore up to us to provide a political presence and a strong commitment to key strategic partners like India and emerging countries. In addition, the White Paper of 2013 takes into account the new dimensions of our defense strategy and national security. I would like to again mention three: cyberspace, maritime security, and hardening of the capabilities our forces are faced with in crisis zones.

Cyberdefense is a new strategic domain upon which the White Paper places particular importance. The interconnection of information systems in our society has created new vulnerabilities, which were not followed by a simultaneous effort to protect. But the likelihood of major cyberattacks has increased since 2008, and cyberspace has become a field of confrontation of its own. The challenge is not only the risk of denial of access or penetration of networks for espionage – realities already considerable and proven. What is at stake now is the ability to take remote control or even destroy vital infrastructure through digital networks.

French defense industry

15 billion

in revenue

The choice was made to preserve the integrality of critical industries that make our industrial and technological base an instrument of French sovereignty and strategic autonomy.

In this respect, the White Paper is committed to the pursuit of an ambitious policy to identify the source of attacks and to establish robust and resilient defense and an adapted response capacity, including offensive computing tactics, combined with intelligence technology. This is a new strategic field that is open to the defense field, with several ways of proceeding. I will mention a few by referring in particular to the work of the General Secretariat for Defense and National Security (SGDSN): increasing human resources, strengthening the security of state information systems, technological development and scientific and industrial skills, defensive and offensive development capacity, building up of military cyberdefense, establishing an operational chain centralized from the Center of Planning and Conduct of Operations (CPCO), creating operational and citizens reserves. The task, as we see, is urgent and significant!

Another area, maritime security, has emerged as an issue of increasing importance since 2008. It concerns the shipping routes that support strategic supply lanes for Europe. It relates to the preservation of natural resources and fisheries, but also to the protection of our overseas territories and asserting our sovereignty in our exclusive economic zones. As such, it involves efforts to maintain means of accessing the sea and maintaining the security of these areas.

Finally, it calls for a response of the whole state apparatus, involving the Ministries of the Interior, Defense, Overseas Affairs, and Finance.

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POLICY MAKING The third new military dimension is what the White Paper of 2013 acknowledges as the increasing hardening of the threats our forces face in areas where they are engaged in crisis management. This trend of “hybridization” of threats sees irregular opponents, such as criminal or fanatical actors, rely on relatively sophisticated technologies and means that are similar to state resources. We must take into account the necessary tightening of our military strategy. This is why the White Paper develops an accurate analysis and doctrine adapted to new conflicts.

I now turn to intelligence services. Although this is not a new dimension, it remains a future strategic field. Through this White Paper, the Government confirms and amplifies the priority it is given in our defense strategy and national security, whether human or technical.

Intelligence is in fact a strategic key to autonomy and operational efficiency. It provides essential support to our ability to protect, deter and respond. I see this during each of my trips to crisis environments. Therefore, France will continue the efforts it has undertaken to acquire the capacity for data collection and exploitation that we need for self-assessment for military planning, for targeting, for our Special Forces to act, and likewise, for that of our conventional and nuclear military means.

The White Paper 2013

announced a 10% reduction of French armed forces personnel

Several programs, too long delayed, have now been accepted and enlarged, including those relating to observation satellites, telecommunication satellites, means of onboard air platforms, theater and tactical UAVs and light aircraft monitoring and observation with sensors.

All the crises in recent years – Afghanistan, Libya, Ivory Coast, the Sahel, Syria – have shown the crucial importance of Special Forces. Indeed, they are particularly in tune with the needs of the authorities, both political and military. They are able to respond in an emergency, often stealthily, in the depths of hostile areas or complex situations. Noting their qualities and in particular their adaptability, the new armed forces model plans to strengthen their capacity, their command, as well as their integration with the intelligence services.

A forward-looking model also requires equipment priorities that are fundamental to the future and our sovereignty. I am thinking of investment in space, both for communication and for observation and listening.

In the same mindset, the White Paper plans to equip our forces with the equipment they lacked or which was incomplete. This is the case for tactical and theater observation drones, which will first be purchased off the shelves, and then be carried forward, I hope, by European programs. This is the case for tanker aircrafts that France has planned to acquire because they play an essential role in deterrence missions and air intervention missions.

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by 2019 Defense counts 1.5% of the French GDP

11%

of the state budget

DEFENSE LEADERS • FRANCE 2013

POLICY MAKING

Return to nATO: the French Perspective France withdrew from NATO’s military command in 1966 but returned to the fold in April 2009. Three years later, the Védrine report deemed the French reintegration to have had mixed results.

However, NATO may be France’s best bet to fulfil objectives.

It was to increase a European role in the organization that a French re-entry was necessary.

France fully withdrew from NATO’s military command by 1966 to follow President Charles de Gaulle’s vision to pursue strategic autonomy in face of American and British inaction to form a tripartite direction for NATO in which France would play an equal role. 43 years later, President Sarkozy reversed the decision, which he defended as being identical to the impulsions of the past but in a different strategic environment than that of the Cold War era that precludes France pursuing an independent defense policy.

Not only had France already started a gradual reintegration – in 1995, for example, it rejoined the military committee and allowed the first NATO exercise to occur on its territory since pulling out – but it is the fourth-largest troop and financial contributor to the organization.

It was therefore losing out from not actively participating in the organ responsible for operational planning. A third driving factor was Sarkozy’s desire to improve ties with the US.

Opposition

An honorary National Assembly session voted in favor of the plan (329-238 votes). Yet there was disapproval expressed, stemming from the conviction that France’s full membership would result in a loss of independence. The decision was also decried as pandering to Atlanticism.

Given that de Gaulle’s strategy had formed the bedrock of the country’s defense policy against American “hyperpower”, a return to the faulty organization would only decrease French influence. Sarkozy countered such claims by emphasizing that it was in order to increase a European role in the organization that a French re-entry was necessary.

Visible consequences

independent

member countries

Thus, one of Sarkozy’s conditions was a greater French role. This successfully occurred with France being put in charge of the vital Allied Command Transformation, Virginia, responsible for the Alliance’s long-term strategy, and a regional command in Lisbon.

Védrine’s report further notes French influence in rationalizing the institution, which led to a less than expected reintegration cost. There have also been a number of jobs created. The fact that France was able to take the lead in the Libyan operation has been attributed to the French reentry. It also led to the US asserting support for a strengthened European defense.

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

The potential

A lack of tangible economic benefits in the past three year does not lessen the potential advantage and leveraging power France can command from within NATO. It is first and foremost a question of cost. Weakened European defense budgets (and lack of a common vision) implicate NATO as the sole option to offer medium-term European supranational security.

Second, France’s re-entry has removed concerns about an alternate structure in competition with NATO. It therefore has a stronger probability to get members like the UK and Germany on board. The fact that no other nation followed France’s lead to pursue an independent defense policy away from American umbrage is a further indication that the only means to effectively promote a strong “European Europe” is through the bounds of the Atlantic Alliance. Indeed, it can help direct American efforts to that effect.

Prospective material benefit includes a broader market space for the French defense industry with an increased access to the US procurement market. While there has not been an increase in the number of contracts awarded to France since 2009, the potential remains. Industrially, it will allow the French military to enjoy further interoperability with other members, providing impetus for the country’s force modernization, as well as continued access to US military savoirfaire. The case can be made for France utilizing, to its advantage, the concept of “smart defense”: generating modern defense capabilities through a renewed culture of cooperation given financial constraints.

With regards to independence, it must not be forgotten that regardless of its military status in NATO, France is already bound to collective action if a member state is attacked. Moreover, it has retained its rights over its own nuclear deterrent, “Force de Frappe”.

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POLICY MAKING

Claude Guéant Former French Minister of the Interior Claude Guéant became the general secretary of the Elysée in May 2007 under the presidency of Nicolas Sarkozy. In February 2011, he left this post to fill the position of Minister of the Interior where he held the reins of French homeland security until May 2012.

What are the main threats facing France today?

The principal threat facing France is the threat of terrorism, both on our territory, given the unfortunate attacks carried out by Mohammed Merah (terrorist murders in 2012), and abroad, where a number of organizations professing Islamic extremism regularly target France as one of their enemies. This threat also weighs heavily on our foreign nationals and interests abroad and is the reason for which we need to have the capacity to tackle the threat both internally and externally.

Our operations are undertaken in close collaboration with our allies, namely the American, British, German, Israelian and even Algerian, Pakistani, Belgian, or Dutch services.

To what extent does the French intervention in Mali stem from this risk?

I do not believe that it stems from this risk fundamentally; the risk today does not seem to be any greater than before given that we are fighting the same groups in Mali who have consistently, for years, expressed a desire to launch attacks on our soil.

4,000

French troops in

14

Mali

In which sectors does France still need to improve?

We are constantly trying to improve both legislative and operational measures. With regards to legal framework, for example, after the London 2005 metro attacks, we prepared an antiterrorist law that was adopted by the parliament in order to significantly reinforce our ability to effectively fight against this threat. As for human resources, we have considerably strengthened our counterterrorism forces. Indeed, we used to have two intelligence agencies, the Central Directorate of General Intelligence (RG) and the Directorate of Territorial

Surveillance (DST) which were unified under the Central Directorate of Interior Intelligence (DCRI) in 2008. We did away with the RG agency which allowed us to triple our staff dedicated to the fight against national security threats, namely terrorism.

Quantitatively, we can say that in the fight against terrorism, our internal agency detains roughly one hundred people on average each year suspected of Islamic terrorist links. Among those hundred, the judicial system puts about 30 behind bars. Regular and sustained action is thus taken. Our operations are undertaken in close collaboration with our allies, namely the American, British, German, Israelian and even Algerian, Pakistani, Belgian, or Dutch services.

Of course there are vulnerabilities in this method.

The murders committed by Mohammed Merah in Toulouse and in Montauban in 2012 have illustrated this. We are more efficient in our efforts against organizations rather than individuals or small groups.

What are the French domains of excellence with regards to homeland security?

We have several domains of excellence involving equipment, and this expertise comes from our forensic police methods. We have a long tradition in forensics; the creators of scientific policing were French. Our strengths also include intelligence gathering, biometrics and facial recognition systems.

Moreover, there are several domains in which our advice is often sought because there is good reason for doing so, mainly concerning law enforcement.

We know how to ensure law enforcement avoids overreaction and use of violence. This represents societal progress. In this field our know-how is largely solicited by other countries.

What is your viewpoint on the situation in Syria?

The events taking place in Syria for the past two years are truly abominable. It is an awful drama, and Bachar Al Assad needs to leave. The situation will not be resolved otherwise. That being said, the situation is complicated, and we are becoming more aware that those who are fighting against the established power in Syria are potentially antagonistic forces.

There are those among them with real extremist Islamic projects. These groups could present a source of profound destabilization in the region starting with Syria but also branching out to the rest of the region. Consequently, we need a political DEFENSE LEADERS • FRANCE 2013

POLICY MAKING solution. It will obviously not be simple, but I am one of those who from the beginning contested that we have not sufficiently asked for Russian participation in this affair. Our diplomats are still in a reticent position regarding Russia. Russia is not an easy partner, but there is no hostility. We should place greater confidence in this partnership, especially as it is the only state holding the cards necessary to end the conflict. Also, several proposals are converging now: those of the special envoy to the United Nations, the Arab League and Russia, all of which tend to indicate a need for the organization of a transitional government representative of the diverse groups, including those who are today in power (Ba’athists). The path is open. I was immediately against arming the opposition because a humanitarian viewpoint is essential: there have already been 70,000 deaths. The more weapons we provide, the greater the risk to human life. Finally, it is important to note that President Hollande went back on his proposal to arm the opposition, and he will only do so once we are sure that weapons will not fall into the wrong hands.

Concerning French interventions in Libya (2011), Ivory Coast (2011) and Mali (2012), does France have a mandate to intervene in Africa?

France has never acted alone. In Libya we had the support of the United Nations to stop a massacre from occurring. In the Ivory Coast, we also acted as the extension of an international position. In Mali,

President Sassou Nguesso stated that for the first time in his long political career, he saw the African Union unanimously approve an external country’s intervention in Africa. In this context, we have revised our relationship with Africa; we are not there to get involved in interior affairs. We have partners, state-to-state cooperation with different countries.

There are also many countries in Africa that request French aid. We do not assist regimes, but we bring aid to states under international law. This was the case in Ivory Coast for example, or in Mali, where it was unthinkable to leave Bamako to the Islamists.

Moreover, we should consider Africa as an adult and respect the Africans. We need to keep our special relationship with the Africans. The majority of the francophony is in Africa.

Should diplomacy accompany international trade promotion?

Clearly, international trade is first and foremost the affair of companies. All the same, the state has the responsibility to do everything it can to help companies succeed in exportation. Nicolas Sarkozy fully assumed this role. We have seen both successes and failures. Take the example of the highspeed train, TGV, that we tried to sell to Saudi Arabia, where Alstom, the National Railway Society (SNCF) and the state worked hand in hand. In the end, our product was too expensive but the state could not do anything about it. Nevertheless, we succeeded in selling military equipment to Brazil, namely submarines via a technology transfer organization.

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

DCRI personnel:

2,922

41

DCRI budget:

million

15

FRENCH ARMED FORCES DEPLOYMENT The French colonial past left multiple territories and zones of influence in the world which remain at the heart of French strategy. These settlements around the globe allow France to reign over the second largest exclusive economic zone in the world, just behind the United States (11 million kilometers squared or 3% of the surface of the world’s seas). These territories possess natural resources and strategic fish stocks that are monitored in the French

Antilles, in the Indian Ocean, in the South Pole and in Pacific archipelagos. This is the role given to the sovereign forces (in red on the map) in all French territories outside of the French mainland.

France has also conserved several military bases in African countries from its former colonial empire that became independent in the 1960s. These entities (in green on the map) are the fruit of defense agreements with the

countries concerned and allow France to frequently lead combat operations against narcotics trade and piracy throughout Africa. In 2009, France inaugurated a fourth external military base in Abu Dhabi in order to have greater influence in the Gulf security.

KOSOVO - KFOR

FRANCO-GERMAN BRIGADE

300

MALI- SERVAL 2,000

FRENCH ANTILLES 1,250

(UN Security Council Resolution 2085 of 20/12/12)

CHAD - EPERVIER

SENEGAL DAKAR

950 6 Rafale

350

IVORY COAST ONUCI 450

FRENCH POLYNESIA 1,000

GABON FRENCH GUIANA 2,200 BA367

900 CORYMBE 1

16

CENTRAL AFRICAN REPUBLIC BOALI 600

DEFENSE LEADERS • FRANCE 2013

Above all, these bases host prepositioned French forces which allow France to be particularly reactive in protecting its interests and its nationals of which 200,000 live in Africa (assured by a support ship in the Gulf of Guinea). These bases also offer a rapid deployment capacity for international operation in Africa. The example of the Mali operation in January 2013 speaks for itself, with French forces arriving in only hours from neighboring countries.

LEBANON- FINUL 900

In the Far East, after 12 years in Afghanistan, France chose to remove all of its combatant forces by the end of 2012. Left now are troops dedicated to the training of Afghan personnel.

Although it was believed that this operation signaled the end of French operations abroad far from its borders, Mali disproved this theory in less than a month.

Finally, France benefits from a consulate network, one of the largest in the world, thanks to its defense attachĂŠs. Their role is both political and economic, readily supporting the French defense industry by participating in the gathering and diffusion of information in this domain.

AFGHANISTAN 1,500

UNITED ARAB EMIRATES 700 6 Rafale BA104

Current operation French military bases French military bases in French overseas territories French exclusive economic zones Ballistic missile submarine (always one in full time circulation)

ATALANTE 1 REUNION MAYOTTE 1,900 DJIBOUTI 2,100 7 Mirage 2000 BA188

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

NEW CALEDONIA 1,500

17

POLICY MAKING

Jean-Louis Carrère President of the Senate Standing Committee for Foreign Affairs, Defense and Armed Forces Jean-Louis Carrère is one of the most respected Senators in the field of defense and security.

His background has allowed him to become President of the Senate Standing Committee for Foreign Affairs, Defense and Armed Forces. He also heads the French delegation to the NATO Parliamentary Assembly.

In the context of national budget reductions across the world and the emergence of new actors, what changes characterize the defense market?

I think that a distinction concerning the defense market needs to be made between Europe on the one hand and the United States on the other.

The Senate Standing Committee for Foreign Affairs, Defense and Armed Forces is formed of

With regards to Europe, the budget crisis has exacerbated selfish tendencies and prioritized national interests instead of inciting European states to unite as one might hope.

In this way, the defense market remains demandsided and highly fragmented. Despite the application of European defense directives, no one imagined having to systematically rely on tenders. France, although the originator of these directives, does not apply them any more than others. Everyone plans to favor their own companies. Only countries that do not have a defense industry rely exclusively on the opening of the market to competition.

On the supply side everything seems fixed, except of course for the One MBDA constitution which has advanced at a measured pace. The failure of the abandoned merger between EADS and BAE had a strong impact. In fact, the mindset in favor of a united Europe is so weak today that we would be incapable of making a European company like EADS. As for mergers in the naval defense industry, this kind of project seems to me at present completely impossible.

In Europe there are no longer large development programs which could structure supply and bring about demand. The last important European military equipment program, the A400M, dates from ten years ago. The absence of MALE drone and even UCAV-related projects is quite problematic. And yet, everyone knows that in this domain more than in others, there can be no salvation without uniting our strengths, our military capacities and our industrial resources. Nevertheless, everyone finds a reason not to cooperate. The absence of projects endangers, for example, the future of European combat aviation.

As for the United States, however, and perhaps going against the dominant line of thinking, I do not believe that the federal government will save a substantial sum on military equipment. The most important cuts will take effect on the workforce. If

18

significant cuts are made to equipment, I do not think they will affect the most important equipment programs for the American military-industrial complex. For example, I do not believe that large budget cuts will affect the Missile Defense Agency budget which is responsible for ballistic antimissile defense. If cuts are made in the equipment budget, they will impact primarily armored vehicles. The American economic model is structured in such a way that subsidies in the domain of military research fuel innovation for large corporations. There is a consensus in the US of maintaining the goose that lays the golden egg as a measure of technological competitiveness and military leadership. The American administration will continue to fuel the most important technological programs for its economy because, contrary to others, they know how to make choices and delineate their priorities.

What is the diagnostic for the state of competitiveness of the French and European defense industries?

French defense industrial groups are doing pretty well altogether. They have in recent years made great efforts with regards to competitiveness due to the defense budget reductions.

Nevertheless, we do not hide the fact that the future remains grim. Even though we have seen it in the past, there is no hope for European consolidation. Consolidating programs cannot be achieved because there are not so many large development programs. Consolidation by the book, with the obligatory tenders, will take forever as long as countries do not implement European defense directives.

The state-led consolidation initiative, what we once called the industrial mecano, is not on the agenda these days. It would be necessary first to privatize DCNS or Nexter before we can envision attaching them to other large European industrial groups. Even if we did do it, no state would voluntarily allow its naval shipyards or its production-sites to disappear regardless of how inefficient they are. We saw in the EADS-BAE affair that what essentially motivated the German refusal was the fear that the new company would outsource its defense business to England.

DEFENSE LEADERS • FRANCE 2013

POLICY MAKING Thus, it is necessary to wait for certain defense industries to disappear in order to be able to restructure the European defense industry. For the moment, it is above all the American industry that has benefitted from this. The Italian company, Avio, which for example builds the key parts for the A400M and for space launchers, was bought

by General Electric. What would happen to BAE, Finmeccanica, or Saab if these companies were in difficulty? I fear that their first instinct would be to sell out to American companies.

Stockholder, client or salesman: what is the French state’s attitude towards the defense industry?

The French state has a long tradition of intervening in defense company affairs. This has taken the form of equity investment if not pure and simple nationalization. The EADS-BAE affair calls for reflection. If a lesson is to be gained from this failure, it is that the German government was able to oppose the project without any equity investment while France, who held 15% of the voting rights and even 22.5% through its stockholder agreement with Lagardère, was incapable of getting the project adopted. Further, at no point did the British ask to have as many shares as us. So there are ways of protecting state interests that are just as efficient as equity investment. In these days of budgetary restriction, reflection is necessary.

Concerning the state as client, yes, it is a fact: we are in a situation of monopsony, meaning that we are a single market. And the well-understood interest of this client is to never find itself confronted with only one producer, in which case, the client would have little means of influencing price formation and would be condemned to overpay for military equipment. If the state is forced into a monopoly because it cannot do otherwise, it is necessary to have on its side a state expert. I am referring to the DGA or the French Aerospace Research Center (ONERA), which are completely at the service of the state and capable of analyzing and contesting the cost price structure of armament. We must be clear; this supposes very strict revolving door restrictions because the expert must be transparent.

for 2012, we brought up the case of MALE drones, and we unanimously adopted an amendment to reject the choice of the Héron TP drones of the Israeli Aerospace Industry.

Regarding control, parliamentarian action takes place essentially on the basis of information reports that discuss the state of certain aspects of the administration’s policy and makes recommendations.

Outside of these two stages of political action, we act as much as possible before decisions are made.

This is notably the work of our budget program reporters but is more generally the work of the entire commission to gather information from all sources, to come to a single opinion and to make that opinion known.

On the subject of the private security service and defense companies (SMP), does the French legislative situation seem satisfactory?

This is currently a subject of debate. Many argue for the revision of the Montreux Convention, or the introduction of a disposition into French law allowing for private security service and defense companies. This would put us on equal footing in terms of international competition with Anglo-Saxon companies.

It is not for the moment a priority, given the White Paper and the military planning law, but we need nonetheless to take action on this subject and as quickly as possible would be best. There is a real problem particularly concerning maritime security in the face of piracy.

Parliament takes action at two critical stages of the political timeline: authorization and control.

With regards to the state intervening in sales, all of the major powers do it. I believe that not doing it would penalize our own industries. It is true that buying a combat plane is not a commercial act like any other; it is also a political act that demonstrates the trust between buyers and sellers. In this way, it is normal for state leaders to guarantee that buyers will benefit from continued security in hard times.

What is the role of parliamentarians in the political orientation of defense?

Parliament takes action at two critical stages of the political timeline: authorization and control. We cannot say that Parliament defines guidelines since it is the administration that determines it. And we cannot say either that Parliament drives defense policy making. However, it influences it.

At the moment of authorization, meaning the examining of the budget or the declaration of general policy, the parliamentarians can bring up any subject of their choice. It is in this way that in the Senate during the debate over the finance law THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

19

POLICY MAKING

Budget Brouhaha After months of suspense, several delays and many leaks, on 29th of April the French president François Hollande finally unveiled the Defense and National Security White Paper 2013.

Although the latest version is only meant to provide a strategic framework within which defense activities will be dictated in the coming years, there had been much controversy over the budget allocation. Two scenarios had gone head to head these past months. Scenario Y, advocated by the Ministry of Defense, demarcated the minimum threshold below which the army would risk being relegated to an inferior global standing.

The Ministry of Economy on its part championed Scenario Z, which saw 50,000 redundancies in the Armed Forces – an equivalent of the current total number of personnel in the Air Force – and commensurate employment cuts in the defense industry. Indeed, rumors of stopping the use of the French aircraft carrier Charles de Gaulle given financial constraints and instead selling it off to either Brazil or India were aired. This scenario also envisaged forgoing the cargo aircraft A400M and the Scorion program for new armored trucks for the Army as well as the cancelation of the remaining order of NH-90 and Tiger military helicopters. There would also be an adverse effect on the Rafale, FREMM frigates, Barracuda nuclear submarines and new MRTT aircraft programs. The defense budget would consequently draw down to around 30 billion euros (not including pensions at 20 billion), amounting to 1.1% of the GDP.

€ billion

(nominal cost)

50

However, the French military operations in Mali and the Central African Republic at the beginning of the year proved the impossibility of implementing Scenario Z’. With public polls backing up the Army, François Hollande confirmed in a televised speech in March that the 2014 budget would be the same as in 2013, paving the way for the solution defended by the Armed Forces.

In the end, the defense budget for the period 20142019 will be 179.2 billion euros, not including pensions, thus remaining at 1.5% of the GDP. Including pensions, it will be at 1.76% of the GDP (as per the norms of NATO), contrasted with 1.9% today. In reality, however, the Armed Forces will have access to less money, since this budget incorporates 5.6 billion euros in windfall revenues that the country hopes to reap from the sale of its interests in the industry (for example, the 1.2 billion euros from the sale of its EADS shares), property sales and those of radio frequencies.

In terms of staffing, 24,000 posts will be cut between 2016 and 2019, in addition to the 54,900 job losses already decided for the preceding period 2008-2015. As for equipment, no major program should be sidelined but instead will be spread out over a longer period of time. Even so, the Air Force will not be able to place a new order for Rafale aircrafts until 2020.

All these recommendations should be definitively adopted in a military planning law to be passed by the Parliament in September for the period 20142018.

40 35

35.8

36.1

2007

2008

Evolution of the defense budget between 2007 and 2013 EQUIPMENT

47.7

45

In terms of staffing, 24,000 posts will be cut between 2016 and 2019.

Research and development

39.2

41.9

Other

39.9

38.6

30 25 20

20

2009

2010

2011

2012

2013 DEFENSE LEADERS • FRANCE 2013

The nine to watch in 2013 Army Engineer General, Laurent Collet-Billon Chief Executive of the French defense procurement agency (DGA) After spending a large portion of his career at the DGA, he was named Chief Executive in 2008. He proved his ability to quickly impose himself in the industry and internationally. Concerning the A400M purchase, he did not miss the opportunity to point out the serious shortcomings of EADS all while leading negotiations regarding the additional equipment fees that production delays engendered.

Expected in 2011 to take command of the nuclear energy company, Areva, he will most likely leave his position at the DGA in 2013. An avid proponent of the consolidation of the French defense sector, his next position will probably remain in this domain.

Lieutenant General Benoît Puga Chief of Military staff of the President of the Republic Former general in command of special operations and director of military intelligence, he was nominated by Nicolas Sarkozy in March 2010, then confirmed for the position by his successor François Hollande. Member of the President’s cabinet, he is the principal military adviser to the President. He aids and advises the president in the capacity of his role as “army chief” instituted by the Constitution. He assures notably the permanent operational nuclear forces (transmission of firing order). The three predecessors for this post were next named Chief of Defense staff.

Jean-Claude Mallet Special adviser to the Ministry of Defense Senior official, he occupied a number of influential positions (Director of Strategic Affairs, Secretary General of National Defense) before being called to join Jean-Yves Le Drian’s cabinet.

Named President of the Commission for the Defense and National Security White Paper of 2008, he once again occupied a major role in the 2013 Commission where he opposed a number of the Commission’s president Jean-Marie Guehenno’s positions. In December, he called for the adjustment of the contributions of the three French Armed Forces chiefs of staff.

Jean-Pierre Chevènement Senator, former Defense Minister A fervent advocate for French independence, he protested against the French Army’s engagement in the first Gulf War and in Afghanistan, as well as French reintegration in the NATO command, fearing subordination of French foreign policy to American policy. It is also for this reason that in 2013 he promoted the idea that the particular efforts of France in the matter of defense (0.5% GDP more than other European countries) should be exempted from the 3% public deficit authorized by the European Union.

He argues, for example, that in Mali “the other European countries are not doing anything for a situation that directly concerns European defense”.

Marwan Lahoud Chief Strategy & Marketing Officer of EADS Armaments engineer, with work experience at the Cabinet of the Ministry of Defense (1995-1997), he began negotiating the creation of the EADS European Consortium. CEO of MBDA in 2003, he continued his rise within EADS, advocating the pursuit of acquisitions in the defense and security sectors. He was on the frontline of the failed merger in the summer of 2012 between EADS and the British BAE Systems. He quickly recuperated from this disappointment thanks to the way in which he managed the renewal of the Executive Board, easing the way ahead for its leader, Thomas Enders. Today he manages the strategic review responsible for defining the new strategic priorities of the consortium.

Bernard Carayon

Jean-Paul Herteman

President of the Prometheus Foundation

CEO of Safran Group

Former deputy, specialist of economic intelligence and business secrets, he created the Prometheus Foundation in 2005 which aims to support the French economic and strategic sectors economic warfare, producing an “operational line of thought”.

With a strong network, he benefits from numerous contacts in the industry and in major companies. He is currently pushing French actors to attempt to reinforce French influence on international standards.

Armaments engineer, he began his career in the DGA before joining Snecma in 1984. He stayed with the company during the course of its evolution until becoming Chairman of the Board and then CEO in 2011. Well-connected, he acquired multiple representative positions in the sector, first at the head of the French Aerospace Industries Association (GIFAS), then at the European level, taking control of the AeroSpace and Defense Industry Association of Europe and also as the Vice Chairman of the General Council of Armament.

Arnaud Danjean

Antoine Bouvier

European deputy, President of the Defense and Security Subcommittee

CEO of the MBDA

He began his career as a civilian worker with the General Directorate for External Security, the French foreign intelligence services. He specialized in European security issues before being elected in 2009, first as European deputy and then as Subcommittee President. In this position, he is the rapporteur on resolution projects focused on the instauration of European security, security policy and common defense strategy. He represents an important French voice in Brussels on military subjects.

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

With time spent at ATR Aircraft, Eurocopter and Astrium Satellites, he became the head of the European missile company in 2007. Given the capital structure of MBDA (37.5% EADS France, 37.5% BAE Systems), he is at the cutting edge of the Franco-British cooperation rekindled by the Lancaster House Treaty of 2010. He advocated Franco-British mutual dependence in the domain of missiles (the “share it or lose it” doctrine), reinforcing the idea that success will rely on strong industrial integration and respect of financial promises made by both countries, further adding that France lags in financing its part of the light antiship missiles desired by the British.

21

POLICY MAKING

Jean-Pierre Devaux Director of Strategy of the French defense procurement agency (DGA) The DGA, created in 1961, is responsible for preparing the future of the French defense systems, equipping the French military, and promoting defense equipments exports. Laurent ColletBillon is the current head of the DGA, thus named on July 28, 2008.

What are the DGA’s main missions? What is your particular mission as Director of Strategy?

Technological maturation

50% Prototypes

Research

15%

35%

The DGA covers three distinct missions within the Ministry of Defense. First, it prepares future weapons systems by injecting 750 million euros into numerous targeted research and innovation projects. Second, it equips the armed forces in the context of European industrial and technological policy. In this regard, it pilots roughly one hundred programs that represent an annual investment of around 10 billion euros. Finally, the DGA supports and promotes French defense industry exportation.

The Strategy Direction has more specifically taken on the mission of preparing for the future.

This responsibility requires detecting emerging technologies, directing research investment efforts and identifying key industrial and technological capacities. Finally, the Strategy Direction is responsible for developing international cooperations.

What is the French doctrine in the field of defense development and equipment acquisition?

There is above all a will to maintain autonomy in the domain of nuclear deterrence in a larger sense.

We developed our own dissuasive tools, and we are the only ones in Europe with this advantage. The benefits of this preparation for the future are evident in the domain of submarines where we clearly aspire to keep our autonomy. In the domain of ballistic missiles, we are also focusing on our research in order to maintain our independence.

There are fields in which we wish to remain particularly autonomous. In aeronautics for example, namely combat aircraft programs, the issue is less obvious than deterrence, and we admit the necessity of a certain degree of cooperation for this type of program. There is also a kind of acceptable dependence, typically in the case of naval mine warfare where we prepare to renew our present capacity: it will be a Franco-British partnership because in this domain the French and the British have the exact same needs which allow us to work together in this field.

22

What are the principle technological subjects of concern for the DGA today in armed forces equipment?

Naval mine warfare is a good example of what we are starting to integrate in terms of breakthrough technology equipment. Breakthrough technologies occur in two areas. The first is robotics where there is a strong focus on the naval domain but also in the land and air domains. The second is assets’ networking. This is something we began to apply in the land domain with the FELIN program that we have carried forward on with Scorpion and which we are now applying in mine warfare with the concept of surface drones equipped with submarine drones and the multiplatforms situation report.

For upcoming breakthrough technologies, we are currently carrying out several studies in the field of science, where we are looking closely at the prospect of nanotechnology, as well as work done in the energy domain even though we know that defense will always be a minority customer in this domain. We also carry out studies on different types of materials. The REACH regulation requires material changes that will need to be handled and thus, prepared for. There are also studies on particular materials which could provide advantages in terms of changing characteristics depending on the environment. In the domain of intelligence as well, we are exploring electromagnetic waves for image acquisition that are slightly different from what we are currently using. We conduct studies on terahertz radiation and on multispectral images by enriching the range of possibility in terms of image acquisition and above all data interpretation.

In 2013 the DGA will invest 750 million euros in research and defense. Today the DGA is by far the biggest European investor.

DEFENSE LEADERS • FRANCE 2013

POLICY MAKING How does the DGA conduct R&D? In 2013 the DGA will invest 750 million euros in defense research studies. Today the DGA is by far the biggest European investor. Another French particularity is that funding goes directly to the industry, which rounds off this financial aid with its own funds. In this way, we have a strong financial leverage. Many of our partners, including the important ones, still internalize a majority of research. Finally, our investment covers a large spectrum, from basic research to prototypes. We devote 15% of funding to basic research, 35% to prototypes and the rest goes to technological development. We do not carry out basic research: we accompany it. Basic research is rarely carried out entirely by the military except in the case of nuclear capabilities and cyberdefense. The majority of research is thus conducted through dual-use research in the beginning stages. The majority of research funding, 650 million euros roughly, are devoted to strictly defense projects.

Our approach to supporting research and innovation relies upon a lots of tools that are compatible with the European regulations on subsidies, particularly in dual-use domain. For example, the DGA supports a pool of 450 PhD and post-PhD students who all work in French or foreign laboratories. We choose the theses according to their utility for defense purposes. This leads us to work for example with the National Agency for Research (ANR) on energy subjects or information and communication technologies.

We have also created with the ANR an entirely dual-use financing program called Specific Support of Innovative Defense and Research Work (ASTRID).

We devote roughly 12 million euros each year to this financing program which undertakes 30 to 40 subjects, funded for an average length of three years.

For years the DGA has also supported innovative SMEs. A specific financing program was put into place to meet this end called Support Scheme for Dual Innovation (RAPID). This project recently saw its budget enlarged from 40 to 50 million euros.

This allows for the financing of projects proposed without request by SMEs in a four-month time period. The projects last between two to four years and result typically with a prototype or a first model.

This process was created in 2009 and has allowed us to finance nearly 200 projects. The Hercules exoskeleton and the Millicam camera to see through walls are both recipients of the RAPID program.

Finally, for off-the-shelf products, we have a program called “reactive experimental operations”.

Concretely, this allows us to test run the products by the armed forces in order to possibly acquire them. This is a process that is especially used by the Special Forces.

In every case our objective is simple: facilitate the transformation of ideas into products. The DGA does not simply invest, it is also an innovation catalyst!

What about the cybersecurity domain?

DGA developed its own expertise comprised of close links with the world of research and industry. It is a complex and transversal domain in which we are hiring at a rate of about forty highly skilled engineers per year. The world of cybersecurity is similar to that of nuclear deterrence in that we are working to remain very autonomous.

Given the number of international programs being delivered, is it time for more bilateral cooperation?

We must be pragmatic. The cooperation programs allow us to acquire equipment that we could not finance on our own. This is the case for the A400M and the Tiger which required strong developmental efforts. But there has been some excess. The multiplication of national specifications is one example. Our job today is to avoid these errors from now on.

Experience shows that the most important thing is to bring military needs together in order to avoid engaging in dispersed activities. Bilateral relations aim to complete the first steps in clearing up needs. To clarify, they facilitate the creation of a core group of nations that really desire to construct together and who have aligned their military needs and doctrines of use. In this way, we have a clear idea of the solution and a rapid tempo. This is what we do in practice with the British in the context of the Lancaster House Treaty. For missiles, it is strictly bilateral. We rely on our industry and we work together. We also do trilateral projects like the ASTER 30 missile, a French-Italian missile that is used by the British. We relay information about each development to these latter. In this kind of cooperation there is always concern over widening the circle while maintaining a core nation group that takes the lead.

87

A large number of countries currently have budgetary problems, which could potentially hamper the launch of program, but ideas appear to solve this. As Winston Churchill said, “Gentlemen we have run out of money. It is time to start thinking“.

The cybersecurity domain is an interministerial subject, largely handled by the ANSSI. At the Ministry of Defense, in cooperation with the joint staff, the THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

23

WORKFORCE

59 1

,0 01

Defense Headcount Between 1990 and 2013

600,000

84 2

soldiers

73 5 3, 28

7,1 31 28

,4 93

0

300,000

29 6

22 30 5,

31

3, 40 2

CALLED 32 0, 93 6

400,000

civilians 32 7,5 92

37 8,

500,000

200,000 100,000 0

1990

2000

2007

2008

2009

2010

2011

2012

2013

Staff of the French Army (2011) 53.5%

21.8%

Ground

NAVY

16.9% air

7.8% OTHER

National Guard & Police Workforce (2012)

144,153

95,012

24

Police

National Guard (Gendarmerie NATIONALE)

DEFENSE LEADERS • FRANCE 2013

WORKFORCE Active Military Personnel (2010)

41%

Non-commissioned officers

officers

15%

44%

RANKS

120,000 100,000 80,000 60,000 40,000 20,000 0 GROUND

NAVY

AIR

DGA

various

10 ,0 00

5, 00 0

5, 00 0

10 ,0 00

15 ,0 00

20 ,0 00

25 ,0 00

30 ,0 00

35 ,0 00

40 ,0 00

45 ,0 00

Age Pyramid of the Military 16-20 21-25 26-30 21-35 36-40 41-45 46-50 51-55

Men Women

56-60 60- +

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

25

MAIN EQUIPMENTS Combat Aircrafts

Armored Vehicles

Omnirole fighter Heavy tanks

Rafale (132 more ordered)

Troop transportS VAB

254

3,170

Leclerc

AMX 10 RC

256

PVP

152

ERC 90 Sagaie

Artillery

77

1,131 VBL

CAESAR

Nuclear or conventional assault, air combat, reconnaissance

165

Light armored vehicles

Light tankS

1,610

74

Mirage 2000 & Mirage F1

Transport Aircrafts Strategic airlift

Infantry combat vehicleS

1

A400M (TO BE Delivered in 2013 - 50 ordered) (630 more ordered)

445

VBCI

Tactical transport

53 C130 & C160

Helicopters

UAVs

MALE

Transport and rescue helicopterS

Attack helicopter HARFGANG

4

Helicopters

23

Cougar

92

Puma

40 Caracal

NH 90 Caïman

26

8 6

Air defense, rescue & transport

TIGER (40 more ordered)

GAZELLE

153

84

Fennec, Caracal, Cougar, Puma & Super Puma DEFENSE LEADERS • FRANCE 2013

MAIN EQUIPMENTS Submarines

Naval Aviation On-board aircraftS

27

Super Etandard Modernized

31

RAFALE

Le Triomphant class

4

Ballistic missile nuclear submarineS

Nuclear-powered attack submarineS

Helicopters

48

Lynx, Panther, Caïman

6

RUBIS class

Aircraft carrier Charles de Gaulle

1

Amphibious assault shipS Mistral & Foudre class

4

Frigates d’Estienne d’Orves CLASS

5

9

Light Stealth Frigates

1

Communication satelliteS

submarinelaunched ballistic missileS: M-51

2 Observation satelliteS

4

HELIOS II & PléiadeS

1

4

Anti-air frigateS Horizon class

8

Nuclear Missiles

Satellites

SYRACUSE III

Aquitaine class (FREMM) (10 more ordered)

Antisubmarine frigateS

Lafayette class

Gowind class

Multipurpose frigateS

FELIN Systems infantry combat systemS (10,000 OUT OF 22,588 ordered)

air-launched nuclear missileS: ASMP/A Nuclear weapons delivery

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

27

THE YEAR IN REVIEW

François Hollande names Jean-Marie

Euronaval

Guéhenno President of the White Paper

François Hollande

elected President of the French Republic

Salon in Paris 22-26 October

Defense and National Security Commission

EADS and BAE systems

Brazil holds off on its choice of a combat plane, but the Rafale is still in the running

François Hollande announces at the NATO summit

the withdrawal of 2,000 French combattant forces from Afghanistan

abandon their merger project

before the end of 2012

May

June

July

August

September

French Army leaves the Surobi region

in Afghanistan

Eurosatory

October

Renault Trucks Defense acquires

the light armor manufacturer, Panhard General Defense

Salon in Paris 11-15 June

First successful end-toend MBDA submarine cruise missile launch

Jean-Yves Le Drian

named Defense Minister

Stéphane Reb named Director of International Development of the French defense procurement agency (DGA) DCNS finishes the first hull section of the Barracuda nuclear attack submarine

28

DEFENSE LEADERS • FRANCE 2013

THE YEAR IN REVIEW The French Army leaves the Kapisa

region in Afghanistan

Jean-Yves Le Drian rings in the new year with the

DCNS and Odebrecht inauguration of industrial submarine construction-site for the Brazilian navy

1,500 French non-combattant

remaining in Afghanistan Signing of SME Defense Pact: 40 guidelines for strengthening defense SMEs

Launch of Operation Serval in Mali

India might order more Rafale than planned (189 instead of 126)

First flight of the nEUROn combat drone demonstrator

by Dassault Aviation

NOV

DECEMBER

JANUARY

François Hollande unveils the long-awaited French White Paper on Defense and National Security

FEBRUARY

MARCH

APRIL

MAY

Defense budget voted at

€38.6 billion

4000 French soldiers deployed in Mali

Jean-Bernard Levy named CEO of Thales Group

French M51 submarine-launched ballistic missile test fails off the coast of Brittany

Eric Trappier named CEO of Dassault Aviation

DCNS equips the French Navy with the first FREMM frigate

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

The heads of Thales, Nexter, DCNS, Dassault Aviation, Safran, MBDA and EADS France call for an audience with President François Hollande to discuss the defense budget.

29

POLICY MAKING

H.E. José Maurício Bustani Ambassador of Brazil to France Ambassador of Brazil Bustani is a long-time supporter of the Franco-Brazilian strategic partnership. Thanks to a shared border, compatible defense objectives and openness to technology sharing, France and Brazil have become strong partners in the domain of defense and security industries. Ambassador Bustani expands on this alliance.

In 2006 Brazil and France signed a strategic partnership particularly concerning the military and space sectors. What does this partnership entail?

The presidential reunion in December demonstrated the strong bond between President Dilma Rousseff and President François Hollande.

The strategic partnership heralded by Presidents Lula and Chirac in 2006 were reinforced and enlarged in 2008. Last December, this cooperation has gained a new momentum after the national visit by President Dilma Roussef in France. During this successful visit the Presidents decided to enlarge the strategic partnership in the domains of science and technology, particularly space and supercomputers. They also decided to bring out the potential for cooperation concerning the military.

In the defense domain, I can confirm that the partnership has been outstanding. We can notably underline the success of the submarine program (PROSUB) and the helicopter program.The submarine program, the biggest cooperative international project between the two countries in the domain of defense, is focused on the joint construction of four classic Scorpène class submarines. It also includes the manufacture of a nuclear submarine headed by Brazil with regards to nuclear powered engines and to the nuclear island construction area, as well as the manufacture of combat system torpedoes. And finally, it includes the construction of the shipyard and the naval base at Itaguai in the state of Rio de Janeiro which is capable of handling classic and nuclear submarines. The helicopter program allowed for the acquisition of fifty EC-725’s which will be used by three armed forces and whose creation will gradually be handed over to Helibras (Helibras is the Brazilian subsidiary of Eurocopter). This will allow for regular increase in production of national aircraft. The transfer of technology and industrial capacities imagined by the program will require the modernization and the duplication of Helibras factories at Itajubá within the state of Minas Gerais.

The strategic Franco-Brazilian partnership has solid footing and is lucrative for the two countries.

The partnership is founded on a certain number of common characteristics. First, there are cultural similarities between our two nations who share certain values as well as a democratic political system. Next, you have the shared border with French Guiana. And finally, we share a common vision of international order founded on multipolarity, multilateralism and international law. This partnership is also based on the idea that both countries have much to gain in

30

the way of defense industry collaboration. On the one hand, even though France is technologically advanced and equipped with a range of sovereign industries, it is incapable today of protecting its scaled economies – distinguishing it from the United States and China – which permits France to stay at the forefront of industry and technology.

In order to meet the challenges of the weaknesses inherent in a scaled economy, France has chosen to add partnerships with emerging powers like Brazil to its traditional European partners. For Brazil, the cooperation with France in strategic domains and in high technology has allowed for the transfer of technology, the creation of jobs for skilled workers, the training of middle and senior managers, the enhancement of the industrial network, and the creation of strong Brazilian companies capable of forming joint ventures competitive at the national level with competition from the US and China.

Brazil was once the main French commercial partner in defense and security, but business has slowed. What is the current status of the relationship?

Even though the international images of Lula and Rousseff were quite similar in content, there are obvious differences in their personal styles.

President Rousseff has her own way of reacting on the international stage, as well as concerning internal politics, which is natural. The presidential reunion in December demonstrated the strong bond between President Dilma Rousseff and President François Hollande. It is clear that they share the same vision regarding to global governance, to the future of Europe, and concerning economic management (growth and social justice). The presidents are united in the fight against ultra-liberal conformity and the excessive importance given to austerity budgets.

This agreement will most likely move the strategic partnership forward with positive development in the domain of defense.

The fight against cross-border crime, notably illegal gold mining and fishing, are the center of intense bilateral cooperation. A police cooperation center, used to reinforce the cooperation already in place, was made operational in 2010 between the two countries. Last February, the Gendarmerie Nationale and the Brazilian navy also led missions to fight against illegal fishing alongside the French.

DEFENSE LEADERS • FRANCE 2013

POLICY MAKING

Despite the progress made regarding bilateral cooperation, an asymmetric situation persists concerning the circulation of people. It will be very important to eliminate the visa obligations for Brazilians who enter French Guiana for short trips.

The French who enter Brazil by way of AmapĂĄ from French Guiana are not required to do so.

It is essential that people understand the importance for France of being an Amazonian country. In Brazil the public opinion should pay closer attention to questions concerning our border and to the possibilities for cooperation that go along with it. Neighboring countries are partners in an unbreakable alliance, and we must integrate this dimension into our strategic partnership.

Although the Rafale was likely to win the FX-2 contract, the final decision has been delayed.

What are the reasons for this?

This deal will be made once our President decides that the budgetary conditions are optimal. Without wanting to guess the results of a choice that is not my own, I would say that France has certain advantages that put it in a good position for this tender, as well as for the majority of tenders, so long as companies know how to make the best offer. The French advantage is having the greatest technology transfer openness, which falls in line with the French state’s strategic vision, aware of the necessity to

make partnerships with an emerging power in order to realize economies of scale for its industry and to be able to rival giants like the US and China. The second advantage for France is the possession of real skills that we need, knowing that there are few countries that have such a range of capacities. The third French advantage is that its dimensions are great for a partnership because they are very similar to those of Brazil. The relationship is thus neither one of superiority or of inferiority, but of equals.

The French advantage is having the greatest technology transfer openness.

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

31

POLICY MAKING

H.E. Mohamed Meer Abdalla Al Raeesi Ambassador of the United Arab Emirates to France Graduated from the College Interarmées de Défense in France, the Technical Military College in Egypt, as well as the Université de Technologie of Nanterre in France, Mohamed Meer Al Raeesi is serving as Ambassador Extraordinary and Plenipotentiary of the United Arab Emirates to the Republic of France since April 2010. Prior to this positions he served in the Air Force Command and retired from the Armed Forces with the rank of Brigadier General.

How can the relationship between France and the UAE be described?

His Highness the late Sheikh Zayed Bin Sultan Al Nahyan had already laid the foundation of the relationship between France and Abu Dhabi, even before the formation of the UAE in 1971, with purchase agreements of French Military Equipment. The relationship has been built upon with successive French presidents, right up to the current President François Hollande. His Highness Sheikh Khalifa Bin Zayed Al Nahyan, President of the UAE, has continued the policy of the late Sheikh Zayed and with a very close and continued followup from His Highness Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces. The strategic relationship between France and the UAE is therefore very strong on all fronts: political, economic and military. It has seen a positive strengthening over the years; proof positive of this is the growing presence of French in the UAE and of Emiratis in France, and the increasing investments by French businesses in the UAE. This privileged relationship has evolved since the partnership agreement in 1997 between the two countries, an agreement that was revised and renewed in 2012. Cooperation at the military level covers the three armed forces (air, land and sea), and a large part of the equipment used by our armed forces is of French origin. The two also collaborate in formation and training, notably organizing joint exercises on French and UAE soil or in other Gulf countries. Moreover, there are Emirati officials who receive training in French military schools, at the Joint Service Defense College, and reciprocally, there are French officers who train at the military school in the UAE.

Afghanistan, and more recently Libya. Finally, the UAE is member of the Istanbul Cooperation Initiative (ICI) as well as an observer member of NATO. Our involvement in defense activities is thus intended to preserve peace, security and stability in the world.

What is the potential for industrial cooperation between France and the UAE, particularly in the wake of IDEXDefense Exhibition 2013 at Abu Dhabi earlier in February?

IDEX is the largest military exhibition of the Middle-East-North-Africa (MENA) region, and the 2013 edition showed the interest Emiratis leaders give to French booths and enterprises. Furthermore, the equipment used by the UAE Armed Forces is mostly French, which reflects our recognition of the technology and quality of the French defense industry. An exhibition like IDEX provides further opportunities for military specialists to examine new products offered or presented by French companies, and there is a real probability of a future equipment deal. Further, a large, high-level delegation will attend the Paris Air Show (Salon de Bourget) in June.

To what extent is the UAE active on questions of defense in the Gulf Cooperation Council (GCC) and at the international level?

Even before the UAE came to be, His Highness the late Sheikh Zayed Bin Sultan Al Nahyan and the emirate of Abu Dhabi had a vision that peace and security of the UAE were closely linked to the general security of other GCC countries. We are thus an important partner in the organization of defense in the GCC. Furthermore, the UAE does not intervene in internal affairs of other nations, but as a response to humanitarian needs under the mandate of the United Nations. For example, Lebanon in 1976, Somalia or Kosovo along with French regiments,

32

DEFENSE LEADERS • FRANCE 2013

POLICY MAKING

Do you believe French companies are losing market shares in the UAE?

What is the potential for the UAE’s defense industry and its evolution in the coming years?

We are a small country that needs to have the most sophisticated technology in the world to protect ourselves, and given my experience in the army, I would like to emphasize that quality is more important than quantity. We are consequently committed first and foremost to the quality of material when we enter into discussions with third countries, whether it is France, Germany, the UK or the US. We then compare all offers according to our needs, and choose. When we buy equipment, we ask suppliers to modify their products and integrate specificities particular to the UAE in their systems.

Then we look at the price.

The UAE is a young nation and our wise leadership has always wanted to focus on the human element before infrastructure. Such was the vision of the His Highness the late Sheikh Zayed Bin Sultan Al Nahyan, who gave human development the importance it deserved. Today, we have brainpower and capacities of high expertise. Therefore, we naturally have the ambition to have a strong industry at the forefront in all domains, particularly in the defense sector.

Tawazun is a good example of a successful company.

We want to continue collaborating with foreign and particularly French enterprises in the field of transfer of know-how. I wish to thank French armament companies who work and constructively cooperate with us, as well as the French government, which facilitates our mission.

The world, today, has changed. 20 or 30 years ago, the only options available for, say, fighter jets were French or American aircraft. Nowadays, there are more options, and state-of-the-art technologies are available in many places. We thus now have teams that are dedicated principally to comparing different offers available worldwide, in terms of matching products with the requirements of our armed forces, and in terms of pricing. I want to insist on the fact that for us, marketing and pricing are very important factors; we will not buy the same product with the same level of technology at a higher price because of good diplomatic relations. When I meet key executives from French companies, my advice to them is always to improve marketing and pricing.

We want to continue collaborating with foreign and particularly French enterprises in the field of transfer of know-how.

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

33

POLICY MAKING

H.E. Tan Sri Abdul Aziz Zainal Ambassador of Malaysia to France Prior to his present appointment as Ambassador of Malaysia to France, Tan Sri Abdul Aziz Zainal was the Chief of Defense Force, a position that he held from February 2007 to September 2009. Previously, His Excellency also held the post of Chief of Army from 2004 to 2007.

What do Franco-Malaysian defense relations entail?

France and Malaysia are major trade partners; the purchase of defense equipment and systems forms part of our trade balance.

Historically, Franco-Malaysian defense relations were established as early as the 1970s when the Malaysian Armed Forces purchased a squadron of Combatant Class ships from France.The engagement has since continued with the subsequent purchase of other military equipment, weapons and hardware, for the Malaysian Army, Royal Malaysian Navy and the Royal Malaysian Air Force (RMAF). Apart from this, there have also been various training programs with the respective services and transfer of technology programs with the local defense industries, as part of the offset programs, particularly for the continued maintenance and operational readiness of related assets and systems. With all those purchases and programs, the relationship between Malaysia and France has grown and the Malaysian submarine program has further strengthened the bilateral relationship. To date, the strength of FrancoMalaysian defense relations can therefore be described as one that is at an excellent level.

What represents Malaysia’s main concerns in the defense and security sector?

Like other nations the need for continued improvement, upgrading and modernization of defense assets and equipment are always being planned, however, all these are generally dependent on government allocation or the annual budget for defense. The Malaysian Armed Forces envisions itself to be a credible force with the necessary force capability. When I was the Chief of Defense Forces, we developed a force capability development plan that will transform and strengthen the Malaysian Armed Forces. These capabilities include procurement of state-of-the-art systems and assets to enhance operational capabilities in the sub-surface, surface, airspace, and cyber domains. Notwithstanding that, the development of the Malaysian Armed Forces is in tandem with the need to defend the country from any eventualities and to provide stability in the region. Malaysia promotes moderation and has very good relationships with all countries in the region.

What explains the Malaysian enthusiasm for European and particularly French products?

Malaysian enthusiasm or preference for European, in particular French products is because we see French products as technologically advanced and

34

reliable, whereas the sale of US products generally tends to be more restrictive given the requirement of approval from their Congress. Apart from that, the relationship and confidence built over the years does have an influence on the decisions made with regards to such procurements. Needless to say, France and Malaysia are major trade partners; the purchase of defense equipment and systems forms part of our trade balance. Malaysia’s trade volume with the European Union amounted to a generous 35.26 billion euros last year.

Furthermore, the Franco-Malaysian seminar on small and medium defense enterprises was well received by Malaysian companies and has contributed towards the establishment of a strong relationship between the local defense industries and French companies. As we are aware, Malaysia hosts two major Defense Exhibitions, the Defense Services Asia (DSA) and the Langkawi International Maritime and Aerospace Exhibition (LIMA) alternately on an annual basis. These exhibitions are strongly supported and participated by many French defenserelated companies such as DCNS,Thales, MBDA, Nexter, EADS, Panhard, Safran, RTD, Sert, Deschamps, Dassault and many others. LIMA and DSA therefore provide an avenue for cooperation and collaboration in identifying and promoting new technologies among the defense industry players, and with the military and security agencies.

What are the factors at stake for Malaysia in its selection of a new combat jet model?

The Royal Malaysian Air Force (RMAF) has made a continuous effort to upgrade its capabilities, especially with inception of the latest Multi Role Combat Aircrafts. The RMAF is presently in the process of trying to procure a new platform under the MRCA program and the Multirole Rafale is among those that are being considered, together with the Eurofighter and the F18 Super Hornet. The Rafale is an excellent Multirole Combat Aircraft and does meet the criteria set by the RMAF. The evaluation process of these aircrafts and support requirements is currently being undertaken and yet to be finalized.

Among the criteria being considered is also the benefit gained from the offset programs proposed by the respective companies and whether there can be a substantial transfer of technology coupled with the development of the local defense industry for continued sustenance.

DEFENSE LEADERS • FRANCE 2013

POLICY MAKING

Betting on Exports In a context of reduction in budget allocation and a decline in domestic revenues, French defense companies have no choice but to expand their presence on an international level and address markets worldwide. Their ability to continue investing in new products and services will increasingly rely on lucrative exports sales. This is particularly important in a world where France has new rivals, be it new countries spending more on their armed forces or competitive newcomers on the international arms market.

The London-based International Institute for Strategic Studies (IISS) announced last year that for the first time in modern history, Asia’s defense spending was to exceed Europe’s. This has repercussions both on France’s rank as a superpower and on its defense and strategy industry: as a permanent Security Council member, France is the second largest United Nations contributor in terms of personnel. It is also part of an international effort against terrorism, maritime piracy and other new threats. Therefore, the country will be expected to continue its peacekeeping efforts and support its role as a military superpower in the years to come within the limits of a restricted budget.

But while France and other Western countries reduce their defense budgets, Asian defense spending rose by 3.15% overall in real terms, and a handful of countries currently account for more than 80% of local defense spending, namely China, Japan, India, South Korea and Australia. Other major markets include Brazil and Gulf states. These countries represent major export opportunities for French arms and defense companies.

As long as they enjoy steep economic growth and maintain a strong need in defense equipment, France’s exports will remain strong. The country remains the world’s fourth largest exporter of arms, thanks to its advanced technical capabilities, giving its national defense a competitive edge on the high end of the market. Brazil, which launched its extensive modernization program, became France’s second biggest client country on the 2002-2011 period by committing to purchase, among other military acquisition contracts, 50 helicopters and 5 submarines.

This submarine agreement with Brazil is a particularly good example of what French defense needs to accomplish if it wants to

36

remain in the small group of the world’s biggest exporters. French shipbuilder DCNS in a joint venture with Brazil’s Odebrecht will build the submarine base, four conventional diesel-electric Scorpène submarines and the hull of a fifth submarine powered by a nuclear reactor provided entirely by Brazil. DCNS agreed to provide technology transfer and assist indigenous development of the nuclear sector, which, according to then Brazilian Defense Minister Nelson Jobim, helped tilt the balance in favor of France to be awarded this contract that will ultimately allow Brazil to join the small club of nations owning nuclear-powered submarines. Saudi Arabia, the United Arab Emirates and India also feature among France’s most important client countries, with ships, aircraft and missiles being the most exported defense equipment.

But such interesting export markets attract ferocious international competition. Strong state support is needed for major defense bids: defense and foreign ministries must be coordinated to improve and strengthen export capabilities and political actors at the highest level must be involved. President François Hollande paid a visit to India in February 2013, his first visit to Asia since taking office in May 2012, in order to push the 12-billion dollars sale of Rafale fighter jets. He was accompanied by an influential delegation of ministers including Foreign Minister Laurent Fabius and Defense Minister Jean-Yves Le Drian. Le Drian also led a trade offensive in Saudi Arabia in January 2013 amid talks on the French intervention in Mali.

Because most Western countries are facing the same difficulties – shrinking domestic markets and increased international competition – international cooperation is another option available to French arms exporters. Cross-border collaboration includes sharing equipment, coelaboration of common programs, or mergers between corporations. Such solutions would have led to the sharing of an aircraft carrier for closer integration between the French and the British navies, and there had been talks of a merger of British BAE Systems with EADS, a deal that would have created the world’s biggest defense and aerospace company. However, this last example highlights the reluctance of European leaders to put national interests aside in order to favor cross-border institutions.

Export Orders in 2011:

6.5

billion

Export Share for Frenchbased defense companies:

Largest Contract 2012:

12 billion

from sale of Rafale fighter jets to India

DEFENSE LEADERS • FRANCE 2013

Recognizing threats is our instinct

Systems

Photo credits: Aspheri, G. Lepp/Getty Images -

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Equipment

www.nexter-group.fr

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French military exports between 2007 and 2012 Major Equipments Ordered / Delivered / Licensed Brazil:

12 Mirage 2000 aircrafts: $80 million deal 7 Patrol ships 50 EC725 helicopters: $1.9 billion deal 5 Scorpène submarines: $6.8 billion deal

Saudi Arabia:

6 A330 MRTT tankers 1,800 Portable SAM: $630 million deal 264 Aravis armored personnel carrier 132 CAESAR self-propelled gun

India:

36 Exocet antiship missiles: $150 million deal 490 Air-to-air missiles: $1.3 billion deal 20,000 Milan antitank missiles 6 Scorpène submarines: $4.5 billion deal 49 Mirage 2000 modernization: $1.5 billion deal 126 Rafale: $12 billion MMRCA programme

United Arab Emirates:

600 SCALP air-to-surface missiles 520 MICA BVR air-to-air missiles 62 Mirage 2000 aircrafts: $3.4 billion deal 150 Exocet antiship missiles: $500 million deal 3 A330 MRTT tankers: $990 million deal 6 Corvettes: $700 million deal

Russia:

2 Mistral amphibious assault ships: $1.2 billion deal

Malaysia

Expenditure of Top Five Buyers 2007-2012

Br az i Sa l ud i In Ar di ab ia a UA E M al ay si a

6 Gowind frigates: $2.7 billion deal 1 Scorpène submarine 40 Exocet antiship missiles

$ million 3,000

1,000 500 100 2007

38

2008

2009

2010

2011

2012 DEFENSE LEADERS • FRANCE 2013

$5B

$3B $1B

Regional Breakdown of Exports 2007-2012 (million) Asia

Europe

European Union ����������������������$5,414 European Countries ����������������$2,412

15,7%

Various (2%) Africa

28,1%

Central Asia......................... $499 Northeast Asia.................. $1,286 South Asia........................ $6,693 Southeast Asia.................. $5,488

5,9%

North Africa............................. $2,374 Sub-Saharan Africa..................... $539

Oceania(0,5%)

Total ................................. $260

America

24,4%

Central America..........................$556 North America.........................$2,663 South America ........................$8,931

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

23,4%

Middle East

Total...................................$11,614

39

POLICY MAKING

Christian Mons President of French Land Defense Manufacturers Association (GICAT) GICAT was created in 1979 and brings together all companies from the defense and ground security sectors. With 230 member companies, GICAT represents a turnover of more than 5 billion euros. Every two years, COGES, a subsidiary of GICAT, organizes Eurosatory, the number one global exhibition of 1,200 defense and land security demonstrators.

5

billion

turnover

40

What are the main strengths of the French ground security sector?

How will the GICAT’s possible role as spokesperson to the government take shape?

The investment policy carried out from the 60s to the 90s with regards to R&D has allowed France to maintain its position on the global stage.

As the representative of 230 companies, GICAT is positioned as the industrial interlocutor of preferred contractors. GICAT is a gateway between the institutional world of the state and that of the private sector. We aim to speak as one voice, to work together, and to defend the interests of the profession and of those of the ground forces community. Our interests are linked to those of the ground forces. In this way, we spend tremendous efforts particularly in explaining the role of the ground forces.

Nevertheless, we have witnessed over the past 15 years a gradual reduction in European defense budgets. This reduction directly affects defense and security R&D. For example, over the period of 1997 to 2012, in constant value of euros, the national R&D budgets for defense went from 1.2 billion to 750 million euros overall. If these cuts continue, then tomorrow’s defense is in jeopardy. Development cycles require on average 15 to 20 years. Today our teams benefit from the technologies developed by studies that took place in the 90s. Without greater investment in the way of research and technology, we are jeopardizing future generations of equipment because the future of our defense industry depends above all on innovative and breakaway technologies.

Without this indispensable technological advantage, it will be very difficult to maintain the defense technological and industrial base (DTIB) and their export potential.

But the heart of our operational activities lies in identifying the uniting themes of the profession in the hope of improving company competitiveness and operational efficiency, the two themes are linked.

The other important responsibility is to help companies grow in France and internationally. This development mission requires permanent export support. The Eurosatory exhibition, number one forum worldwide in the ground forces sector, is a major meeting point for French defense companies.

We can count on having close to 300 French companies present for each forum.

If France is ranked 4 th worldwide, it is because of our capacity to provide foreign and French armies with materials that are best adapted to their missions. It is the mastery of know-how that promotes French sales and allows for local support, namely through reactive operational adaptation and the mastery of the doctrine of military operations.

The French combat style that proved itself in external operations, and particularly in Mali, is first and foremost the result of a doctrine that allows for lightly armed vehicles (less than 20 tons), a sector that the Americans have ignored and are not able to manufacture for.

Internationally, GICAT provides financial aid for the international defense conferences to our member companies in the domain of servicing, monitoring, country profiles and strategic information for targeted zones. We provide a global service created especially for the SMEs of the sector. Under the French flag, even a company with 10 employees benefits from a good exposure for all of the major international conferences in the sector.

The Eurosatory exhibition, number one forum worldwide in the ground forces sector, is a major meeting for French defense companies.

By definition SMEs do not have the same cost structure as larger companies, and this can sometimes create tensions. But generally the contractors are aware that they need to rely on SMEs to fully control their production chain. The flexibility of their structure allows them to adapt to tough times by regularly adjusting their needs. Their reactivity remains essential for large companies. In the domain of defense, I noticed that there exists a fairly strong solidarity between the SMEs and the larger companies, which distinguishes the domain from what I have seen in other professions.

Do SMEs and large companies have conflicting interests?

DEFENSE LEADERS • FRANCE 2013

POLICY MAKING

For example, over the last two years, GICAT created two innovation clusters destined to expand French companies’ international presence and open the door to information sharing, a determining factor for the conquest of export markets.

Further, GICAT puts into place days of dialogue between large companies and SMEs, particularly in order to better understand buying policies.

Other meetings are organized as well by GICAT on subjects of interest to our members such as the legal approaches of normalization or sectorbased approaches, such as the NRBC for example.

Furthermore, GICAT prides itself in the fact that some of its proposals were integrated into the latest government announcements, the SME Defense Pact.

What role should France have in building European defense capabilities?

To a certain extent, European defense capabilities already exist and France plays a central role in this. The French role is proven in the missile and transport plane sectors, but essentially for motives of reaching critical mass. Apart from these cases, today, the pooling of resources does not occur or it is done poorly. Currently, European defense exists with MBDA, for example in the domain of missiles, and an embryo of European defense exists in the helicopter domain. But true European defense capabilities will not be achieved unless economic and political policies are more strongly harmonized, which requires more time.

financing. With a global budget of barely 36 million euros, only 6 million euros are consecrated to studies and research. Clearly, there is a lack of political will.

France needs to continue to be a driving force like the other large European countries, through bilateral or multilateral opportunities for collaboration. I do not believe in a European defense without a real, common European security and defense foreign policy

What role should the French state have in promoting exports?

I am for a strong state promotion of exports because in potentially interesting countries, the decisions are by nature political. Even if we have excellent products on the technical level and “combat proven” products, selling them still requires political negotiating. The Americans and the British understand this very well. We know how to use the same strategic approach in France. The successes of large contracts won 20 years ago in the Middle East were principally due to political presence. This justifies a strong state intervention in large projects.

Furthermore, once a supplier is chosen, the buying state still needs reassurance from the provider's country that the material will be delivered. The choice of a combat plane or a missile model for 20 to 40 years is not neutral in terms of the engagement and is often linked to political agreements. In the military domain all sales remain subject to export authorization, which is essentially a state-led or political decision.

On the one hand, Europe is implicated in a number of theaters of operation, including Mali, and presents an operational outlook that is rather flattering in terms of training, peacekeeping, and socio-economic aid operations. On the other hand, the European Defense Agency (AED) has almost no THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

1997 €1,2 billion 2012 750

€ million

National R&D budgets for defense

GICAT

is composed of

230

companies

41

POLICY MAKING

Jean-Marie Poimbœuf President of the French Marine Industry Group (GICAN) Originally created as a representative body of the naval defense industry, GICAN has aligned itself with the Association of Naval Shipbuilding in 2009, forming one single institution that now represents the entire French naval industry sector. Today, GICAN brings together nearly 170 members amounting to 40,000 employees and accounts for a turnover of roughly 6 billion euros.

MEMBERS

JOBS

6

billion

Aggregate Revenue

How competitive is the French naval defense industries internationally?

engineering comes from the French industry since the construction is carried out on-site.

The French naval sector is very competitive all around, but especially in three sectors: first in defense, which is a hi-tech sector with high added value (submarine, frigates, aircraft carrier and highly armed ships) where combat systems represents 40% of the cost of the vessel. French know-how in this sector comes from the capacity to construct highly integrated ships. A vessel whose platform and integrated onboard systems are capable of responding to and analyzing threats must be able to carry out an extremely precise exercise, requiring hitech expertise.

This was the case recently in Malaysia for surveillance ships where DCNS allied with Boustead, creating a joint venture using engineering, development and DCNS architectural know-how.

The buildings were constructed in the shipyards of Malaysia integrating a portion of the more sophisticated equipment coming from France and buying local equipment for more common needs.

These are ships with “strong ears” meaning that they have extremely well-developed detection capacities and are able to identify more than 200 items simultaneously (those of airplanes, submarines, torpedoes, surface vessels) as well as analyze any threats in order to respond with the appropriate type of weapons. This is an exceptional capability. France is one of three countries in the world capable of constructing nuclear-powered ballistic-missile submarines (SNLE class) and is the only one in Europe. The UK for example, makes SNLE class nuclear-powered ballistic-missile submarines but with the help of the United States.

The French naval industry has complete autonomy and a real aptitude for developing and manufacturing such ships. This is how we are able to lock in tremendous success in exportation. We have sold submarines to Malaysia, Chile, India, and frigates to Singapore. As for the frigates in Singapore, we were in competition with the Americans, but we won the bid because of the cutting edge products we offered.

Indeed, our technological know-how makes France a world leader in the world of combat ships.

How should France position itself with regards to mid-level technology and less costly ships in order to achieve a global response?

France and in particular DCNS is already present in this domain but in the form of cooperative efforts.

For naval defense where it is necessary to produce high technology submarines, the equipment is generally manufactured in France. As for the lightly armored ships used for maritime security, the French naval industry is working toward creating a joint venture in order to develop the ships together. The

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The French naval industry has complete autonomy and a real aptitude for developing and manufacturing such ships.

We have other examples of similar cooperation with Brazil, India, and Singapore with Singapore Technologies Marine. Concerning lightly armored buildings, we have decided to pursue local cooperation where the French naval industry sells its know-how and its equipment but manufactures everything on-site. Generally speaking, we do not simply transfer technology nor do we simply sell it. However, transferring technologies to the French and Malaysian, French and Indian, or French and Singaporean companies is part of our course of action. It is a shared industrial strategy allowing for a win-win scenario.

What is the advantage for companies signing up with GICAN and what are its business activities at a European and international level?

Less than ten years ago there were only 60 GICAN members. Today, there are more than 170. GICAN is a significant source of information. We keep our DEFENSE LEADERS • FRANCE 2013

POLICY MAKING

members informed of orders and tender offers that are placed at the national and international levels.

Not all companies have an informational network as developed as GICAN’s in regards to providing upto-date news concerning tender offers. Alternatively we promote the interests of the profession to the government authorities concerning regulations, efforts and financing of research, and in defense of our interests by the government at the European level. It is clear that GICAN brings a source of proposals that small companies cannot tap into alone.

A last point regarding international support, GICAN is present at all of the major trade shows that exist: Abu Dhabi, Langkawi, Rio de Janeiro, Sydney. GICAN organizes a “French pavilion” each time for the companies that do not have the means to present themselves directly. We cover the costs of their participation in international trade shows in a very controlled manner. We create links between members so that internationally, as much

as possible, the larger companies accompany the smaller ones in order to promote all French products.

GICAN plays the role of unifier by taking collective and collaborative action.

What are the other pre-eminent French naval industry sectors?

The second sector in which France is the leader is in the sector of passenger ships with 2,000 cabins and 4,000 to 6,000 people on board with the Saint-Nazaire shipyard. This requires a specialized know-how in the mastery of the industrial process.

These are not exceptional technologies; however, the industrial process is. The third sector is that of leisure boating. We are the second manufacturer in the world, whether in regards to sailing or motor ships. As for other types of ships that have low added value like bulk cargo ships, container ships, we would have the technological capacity to build them, but it requires a large workforce and there are other groups offering more competitive prices.

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Export share of

military shipbuilding

30% 43

POLICY MAKING

Jean-Paul Herteman President of the French Aerospace Industries Association (GIFAS) GIFAS has more than 300 members, counting major prime contractors and system suppliers to small specialist companies. Domains of expertise include civil and military aircrafts, helicopters, engines, missiles, space and satellites, and associated software.

What is the current situation of the French aeronautics industry?

2013

Turnover

in the civil

and military aeronautic sector

â‚Ź42.5 billion

(+16%)

â‚Ź26.9 billion in exports

2012 was a very good year for the aeronautics and space industry with revenues of 42.5 billion euros or a constant perimeter growth rate of 16% and an exports rate growth of 20%. Sales have stayed at a very satisfactory level, remaining higher than the 2012 turnover.

The supply chain accompanied this growth since the equipment suppliers and the SMEs are growing at 16%, and above all, direct exports toward prime contractors other than the big French systems engineers grew by 17.3%. This is a sign of deep growth, vitality and health for our industrial base.

Several points must be reinforced however. The civil sector is doing well now, but one of the fundamental characteristics of our domain is that things can change quickly. And it takes a very long time to make a comeback afterward. This is why the ability to perpetuate our capabilities is an existential issue.

The learning and interaction processes between the initial training and the applied training are complex and fragile. The mastery of putting a program into place is something that requires technical synthesis capacities, deep analysis and team management that is very diverse in its technical specificity, in its geography and in its organizational schema. Only a small percent of highly qualified engineers that work for us have this kind of talent, and this is not something that comes about spontaneously. It takes 15 to 20 years of training experience in order to turn a good engineer into an aeronautics project leader where security and performance demands are strict.

Continued investment efforts and continued activity are necessary. If the momentum stops, the consequences could be dire.

What are we thinking of in particular? The impact of a brutal or poorly organized reduction in defense investment. We are very aware of budget constraints that weigh on our country as in many others.

Nevertheless, highly developed skills deserve to be maintained, not only for the defense capacity of our country but also for the internationalization of our high technology industry development capacities.

taken during the Ministers Conference of the ESA in November concerning the Ariane 6 space launcher, but now we need to move forward to production. In this respect as well, any holes or capacity conversions risk becoming an irreversible situation.

The private sector has a technology road map in conjunction with the public sector. Despite this road map and a number of structuring research programs in place, we must do all we can to maintain technology investment and even amplify it at the national and European level if possible.

It took 30 or 40 years for the French and European industry to get where it is today and if we are not vigilant, we will quickly lose our advantage.

The sector is doing well. It is a dynamic industrial sector, creator of economic value, employment and efficient in terms of sectoral action. The sector is pulled by exports. Aeronautics is still the strongest industrial sector this year by far. But this sector must also have its voice heard in order to maintain capacities that are as close as possible to those of the large international competitors and to preserve its technological competitiveness.

This vitality will be demonstrated from the 17th to the 23rd of June at the 50th Paris Airshow (Salon du Bourget) which remains by far the largest gathering of its kind: 2,160 exhibitors, 44 countries, and 130 registered products.

What are the technologies that are only mastered by a small number of French aeronautic actors?

This is obviously a sensitive subject, but some technologies are dual-use, meaning that the advancements are undertaken primarily by the defense sector and are then developed by the civil sector. This is the case for all aerodynamic, avionic, electronic and material methods. The opposite path also exists, meaning civil technology with applications in defense but this is objectively rarer. Finally, there are niche technologies that are specific to defense, for example infrared technologies, high precision domains, telecommunications, or special flight commands.

Losing them might prove irreversible. This is true for space as well. We congratulate ourselves for decisions

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DEFENSE LEADERS • FRANCE 2013

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What were the results of the meeting between the President of the Republic and armament manufacturers?

The President was very attentive. The issues were framed in a detailed manner. All that is left is to specify the paths, the solutions, the action plans and encourage a good level of communication between the public and private sectors. In today’s context, it is important to take the right decisions quickly. Unclear or imprecise logical progression will have harmful effects on the durability of our capabilities.

What is the hiring outlook for 2013?

We should follow the same trend. We could even accelerate recruitment in certain special techniques, but unfortunately, we are not able to satisfy the needs of our workforce which could be real and long lasting.

On the subject of armament exportation, are the difficulties faced in 2012 part of a structural or a cyclical problem?

Over the past three years, a change in the defense equipment budget paradigm has intensified. Until two or three years ago, the defense equipment budget of the United States represented half of the world's budget. This was true since the beginning of the Cold War.

For the past two or three years, the defense equipment budgets of emerging countries has outgrown that of the United States. In Europe, the defense equipment budgets for all EU member states are weak and getting weaker. There are only two countries that still invest significant amounts in defense comparatively, the United Kingdom and France, but even they have encountered strict budgetary constraints.

All of the initiatives coming from the European commission to improve and fluidify the European defense markets are going in the right direction, but the first step would be to create a market. If member states do not have the desire to provide for their defense capacities, then there is nothing to talk about.

If we look at the trends today, the defense equipment budgets of the emerging countries is growing at a rate of 10% per year. The center of gravity of the markets is going to shift to the large emerging countries. We need to focus our efforts on these markets and we need to realize that with the overall reduction in budget, our American colleagues and competition will do the same by changing legislation in order to allow for the exportation of sensitive technologies. Finally, emerging countries want to be accompanied technologically with partnerships that go beyond traditional offsets, and we need to prepare for this.

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1 1st French industrial exporter

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PROVIDING

PROVIDING

Arming Up or Arming Down?

French and European defense orders increasingly tend towards modernization contracts or technology demonstrators.

50 A400M aircrafts ordered

95 NH90

helicopters ordered

The French Army is in the process of arming itself with the major equipment orders placed in the 1990s beginning to come through. The Air Force will receive the first of its 50 A400M units this summer. After having upgraded its artillery with the CAESAR self-propelled howitzer, the Army will see the last of the Armored Vehicle for Infantry Combat (VBCI) units as well as of the infantry combat system, FELIN, delivered by 2015. With respect to helicopters, the first of the second installment of Tiger helicopters (HAD – Support and Attack Helicopter – version) entered into service at the beginning of this year. Further, some 15 annual deliveries of the NH90 are made to both the French Army Light Aviation as well as to the Navy.

As for the remaining arms deliveries, some will be spread out over time, as indicated the French Defense White Paper published end-April; other programs will be curtailed. France will not be ordering a new batch of the Rafale combat aircraft and will thus be limited to 225 units of Rafale and upgraded Mirage 2000 against an initial target of 286 Rafale. As the government reassures, “It is a target that will still allow us to perform the required tasks: deterrence, protection of the French territory or operation strikes”. It is not sure, however, that this revised target guarantees a sufficient workload for defense manufacturers. Air-to-air refueling has also been affected, with a revised provision for 12, instead of the earlier 14, units of the A330 MRTT tanker aircraft; likewise, the transport aircraft have seen a reduction from 70 entities to 50. Conversely, the Air Force has received a green signal to acquire 12 MALE surveillance drones – these however, are to be imported.

France could also waive one of its FREMM frigates for its Navy while the delivery of the six Barracuda nuclear attack submarines will undoubtedly be delayed. New tenders by the Army under the Scorpion program, which seeks to develop upgraded material for the light cavalry, have also been stalled. Yet it is on the following three armored vehicles - forming part of the Scorpion program - that the land defense industry is counting on: Multirole Armored Vehicle (VBMR), the Armored Combat and Reconnaissance Vehicle (EBRC) and the future Armored Support Vehicle (VBAE).

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The list of major programs currently in development, whether national or through a multinational consortium (OCCAR, NATO), has thus shortened considerably, also given the transition of several programs towards the delivery phase (for instance, the Franco-Italian antimissile defense system SAMP/T will be fully delivered by the end of this year). French and European defense orders increasingly tend towards modernization contracts or technology demonstrators such as for the nEUROn drone, in order to retain a minimum level of support for R&D labs and departments.

Consequently, defense industry manufacturers are rethinking their business models, even attempting to influence the military doctrine by developing innovative, self-funded prototypes; case in point the Combat and Reconnaissance Armored Buggy (CRAB) unveiled in 2012 by Panhard General Defense, a fast and handy vehicle offering high-level protection to its occupants and capable of delivering significant firepower thanks to its teleoperated gun.

Likewise, DCNS’ self-funded Offshore Patrol Vessel (OPV) of the Gowind class, which has been leased to the Navy for a period of three years with a purchase option at the end.

Equipment with such "combat proven" labels is geared towards export markets, which could eventually be used by the French navy in case of an important mission.

French armament manufacturers thus have further reason to turn towards export markets.

Indeed, some are even developing product ranges addressing needs of primarily foreign buyers such as the Sherpa range of Renault Truck Defense and or Nexter’s Aravis vehicle, visible in very few numbers in the French Army.

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PROVIDING

Dassault Aviation 2012 will remain a landmark year for Dassault Aviation with a nearly certain first international sale of the Rafale omnirole combat aircraft.

This year also marks the first technological demonstration of the combat drone (UCAV), nEUROn, and the arrival of Eric Trappier, the newest CEO of only six others in the past 84 years.

In 1966, thanks to its proven experience in military aviation (Mystère, Mirage III), Dassault Aviation was chosen by the French state to be the only prime contractor of French combat planes. This standard has not been overturned since and has allowed Dassault Aviation to maintain a high level of competence within its own research and development centers and to remain an aviation leader worldwide. Utilizing the most modern aeronautical technologies with a particular bent toward military research contracts, Dassault Aviation has thus been able to develop new industrial activities like the Falcon business airplane or the company Dassault Systems, editor of 3D softerware, stemming directly from research for the Mirage 2000.

In 2012, defense activities only represented 29% of Dassault industrial revenues of which 5% were achieved internationally. This number is predominantly carried by the purchase of Rafale several times a year

by the French state. France has committed to purchasing 11 planes each year until 2019 in order to maintain an active supply chain and to reach a stock of 180 aircraft before potentially purchasing 286 planes as initially desired. These shipments do not hinder further Rafale development nor do they inhibit other advancements such as the retrofitting of the F3 standard from the first planes delivered, the series production of active antenna radars, new optronic sensors and a next generation missile departure detector. The rest of revenues in the defense sector comes from research programs focused on drones (nEUROn, Franco-British drone project) and above all, by fleet modernization programs, particularly the French, Peruvian and Indian Mirage 2000, and surveillance planes (Falcon 50, Atlantique 2).

The portion of foreign defense activities for Dassault Aviation could soon grow, to the detriment of activities in France. The engagement of the French state to maintain a level of purchasing at 11 planes per year could be called into question if an export contract is signed for the Rafale. Things seem to be advancing steadily in India where Dassault, in January 2012, entered into exclusive negotiation with the New Delhi government. The definitive signature could take place in the summer of 2013 once all of the licensing agreements between French companies and Indian industrials have come to an end. The agreement plans for French construction of the first 18 jet fighters before the remaining 108 are assembled by Hindustan Aeronautics Ltd and Reliance Group directly on-site.

The signing of this “contract of the century” would open the door to international opportunities for the Dassault Aviation combat plane. It would allow Dassault to control in particular unit prices all the while benefitting from scaled economies and reinvigorating its sometimes dragging competitiveness (also explained by the strong price of the euro over the dollar). Moreover, the prevalent use and successful results of the Rafale in aeronautic operations in Libya in 2011, and more recently in Mali, give it the coveted label, “combat proven”, which Dassault Aviation hopes to take advantage of. Several prospects still remain active and will be followed up by French commercial teams. First, attention is on Brazil, where after several rebounds and finally the tender report for the FX-2 (36 planes) during a more favorable budgetary period, the Rafale remains in a good position. Next, commercial opportunities are present in the United Arab Emirates where back-to-back trips by the President of the French Republic and the Minister of Defense are not unheard of in the case of current arms contracts underway (roughly 60 planes). The choice of the Emirates could also determine the decision made in Qatar and in Kuwait afterwards. Dassault Aviation has also proposed its aircraft to Canada which is still hesitating in its acquisition of the American F-35. Malaysia also seems to be a hot prospect (18 planes) with

Eric Trappier, Chairman and CEO

Along with the selection of the Rafale, the nEUROn also contributed to technical 48

success.

We have made aeronautics history with the first flight of European stealth aircraft. The nEUROn allows us to show

our professional expertise and at the same time our knowhow in multinational production and development.

DEFENSE LEADERS • FRANCE 2013

PROVIDING

Eric Trappier saying that he is ready to install an assembly line. In Malaysia, the Rafale is in competition with the British, German and Italian consortium’s Eurofighter Typhoon, the Swedish Saab’s JAS-39 Gripen, the Russian Sukhoi’s Su-30 and Boeing’s F/A 18E/F Super Hornet.

The finalization of the Rafale at the international level was the determining factor in the choice of the new CEO. Before replacing Charles Edelstenne who exceeded the CEO age limit, Eric Trappier, former international managing director, led a very difficult but successful sales campaign in India for the Rafale. The sale of the Mirage 2000 to the UAE in 1998 was also his doing. Furthermore, the

2012 sales defense

}

main shareholder wants him to revive links with the UAE, weakened in the last months of his predecessor’s term.

It is also up to him to ensure the company’s presence in the combat plane programs of the future which will be carried out under this cooperation. Dassault Aviation hopes to show its complete ability to take on responsibility for these systems, as proven by the nEUROn, the first demonstration of a European combat drone that took its first flight last December. This must have come as a great satisfaction for Eric Trappier, who negotiated this 400 million euro partnership agreement.

€1.14 billion

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29%

2012

2011 49

PROVIDING Dassault and Drones By abandoning its European combat plane program in the 1980s (which resulted in the Eurofighter) and by choosing to go alone concerning the construction of the Rafale, France has been able to retain an independent aeronautic military industrial base. 30 years after this choice, France must maintain a workload sufficient to allow its research and development centers, particularly those of Dassault Aviation, to remain efficient. These centers in turn fuel civil research.

The contracts for feasibility studies and demonstrators will certainly not be enough to maintain the necessary minimum workload. To overcome this, Dassault Aviation would especially like to develop its activity in the space domain. For example, the Rafale could function as a launcher for small satellites.

With the end of primary Rafale development in the late 90s, Dassault Aviation quickly grasped the importance of studies on planes without pilots. After developing several stealth demonstrations with their own funding (AVE Petit Duc and Moyen Duc), in 2003 Dassault Aviation took the lead of the nEUROn program, run in cooperation with the Swedish Saab, the Greek HAI, the Spanish EADS-CASA, the Italian Alenia Aeronautica and the Swiss Ruag. As general contractor, the French manufacturer went ahead to the final assembly in Istres before carrying out the first in-flight test on the first of December 2012.

The nEUROn concept aimed to take on several technological challenges. The nEUROn is the first military aircraft in the world that was entirely designed and developed on the “virtual plateau”, invented by Dassault Systems. This allowed the teams of six different nationalities to work simultaneously in real time on the same data, wherever their geographic locations. In flight, the test runs aim to evaluate the detectability of the stealth platform as much in the domain of radar signature as in the domain of infrared signature. Other tests include the autonomous execution of an air-toground mission based on the take-off, the recognition of targets on the ground and the firing of arms carried out from an internal weapons bay, contrary to the external attachment device in existence today.

Nonetheless, these successes do not hide the difficulties France is experiencing in the field of UAS. After being selected for the francization of the interim mediumaltitude-long-endurance drone, Heron TP (invented by Israel Aerospace Industries), the Senate did not release appropriations, and the decision to fill this capacity gap was pushed back. This is even more worrisome since this system is supposed to be an intermediary while awaiting the Franco-British drone Telemos, developed by BAE Systems and planned for by the Lancaster House treaties. However, the appropriations necessary are still slow in coming, namely on the French side. Despite Dassault’s strong desire to maintain research and development center capacities, France is going through a long period of indecision. Dassault Aviation hopes that the Military Planning Law of 2013 definitively settles the issue.

11 Rafale

were delivered to the French government during 2012

50

Backlog on December 31, 2012 of

€4.23 billion DEFENSE LEADERS • FRANCE 2013

PROVIDING

Armand Carlier Chairman and CEO of Alkan Alkan was created by French engineer Robert Alkan back in 1923 and has positioned itself in a niche market since then. It manufactures aircraft release systems. The company has diversified in the past years to supply aircraft manufacturers throughout the world and is now present in 65 countries. One of its latest successes is its partnership with the Indian Hindustan Aeronautics Limited.

What are the main reasons for producing all of Alkan products in France?

We are producing a significant part of our equipments for the French Air Force and the French Navy. Therefore our client is the defense procurement agency (DGA). Under French defense procurement laws, we are obligated to produce everything within the French territory and are not allowed to subcontract to low-cost countries. When we sell to foreign countries we do not have these limitations and could very well subcontract, but we do not for many reasons. First, it would be complicated to manage from a supply chain standpoint. Second, we want to control the quality of our products. You have to understand that in our industry this type of equipment is subject to extremely strict safety standards. The name of the game is testing, testing and re-testing. You can imagine that our clients expect their ammunitions to never fail them on the job. This has never happened in Alkan’s history, and we have a very good track record thanks to this obsession over safety. So, to answer your question, subcontracting to those countries is not our natural tendency. Now, it is very possible that we will make changes in the future because the future growth of this company depends on exports, not on the French market.

Does this imply a change in Alkan’s business model?

The business model of Alkan has been relatively simple these past several years. We were followers of Dassault’s successes on export markets: Dassault did the hard marketing, and we just had to run behind, selling our equipment. We had to renew this model completely in the last 10 years. My predecessor started the process, but we had to accelerate this move because the last Dassault aircraft was bought by India in 2003. So, the new business model is clearly to multiply the number of platforms, the number of aircrafts we can cater to, and to have cheaper products. We had to multiply

our export cases with these three major focuses in mind over the last 10 years. Geographically, the US, which is the number one market for defense, is of major interest to us.

What have been Alkan’s major successes in the US market due to this change of strategy?

The first one has been with the US Army. We are suppliers to the OH58 helicopter which is the Scout helicopter, one of the two main platforms used by the US Army. The second success has been with the US Navy. We are selling release units. Our racks were and are still very much appreciated by people in the US Army and Navy. We have a very good reputation.

Last year, we were also selected by Beechcraft for its new T6 aircraft. It required a lot of work, but our products present advantages in terms of reliability, safety, mass savings, stiffness low maintenance costs and short turnaround time. We have developed hook-lifting systems, which are relatively unique in the industry. Our competitors generally do this with a screw system, but we have invented a system with hooks which is much more efficient.

How can technology transfers help Alkan to win new export markets?

We are prepared to transfer our technology whenever it is not too critical and whenever it does not imply the creation of a new competitor. These are important limitations. You do not have many players in this industry, maybe five or six companies in the world. For India, we accepted to transfer some technology, and it proved to be extremely successful.

Hindustan Aeronautics has a huge program of combat helicopters, representing hundreds of release units; thus it made sense for them to manufacture in India. However, we do not want them to sell the release units outside their country. We are prepared, similarly, to transfer any production to the US because it is a big market. It is in our interest to transfer technology when large volumes are at stake.

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The US, the number one defense market, is of major interest to us.

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Airbus Military: Taking it to the Next Level This became in 1996 the European Staff Requirement, defining the needs of their armies in terms of military transport aircrafts under the Future Large Aircraft (FLA) program. An international tender was issued where the Ukranian Antonov presented its AN90, LockheedMartin its C130J, Boeing its C17.The group of European industries of the countries mentioned above, which were working in the Airbus Military Sociedad Limitada (AMSL) organization, a forerunner of the current integrated Airbus Military company, presented a project called A400M. AMSL was declared winner of the tender in 2000, and on the May 27, 2003, Belgium, France, Germany, Italy, Spain, Turkey and the UK, grouped within the Organization for Joint Armament Cooperation (OCCAR) officially signed an agreement to buy 212 aircrafts. Italy would later withdraw and Luxemburg join the project. The number of aircrafts needed was revised to 180, but it was at this moment that the A400M program was officially born.

Airbus Military’s roots can be traced back to the beginning of the 20th century, and the inception of Construcciones Aeronáuticas Sociedad Anónima (CASA) in 1923 by Major José Ortiz-Echagüe, or Don José as the staff called him. After years of product development and considerable industrial successes such as its star aircraft, the C212, and thanks to a strong European political will, CASA went through an integration process, particularly in light of the A400M program. It and finally became Airbus Military on April 15, 2009.

Today, the corporation has become a world leader in its domain and – following the Airbus SAS lead – is a perfect example of the benefits for Europeans to join hands on large-scale high-technology projects.

Airbus Military has already proven the high quality standards and versatility of its light and medium transport and surveillance aircraft such as the C212, CN235 and C295. It is now entering a new era, and is redefining the world of military aircraft, with its two all-new game changing products: the heavy tactical and strategic transport A400M and the air-to-air refueling and strategic multirole tanker transport aircraft, the A330 MRTT.

The first deadline for delivery was set for 2009, but the program faced some delays due to the overall complexity of the aircraft and its industrial development. The A400M is nonetheless an incredible technological leap in military transport aircraft and the first delivery is expected during the second quarter of 2013 to the French Procurement Agency (DGA), with plans to deliver two more aircrafts to France and one to Turkey in the same year. The production will then be ramped up to stabilize by the end of 2015.

The A400M: Setting New Standards for the 21st Century

The A400M is perfectly suited to address the need of armed forces for the 21st century thanks to its amazing versatility. It can indeed perform both tactical and strategic missions, as well as perform airrefueling missions. It is powered by four counter-rotating Europrop International TP400 turboprop power plants, delivering a combined total of 44,000-horse power, the most powerful ever conceived. It also offers a wide flight range in terms of speed and altitude. Indeed, it has the ability to fly distances up to 8,700 kilometers, at a cruising altitude up to 37,000 feet, and at a speed of up to Mach 0.72 (882 kilometers/hour). Thanks to these incredible performances, it can undertake a wide range of missions such as refueling fast fighter jets at high speed, or helicopters at lower speed, drop up to 116 fully equipped paratroopers from both high and low altitudes, as well as deliver loads at 15 feet.

The A400M also has a high load capacity of up to 37 metric tons, and can, for example, accommodate in one single load two Apache combat helicopters, or even an Armored Vehicle for Infantry Combat (VBCI) with its 10 troops. Furthermore, the airlifter is equipped with a 12-wheel landing gear designed for operations from stone, gravel or sand strips which enable it to land on, and take-off from, short, soft and rough unpaved airstrips meeting up to the CBR4 standard. It therefore ensures tactical superiority because it can fly its load directly where it is needed and, for example, provide humanitarian aid in the very short timeframe needed after a disaster. Once on the ground, the A400M

The genesis of the project goes back to the 1980s when Aerospatiale, British Aerospace, Lockheed and Messerschmitt-Bölkow-Blohm decided to design a replacement aircraft for the C-130 Hercules and the C-160 Transall under the Future International Military Aircraft (FIMA) program. Lockheed left the project in 1989 to focus its resources on the modernization of its C-130 Hercules and from 1991, seven nations (France, Germany, Italy, the UK, Turkey, Spain and Belgium) began developing the European Outline Staff Target.

April 2009 Headquarters: Madrid Staff: 5,800 Turnover 2012: €2.1 billion Established:

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Orders 2013*:

8

Deliveries 2013*:

5

Number of aircrafts ordered since creation*:

1086

Number of aircrafts delivered since creation*:

862

Number of aircrafts in operation worldwide*:

614

* as of April 31, 2013

DEFENSE LEADERS • FRANCE 2013

PROVIDING

is designed for very rapid and autonomous cargo unloading with its on board 32 metric ton powered winch. The cargo hold is optimized for single loadmaster operation from a computerized workstation, thus minimizing the time on the ground, and reducing the aircraft’s vulnerability when on hostile terrain.

Last but not least, the A400M has clean and minimized infrared signature engines, four independent control computers, damage tolerant controls, and comprehensive optional defensive aids and cockpit armoring. It is therefore hard to find, hard to hit and hard to kill. Furthermore, it only needs 84 days of scheduled downtime maintenance in 12 years, making it one of the most reliable airlifters ever built.

A330 MRTT: the Supremacy Multirole Tanker The A330 Multirole Tanker Transport (MRTT) is absolutely unique in its category, and is a true “multirole” strategic aircraft. It is both a tanker which can provide a wide range of air-to-air refueling solutions, and simultaneously a real “transport” aircraft for both personnel and cargo.

Furthermore, it can also be used for medical evacuation (MEDEVAC). It is based on the service-proven A330-200 (in total there are over 1,200 A330s sold and close to 1,000 delivered to over 130 customers and operators around the globe), which has a range of up to 8,000 nm/ 14,800 kilometers, and can fly at speeds up to Mach 0.86. The basic tank capacity of the A330-200 is sufficient to supply the required fuel quantities without the need for any additional reservoirs, nor major structural modifications.

As a tanker, the A330 MRTT can refuel any type of fighter or other large aircraft either through a pair of hose and drogue under-wing pods, a hose and drogue Fuselage Refueling Unit (FRU) and a Universal Aerial Refueling Receptacle Slipway Installation (UARRSI), or through the advanced Airbus Military Aerial Refueling Boom System (ARBS).

The ARBS is fully interoperable with all refueling receptacle-equipped fighters, such as the F-35A Lightning II, F-16 and F-15, and large aircrafts, such as the E-3 AWACS and the A330 MRTT itself. Even in adverse weather, day or night refueling can be performed, thanks to its stereoscopic vision and laser-based infrared lighting systems.

Refueling can be performed at any altitude up to 35,000 feet while cruising at speeds between 330 to 600 kilometers/hour. The ARBS also allows fast fuel transfer of up to 4,600 liters per minute. Furthermore, the AAR (Air to Air Refueling) systems are controlled from an advanced Fuel Operator Console in the cockpit which features an Enhanced Video Monitoring System to perform day and night refueling. Being positioned in the cockpit, the “boomer” can much better interact with the flying crew, herewith enhancing the whole operation.

Domingo Ureña Raso, CEO

With our comprehensive product range, and especially the A400M and the A330 MRTT, we are offering THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

The A330 MRTT is also a great transport plane, drawing on the proven capabilities of the A330 platform. It is capable of carrying up to 45 metric tons of cargo, including spares for the fighters it is escorting, and can refuel them while flying to their destination, or when on mission. Further, it can move some 300 personnel or troops and their equipment. The A330 MRTT can equally be used as a VIP aircraft or as MEDEVAC as and when required. The A330 MRTT is in fact able to perform, on its own, the missions for which so far three different aircraft types would have been needed – and it does so much more efficiently.

Already, Australia, the UK, the United Arab Emirates (UAE), and Saudi Arabia have placed orders for 28 aircrafts. The A330 MRTT was also recently selected by the Indian Air Force (IAF) as their “preferred bidder” for their new generation tanker/transport aircraft. Five aircraft have been delivered to Australia and four to the British Royal Air Force, while five more are planned for delivery by mid-2014, followed by further deliveries to get to the full fleet of 14. Elsewhere, the delivery of the three aircrafts for the Royal Saudi Air Force will be completed early in 2013, to be followed by the three aircrafts ordered by the UAE in the coming months. This means that by mid-2013 as many as 17 A330 MRTT are expected to be in service with four air forces, marking the beginning of a transformation of the world of air-to-air refueling across the globe.

Airbus Military is setting the 21st century standards in the industry and has proven that European cooperation is the way to go. Don José would be proud.

all new products which anticipate the needs of air forces in the changing world of the 21st century. Not only do their characteristics, performance, reliability, efficiency and versatility better respond to the

new challenges of this changing world, but, all being able to perform several types of missions simultaneously, they are also the optimum investment in budget restrictions times.

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PROVIDING

Eurocopter 1992 Headquarters: Marignane Staff: 20,759 Established:

Turnover 2012:

€6.3 billion

Number of helicopters in service worldwide:

11,780

Countries of operation:

148

Facilities: Marignane, France; Donauwörth, Germany; Albacete, Spain

Created in 1992 as a merger between the helicopter divisions of Aerospatiale-Matra (France) and DaimlerChrysler Aerospace (Germany), the Eurocopter Group, a 100% owned subsidiary of EADS, is the world’s largest helicopter manufacturer in terms of revenues, offering the broadest range of civil and military helicopters in the world with a 30% share of the global fleet.

Eurocopter’s strategy is based on strong product innovation, international expansion and improvements of services offered.

Technological excellence has always been paramount to the success of the company seeking to significantly expand its service offering in order to enhance aircraft availability, mission performance and cost effectiveness for its customers. One of its latest innovations, for example, is the X3 high-speed hybrid helicopter demonstrator, which combines vertical take-off and landing capabilities with a fast cruise speed of more than 230 knots due to the tractor propellers fitted to each of the short wingspans. This state-of-the-art aircraft could be in line with military clients’ requirements for long-range missions at sea or specific Special Forces missions.

Eurocopter, which undertakes 31% of its activity in the military sector, provides a wide range of models to responds to all kinds of customers’ needs. The Tiger helicopter (or EC665) is a four-bladed, twin-engine attack helicopter. It first entered into service in 2003 and has since been used in many combat operations such as in Afghanistan, Libya and Mali. The Tiger helicopter is the first all-composite helicopter developed in Europe. It incorporates several advanced features such as a glass cockpit, stealth technology and high agility in order to increase its survivability. Despite its high performance, only France, Germany, Spain and Australia have chosen the Tiger, though it is currently in competition in Southeast Asia and in the Middle East.

Improved variants have also begun to enter into service, with more powerful engines and compatibility with a wider range of weapons as for instance US Hellfire air-to-surface guided missiles. The latest variant, the Tiger HAD version, has recently begun to be delivered to France’s defense procurement agency (DGA). Currently, 97 helicopters are in service in the four countries that have ordered a total of 206 units.

There is also the NH90, a medium-sized, twin-engine helicopter designed for modern multi-mission capabilities that offers a costeffective usage throughout its lifecycle. It can be used in two variants, the Tactical Transport Helicopter (TTH) for Army use and the naval NATO Frigate Helicopter (NFH) for embarked and antiship missions.

Started in 1992 under the NAHEMA program (NATO Helicopter Management Agency) NH90s are assembled by NHIndustries, a joint-venture between Eurocopter (62.5%), the Italian manufacturer Agusta (32%) and the Dutch Fokker (5.5%). The aircraft integrates various innovations, gathering in a composite fuselage fly-by-wire technologies and advanced avionics incorporating a fault selfdiagnosis system and built-in maintenance means. Consequently,

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support time and ground requirements are drastically reduced. In spite of important delays due in part to the high number of different specifications for each client (26 different versions), 11 European countries, Australia, New Zealand and Oman have ordered more than 500 NH90 helicopters. Serial production began in 2006 and about 150 have so far been delivered. France has till now ordered 95 aircrafts divided between 68 TTH and 27 NFH. Eurocopter has also been growing through subsidiaries abroad in the past decade. The US market is being targeted through the American Eurocopter Corporation that produces, for instance, the UH-72 Lakota – a militarized version of the EC145 – for the US Army’s Light Utility Helicopter (LUH) program. Helibras in Brazil is one of Eurocopter's main subsidiaries. It assembles, distributes and supports Eurocopter products in South America. In 2008, through Helibras, Eurocopter gained a major contract of 50 EC725 multi-role helicopters with the Brazilian Armed Forces. Furthermore, Eurocopter is aiming at a rapid penetration in India. Its Fennec helicopter (AS550) has been short listed along with the Russian Kamov in a large tender of 197 reconnaissance and surveillance aircrafts, to renew the obsolete Cheetah fleet of the Indian Armed Forces. Finalizing this contract is one of the main goals of the recently appointed French CEO Guillaume Faury whose nomination was unveiled in March of 2013.

He should also increase the process of internationalization of the company and attempt in particular to find new users for its military aircraft and secure European orders, given a context of rationalized defense budgets. Developing customer support with MRO and flight simulators for training is another aspect of his mission, particularly to attenuate the effects of industry cycles.

DEFENSE LEADERS • FRANCE 2013

PROVIDING

Snecma 1945 Turnover 2011: €4.5 billion Established:

Staff: 13,150

35 global locations 11 plants in France More than 5,500 engines in

An average of per year

350 patents

service

A subsidiary of the Safran Group, Snecma is a leading global hightechnology group and a tier-1 supplier of systems and equipment for aerospace, defense and security. It produces either by itself or through partnerships engines for both civilian and military aircraft, launch vehicles and satellites. Snecma is also a world leader in customer support services, namely maintenance, repair and overhaul, for commercial and military aircraft engines. Its expertise, dubbed Enginology, is recognized worldwide. It is organized into four divisions: commercial engines, military engines, space engines and services.

Its product range includes the CFM56 turbofans, the world’s bestselling commercial engine, produced jointly with the American General Electric (GE), through their equally-owned subsidiary CFM International. With the Russian NPO Saturn, Snecma has developed

the SaM146 engine for the Sukhoi Superjet 100 regional jet through their jointly owned subsidiary, Power Jet. The company has also produced the M53-P2 engine for the Mirage 2000, the M88-2 for the Rafale and the TP400 for the Airbus A400M. Other examples of its engines include the Larzac jet engine, jointly produced with Turbomeca for trainers and light tactical support aircraft, and the Tyne turboprop, produced in conjunction with MTU Aero Engines and Rolls-Royce for maritime surveillance and military transport aircraft. The 20 different types of military transport, training and combat aircraft Snecma provides products and services for are deployed by armed forces in 40 countries. As for the aerospace industry, Snecma is a leader in cryogenic propulsion; for example, it has supplied the Vulcain 2 and HM7B cryogenic engines for Europe’s Ariane 5 ECA heavy launcher. It is also the European leader in plasma production with its PPS1350 thruster, and already used on European Space Agency’s Smart-1 lunar probe.

Snecma is currently involved in the development, with GE, of the new-generation LEAP engine that features a revolutionary new technology: fan blades made of a woven composite material using the resin transfer molding (RTM) process, for a significant reduction in weight that in turn reduces fuel consumption and nitrogen oxide (NOx) emissions.

Pierre Fabre, CEO

2013 will be a key year for our projects. Our prime objective, as always, is to better respond 56

to the expectations of our clients through continuous performance improvements.

DEFENSE LEADERS • FRANCE 2013

PROVIDING

Turbomeca 1938 Headquarters: Bordes Staff: 6,360 Established:

Sales 2012:

€205 million

2,450 customers in 155 countries 17 sites and 1 subsidiary

70,000 engines of its own

design

Engines produced in 2012:

1,012

Another subsidiary of the Safran Group, Turbomeca was founded by Joseph Szydlowski and André Planiol following their patent of a supercharger in 1937. The company quickly morphed from artisanal production to industrial, and today is the world’s leading provider of helicopter engines. It specializes in low to mediumpower gas turbines and offers the largest engine power range, from 450 to 3,000 horse power, equipping civil, parapublic and defense helicopters. It also produces turbo-jet engines for aircraft. Turbomeca’s customers are direct end users as well as original equipment manufacturers, with whom Turbomeca is often involved in joint programs. They include Eurocopter, NHIndustrie, Russian Helicopters, the Indian Hindustan Aeronautics Limited (HAL), AngloItalian AgustaWestland, and American Sikorsky. 31% of its engines are dedicated to the military field. Microturbo, Turbomeca’s subsidiary, develops and manufactures lowpower gas turbines and specializes in turboreactors for missiles.

Turbomeca offers two engine families for the light and medium helicopter segment, the Arrius and Arriel. These and their subsequent version are currently powering a wide range of helicopters, from the civilian Eurocopter (such as Ecureuil, Dauphin, EC135), AgustaWestland (A109 Power) and Sikorsky (S76) to the military Eucrocopter Fennec and Panther or AgustaWestland A109 Power LUH. Turbomeca is currently developing the Arrano, the new 1,100 ship engine designed to power four to six tons helicopters. It will be powering the Eurocopter X4 new-generation five to six ons helicopter.

Olivier Andries, CEO

The most solid growth is coming from oil and gas. We see a trend for deeper

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

For the medium helicopter segment (five to eight tons), Turbomeca provides the MTR390 for Eurocopter’s Tiger and the TM 333 for HAL’s Dhruv. Its latest development is the Ardiden engine, a simple, modular and compact design; Ardiden 3 has been selected to power Chinese and Russian helicopters. In the heavy helicopter market, the Makila and RTM 322 turboshaft engines power helicopters built by Eurocopter (EC 225/725, Super Puma, NH90), Agusta Westland (AW101) and Boeing (WAH-64).

offshore and new areas of exploration and operation. We see also a significant growth in some specific geographical areas, and I would list two as fast-

risers – South America and Southeast Asia.

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PROVIDING

Jean-Yves Courtois CEO of Orolia Group Founded in 2006, the Orolia Group serves the aerospace, defense and telecommunications markets with high-precision positioning, navigation and timing devices and systems. The company has established itself as a world leader with significant operations in the United States, United Kingdom, Switzerland and France with a workforce of over 320 employees and 2012 revenues of 66.2 million euros.

What are the principal applications and products developed by Orolia Group in the defense and security domain?

The Orolia Group designs, manufactures, sells and services precision electronic and telematics systems to determine the "where and when" of people, events or objects in the most critical operations. Our solutions integrate various technologies for reliable operation in extreme environments (air, sea, land, space). Our wide range of competencies includes global navigation satellite signals and expertise in software applications.

Orolia Group is one of the world leaders for distress systems used in COSPASSARSAT international search and rescue systems.

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In the aerospace and defense industries, Orolia Group has established a strong position in the supply of network time servers, master clocks and frequency references. These GPS-based clocks, sold under the Spectracom brand, synchronize critical infrastructure in a variety of markets, including aerospace and defense, public safety and security, digital broadcast, financial services and high performance computing, power and utilities, and more. These applications require the reliability that Spectracom offers, including the benefit of legally traceable time (resulting in a leading position in synchronizing emergency call centers). Spectracom also supports applications for time and frequency applications with test and measurement instruments.

Recent developments include an innovative line of GPS and GNSS simulators which has positioned the business as a provider of critical solutions for the GNSS eco-system. In France, Spectracom works on a number of infrastructure programs as well as synchronization and time measurement systems allowing the company to guarantee security, standards adherence and the operational control of systems and infrastructures.

Also, Orolia Group is the second largest supplier worldwide of radio alert distress beacons for the COSPAS-SARSAT search and rescue market and is present in the aeronautics, military, and maritime segments. These beacons are integrated into the company’s emergency locator transmitters (ELTs) that equip planes, helicopters, and fighter planes for automatically locating the site of an incident for rapid response and rescue. Orolia Group acquired British military distress beacon specialist, Sarbe in 2011. Sarbe has been developing and manufacturing lifesaving radio beacons since World War II. Since then, the Sarbe name has become the standard by which reliability and performance

are measured. Armed forces, expeditions and other personnel engaged in hazardous pursuits know they can rely on Sarbe to ensure accurate location and fast recovery in the case of an emergency.

What has contributed most to Orolia Group’s success in recent years?

Performance through innovation and customer satisfaction are two of the five pillars of our culture. Instead of the traditional reliance on the spontaneous “eureka moment,” the Orolia Group meticulously identifies customer needs and develops a creative solution with clear benefits compared to existing alternatives. For example, our precision timing activities, like synchronization, where the ability to generate, distribute, timestamp and analyze the time frequency signatures through the combination of the GPS signals and atomic clocks is a critical component in the aeronautic, defense and armament sectors. Our know-how resides in our intimate knowledge of the most demanding applications. Our commercial, marketing, technical and operational capacities are also important for providing after-sales client service, a personalized technical solution created to fit specific needs.

In 2012, the company announced the award of two major programs for the United States military, worth about 3 million euros. Prime contractor, Northrop Grumman, has selected Spectracom’s SecureSync precision timing platform to support the integration of multiple devices and systems using precise time and frequency signals for a defense program. SecureSync combines precision master clock technology and secure network-centric approach with a compact modular hardware design to bring a powerful time and frequency reference system dedicated to the military applications. This innovation, known for its extreme reliability, security, and flexibility for synchronizing critical operations, has recorded impressive sales growth of 90% in 2012.

The second program is for the supply of US Air Force Metrology Calibration Program (AFMETCAL) test equipment. Spectracom frequency calibrator/ analyzers will be used across several AFMETCAL projects to test and calibrate any device that relies on a precisely timed signal. The US military continues to rely on our precision time and frequency technology due to increasingly sophisticated systems. Thus, we provide a very wide range of innovative solutions DEFENSE LEADERS • FRANCE 2013

PROVIDING within the US territory, representing two-thirds of the global market.

With almost 60% of revenues realized in exports of which two-thirds are to the Asian market, Sarbe military distress beacons have also experienced good commercial momentum. Through its commercial network, Sarbe is present in more than 50 countries and benefits from a brand and expertise renowned among army forces worldwide.

Further, thanks to a global leadership position and a product range in constant evolution, Sarbe is the preferred provider of the British Ministry of Defense.

What explains Orolia Group’s rapid acquisitions in recent years and what is the future direction of the company?

Despite the prudence required given the general economic context, Orolia Group hopes to see a new wave of growth in 2013. Attaining this objective will however be conditioned by new government structuring programs that support the Timing, Test & Measurement Division. The activity should continue to encourage the strong momentum thanks to our GNSS satellite signal simulators with the launch of several new products. In the Positioning Division, despite an unclear outlook of the health of the maritime sector, the activity should be sustained by the extensions of our marine Automatic Identification System (AIS) products, Boatracs-developed software sales and the momentum of aeronautic distress beacons.

60%

of revenues through exports

In the first six years, Orolia Group has made 10 company or asset acquisitions. The acquisitions are not an end in themselves. They represent our desire to quickly take on a leadership position worldwide in relatively mature markets where gaining organic market share is complex and costly. Maintaining a critical mass is essential to leading the way in innovation. Orolia Group’s central focus is on the creation of a “tracking and monitoring” center with service and software content as the most important recurrent revenue source. The future acquisitions of the company will thus be primarily realized in this domain. The acquisitions should allow us to reach the 100 million euros revenue mark in the next three years.

Thanks to the acquisition of Sarbe in 2011, the company benefits from a leadership position on the world market.

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

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PROVIDING

Hispano-Suiza Established:

1904

Headquarters: Colombes, France Staff:

1,200

€205 million Operating from 2 countries Turnover 2012:

Number of power transmissions in service:

30,000

Facilities: Colombes and Réau, France; Sedziszow Malopolski, Poland

Created in 1904, Hispano-Suiza has its origins in luxury cars and aviation engines. When the French subsidiary of the company was bought by Snecma in 1968, the company shifted gears to aerospace manufacturing and research. Now Hispano-Suiza is a subsidiary of the French industrial giant and high-technology specialist, Safran Group. Hispano-Suiza holds 50% market share of engines delivered in the sector and is specialized in three principal domains: power transmissions, the conversion of electricity for local use, and electronic power converters. The French company is driven to become a world leader in the onboard plane electrical chain.

Hispano-Suiza’s clients come from two main sectors: automobile and aviation. Hispano-Suiza’s top automobile clients include Snecma, Rolls-Royce and General Electric, and in aviation its clients count the big names such as Airbus, Boeing, Bombardier, Dassault Aviation, Eurocopter and Gulfstream. The services provided to these companies include managing the creation, development, production and aftersales support for electrical systems. These systems are for the use of pilots and power transmissions for the motors of all kinds of civilian and military aircrafts.

With regards to military engines, Hispano-Suiza designs, develops and produces the power transmission system for the Snecma M882 engine, and the accessory gearbox for the Rafale multirole fighter built by Dassault Aviation. This sophisticated assembly, entirely designed, developed and produced by Hispano-Suiza, comprises two main drives. Engine-mounted accessory drive, which includes the main hydromechanical unit, afterburner hydromechanical unit and lubrication unit, and also aircraft-mounted accessory drive, which drives the power generation equipment. These two units are connected by a flexible driveshaft operating at very high speed.

Fitted with flex-strips, the Hispano-Suiza driveshaft offers unexcelled damage tolerance and fatigue resistance.

military transport plane, along with the ram air turbine (RAT) backup electrical generation system. The KC-390 is a twin jet military transport plane of mid-capacity capable of in-flight refueling and can be also used to refuel other planes in-flight or on the ground.

Also contributing to its military engine programs, Hispano-Suiza plays a major role in assuring the service support of the power transmissions and hydromechanical equipment for Snecma’s Atar, Larzac and Tyne engines.

As an equipment supplier for the “mature” military engines made

by Snecma, Hispano-Suiza provides support services for the power transmissions and hydromechanical equipment on the M53, Atar, Larzac and Tyne engines. The Tyne turboprop, in service since 1964, is produced in partnership by Snecma, MTU Aero Engines and RollsRoyce. It powers the Transall C-160 tactical transport and Atlantique ATL2 maritime surveillance aircraft. Through a contract signed with Snecma, Hispano-Suiza will provide maintenance services for the accessory gearbox on the ATL2 until 2025, also producing the propeller reduction gearbox on the Tyne engine, and still supply various spare parts (gears). This reduction gearbox is still widely recognized today for its compact design and high power, coupled with excellent reliability.

The Atar engine powered the Dassault Aviation Mirage III, Mirage IV, Super Etendard and Mirage F1. With more than 1,000 engines delivered, these aircrafts will remain in service until 2017 with the French Air Force, and even longer with other air forces. HispanoSuiza is responsible for the engine’s power transmission, including production of spare parts. The Larzac engine powers the FrancoGerman Alpha Jet trainer (Dassault/Dornier). More than 1,000 were produced. Hispano-Suiza produces spare parts for the engine’s power transmission.

In November 2011, Hispano-Suiza was selected by Brazilian planemaker Embraer to design, develop and supply the primary and secondary electrical distribution systems for the upcoming KC-390

Olivier Horaist, President & CEO

We aim to position HispanoSuiza as a major player in electrical power THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

applications on aircrafts.

We have refocused our business in three primary areas: the transmission of power; the management of electrical power in a network;

and its conversion into energy for local use, based on power electronics components.

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PROVIDING

Laurent Pourprix Managing Director of Titan Aviation Since its creation in 1955, Titan Aviation, has delivered more than 6,000 refueling systems worldwide. Titan Aviation specializes in the supply of refueling solutions throughout the whole process. It has also opened an Indian subsidiary.

More than refueling systems manufactured What are the activities of Titan Aviation in the defense domain?

80

employees

Titan Aviation is specialized in the design and production of refueling vehicles for military aircrafts and helicopters, as well as terrestrial vehicles (tanks, trucks, four-by-four). More generally, the company can be involved in any project where fuelling expertise and know-how is needed.

How does Titan Aviation distinguish itself in the domain of aircraft-refueling vehicles?

Titan Aviation offers a full range of refuelling equipment dedicated to civilian and defense applications: portable fueling units, tank containers, flexible tanks, fuel farms, airport dispenser and refuelers, tactical hot refueling dispensers, air transportable refuelers, high capacity (up to 80,000 liters) aircraft refuelers, etc. Titan Aviation is able to offer custom solutions to its customers and recently developed a tactical and air transportable refueling vehicle for French Special Forces. The company also developed custom solutions for Lithuanian and Algerian armies, as well as the United Nations.

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What are the focal points of Titan Aviation’s development strategy: ergonomics, mobility, efficiency?

Titan Aviation bases its reputation on strong innovation capabilities. Thanks to its in-house R&D department, many innovative projects have been successfully completed: the S.M.A.R.T. Frame and EZ Fuelling (refueling with vehicle engine off). The S.M.A.R.T. Frame (bolted and welding-free frame) for example allows a modular conception from standard elements, easy repairability, exceptional corrosion resistance, and in the case of international projects, the production of Completely Knocked Down subassemblies ready to assemble on-site.

For a long time, we have focused on the ergonomic and ease of maintenance of our equipment thanks to the feedback of our customers. For some years now, we are also very attentive to the environmental footprint of our solutions, from the design (materials, paint) to the energy efficiency (EZ fuelling).

DEFENSE LEADERS • FRANCE 2013

PROVIDING What are the advantages of membership in organizations such as the European Defense Economic Network (EDEN) and the GILEP clusters?

Titan Aviation is very active in both the EDEN and GILEP clusters. As an SME, the main advantage is to get access to a large network of solutions and opportunities thanks to the cooperation between the clusters members. EDEN cluster has a real international hunting-in-packs philosophy: each member designs complementary products and solutions, and is able to deliver a complete offer to the customers.

How important is international expansion to Titan Aviation’s overall business strategy?

Supplying a niche market, we became an international company a long time ago. Today overseas business represents more than 80% of our turnover. We sell equipment worldwide and are especially successful in Europe, Africa and Middle East. Eight years ago we created a joint venture, Titan Antony, with an Indian partner, to produce equipment locally in order to meet area price-point and technical requirement. Today we look forward Southeast Asia, where we believe the need for refueling equipment will increase in the coming years thanks to the economic boom this area is experiencing.

Today, overseas business represents more than 80% of our turnover.

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PROVIDING

Philippe Schleicher Chairman and CEO of Herakles Herakles was created in 2012 through the merger of the SNPE group’s Energetic Materials branch and the Rocket Engines division of Snecma. Herakles has become one of the world leaders in the conception, development, and production of solid propellant engines for missiles and space launchers. These are very demanding industries in terms of security, performance, and reliability.

What led to the creation of the Herakles Group?

The creation of Herakles is an old project. It came from the realization that there are a large number of links at the level of conception and feedback between the designers of ballistic missile engines, space launchers, and propellant manufacturers.

Moreover, the geographical locations of these two industries, Snecma and SNPE’s Energetic Materials were close to one another in the Bordeaux region.

Since 1972, the two companies were invited to get even closer within the context of the French Economic Interest Group. This was quite satisfactory, but there were still two separate research offices. At the end of the 1990s, the government (as a client and not as a stockholder) made it very clear that budgets would be cut without a doubt and that as a result we should reduce our costs. The merger of these two groups into one single company was finally decided in 2000 by the then Defense Minister, Alain Richard.

performances just as well as the architecture of engines. In this way we benefit from unparalleled decision-making and problem-solving speed. In the end, everyone is very satisfied with this merger.

What are the main activities of Herakles?

Nearly 40% of our activity is centered on ballistic missile propulsion. We produce the combustion agent ammonium perchlorate in our Toulouse factory. We pour the propellant in the Saint-Médard factory. Then we build the nozzles and the thermal protections in the Haillan factory. We assemble the thrusters in Candale which is the location that belongs to the French defense procurement agency

There was a great deal of hesitation because some considered that the combination of the two types of jobs, chemist and mechanic, would be incompatible within the same company. This did not turn out to be true. I can attest to this because we created Herakles on May 2, 2012, and the teams function extremely well together. But it was a real challenge in the beginning. It was necessary to integrate several thousand people within the company. A large part of our personnel was affected by this merger. Last summer 500 people moved. Individuals changed bosses, careers, tools, offices, and so it was not a minor change.

Nearly 40% of our activity is centered on ballistic missile propulsion.

Today we are both the propellant and the engine specialist in the same company. This is a decisive advantage. Before, at the level of development, the engineers belonged to different societies with different constraints that this implies. Now, they work in the same offices and can handle propellant

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DEFENSE LEADERS • FRANCE 2013

PROVIDING

Research Development

% TURNOVER (DGA) and is also the extraction location that we just took back in the context of the French General Review of Public Policies (RGPP). These last three locations are close to the MĂŠrignac airport.

Our second activity is in the space domain where we work in close relationship with our Italian colleagues at Avio. We build the nozzles for the Ariane 5 boosters in Bordeaux, and we pour the propellant at Kourou. We assemble the engines in Kourou with the companies that we own with Avia.

The size of our engines (237 tons of powder each) makes transportation impossible.

The third activity is in tactical missiles. Through our subsidiary, Roxel, we are the engine specialist for MBDA, the leader in European missile manufacturers.

Those are our three areas of expertise. We are also active in the fields of energetic materials and propellants. One of our spin-off technologies is airbags that inflate by gas emitted through propellant combustion. Through this technology we have become an automobile supply manufacturer.

We are also highly specialized in composite materials that are resistant to high temperatures.

This expertise was developed for the nozzles for ballistic missiles which must have the dual advantage of being resistant to high temperatures and being extremely light. This is part of the intrinsic performance of the engine and the missile. In this domain there are many possible applications. This is how we are growing our activities in the sector of carbon-based aeronautic brakes, which we transferred to another subsidiary of Safran, MessierBugatti-Dowty, a company that landed the number one spot worldwide in this technology.

We have a more limited involvement concerning the Rafale. We developed the application of our products on the back of the engines with thermal structured materials which we developed in the context of missiles.

What percent of Herakles’ activity is dedicated to research and development?

Research and development represents 20% of our turnover.

The improvement of product performance is based, for instance, on the creation of more energetic propellant, lighter nozzle structures, more heat resistant and more ambitious architectures.

In addition, we need to pay greater attention to environmental concerns. For example, we must dismantle the missiles, applying a biological treatment for the propellants. We just opened a factory where we start with ammonium perchlorate and end with water and salt.

Ariane 6 will be a wonderful opportunity to develop new production procedures. For example, instead of manufacturing by the batch, we will attempt to produce the propellant continuously on a twin-vice compressor, as done in the food industry.

Is Herakles opportunities?

looking

into

international

We are one of the actors in the American antimissile defense sector, manufacturing thermostructural material pieces. Our subsidiary, Roxel, benefits from large MBDA contracts. In addition, we are opening a new factory in Suzhou near Shanghai at the moment, which manufactures airbags for the Asian market. Here again we cannot transport the materials by boat due to problems involving transportation security.

Finally, we work with Japan in the domain of fibers for thermo-structural materials. We need silicon carbide fibers and thus, we need to secure this highly strategic provision. So, we created a joint venture with a Japanese society.

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

We are one of the actors in the American antimissile defense sector manufacturing thermostructural material pieces.

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PROVIDING

Eurenco 2004 Headquarters: Paris Established:

1,000

€240

million

100% owned by SNPE, Eurenco was created in January 2004 from the merger between SNPE Explosives & Propellants, NEXPLO Bofors and NEXPLO Vihtavuori, thus inheriting worth centuries of in-depth knowledge of energetic materials. Eurenco’s annual turnover exceeds 240 million euros, with about 1,000 employees operating from five industrial plants in France (Bergerac, Sorgues), Belgium (Clermont), Sweden (Karlskoga) and Finland (Vihtavuori).

Increasingly involved in new international programs, Eurenco is a favored partner of major French and European munitions purveyors (BAE Systems, DCNS, Finmeccanica, MBDA, Nammo, Nexter, Otomelara, Rheinmetall, Saab, TDA, etc.), while also developing its overseas export sales. A leading European company for military explosives, propellants and combustible items, Eurenco also provides explosives for the civil sector (oil and gas perforation, mining), and owns the world’s largest production capacity for 2-EHN (diesel fuel additive).To best meet the needs of their client countries in Europe and worldwide, Eurenco has restructured its activities around four operational divisions (for explosives, propellants, combustible items and additives) and reinforced its production capabilities.

Its activities in the defense sector cover a wide range of explosives, gun propellants and propelling charges for warheads and ammunition: high explosives and compositions for melt-cast, pressed and cast PBX explosive charges, as well as fuse boosters; cast PBX charges for insensitive munitions; base bleed grains for extended range artillery ammunition single and multibase propellants for small to large caliber military ammunition, mortar increments, recoilless antitank weapons and reloading powders; low vulnerability (LOVA) propellants for insensitive propelling charges; spherical powders for military small arms ammunition; modular Artillery Charge System (MACS) for artillery ammunition; combustible cartridge cases (CCC’s) for tank and artillery munitions; and nitrofilm for mortar horseshoe containers.

Jacques Cardin, CEO

The European business environment is hit by the defense budgets reductions, while many emerging countries are increasing their defense efforts.

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Offices abroad:

Staff: Turnover 2012:

France (Bergerac, Sorgues), Belgium (Clermont), Sweden (Karlskoga) and Finland (Vihtavuori).

Eurenco also develops new energetic molecules, and manufactures military grade nitrocellulose used in the production of single and multi base propellants as well as combustible cases. Innovation has always been a key driver in Eurenco’s commitment to excellence.

Nowadays, faced with new challenges, its development policy focuses on two major aspects: improving the global safety of munitions while increasing their performance. The new standards of warfare mandate the use of insensitive munitions, less vulnerable to accidental or unintentional stimuli. In order to meet the armed forces’ requirements for personnel and combat platform safety, Eurenco provides innovative solutions to minimize untimely detonations both during combat phases and logistics operations.

In addition to the development of new formulations and processes to manufacture less vulnerable propelling and explosive charges, Eurenco has become a European leader in the loading of insensitive munitions. Furthermore, drawing from the experience of the recent conflicts in Afghanistan and Libya, Eurenco has made a priority of developing solutions that guarantee high operational efficiency, while reducing collateral damage. To ensure both flexibility and volume, Eurenco’s R&D and manufacturing capabilities range from small scale to mass production: up-to-date laboratories, pilot workshops, multipurpose synthesis units, large scale facilities, automated workshops for the filling of insensitive munitions and the manufacturing of artillery modular charges. These modern and innovative facilities are all compliant with environmental laws and the most stringent safety standards.

While continuing to secure its traditional markets mainly driven by security of supply concerns, Eurenco will also increase its offer overseas. The ongoing modernization of the Sorgues plant and the capacity increase of

the Clermont plant are part of the same dynamics, and fall within Eurenco’s commitment to continuous performance improvement and competitiveness.

DEFENSE LEADERS • FRANCE 2013

PROVIDING

David Quancard CEO of Roxel Roxel was formed in 2003 as the result of the merger between French Celerg and British Royal Ordnance Motors. Roxel, the third-largest rocket motors manufacturer in the world and the number one in Europe, can cater to the motor needs of a wide range of missiles such as ground to air missiles, artillery rockets, antiship and antitank missiles, and cruise missiles.

What are the priorities for Roxel in terms of innovation?

We invest around 3% of our turnover in R&D and it is not enough. All the rest is based on customers.

What do we do? We develop products in line with our customers' needs of tomorrow. We need to increase the range of missiles, increase their stealth capabilities; and it may seem strange, but we need to develop more environmentally-friendly products.

Does this move toward environmentallyfriendly materials involve the use of different production methods?

Yes absolutely. When a raw material is less dangerous to the environment, it is also normally less reactive and less efficient. Therefore, you need to change the formulation to use other products.

To decrease the cost, you have to of course find new and smart ammunition to be more flexible for the global mission. For example, you can be more intelligent in terms of thrust curves, to be able to have dual pulse and other such technologies. It means that we have a technological roadmap that we build together with our main customers and then we invest their money and develop new business.

We are always innovating, and internal innovation is something that is very important for us. We have developed an innovation process called Innovarox, where we send a questionnaire to all of our staff members and ask their ideas for the future. Then we put into place the clusters of ideas we have chosen as most important.

What are some examples of the technologies that Roxel has developed?

Roxel has developed Insensitive Munition or IM technology. We are now a world leader in IM technologies. IM is a technology that enables a soft reaction when ammunition for a rocket motor, for example, takes a bullet attack or a fragment attack or a slow cook-off. If it is an IM motor, it is gentle and it burns. The same thing applies for slow cook-off or fast cook-off, when you have a fire in a boat. Thus, IM is something very important because there will be a reaction but only the ignition temperature burning.

The burning creates a few problems but it diffuses the pressure. If it burns, there is no explosion and you can save the platform. This is very important.

Having an IM motor is not only about the type of propellant you use but also about the design and

studies of the rocket model. Roxel is not the only one capable of this technology but we are ahead of the other competitors globally.

To what extent are export markets becoming more important for Roxel?

In France, UK, and Germany, and in Europe more generally, the market is relatively flat or will decrease. Export markets are thus critical for the medium term. We have two ways of exporting. One is direct and the other is indirect. Indirect exports mean that when MBDA exports missiles, for example, we are exporting as well. That is the reason why we are very interested in all export campaigns led by MBDA. So, we are currently working with MBDA to support them on the export markets, for example if there is a need to transfer some technologies related to rocket motors. As of today, the priorities are India, the United Arab Emirates, South America, Far East countries like Indonesia, where we are trying to develop local partnerships as in Abu Dhabi in order to be able to control some of our future competitors. It means that we are ready to transfer some of our existing technology, and at the same time, invest for the future.

We invest around 3% of our turnover in R&D and it is not enough.

What have been the main benefits of merging together the French and the UK companies to form Roxel?

The UK is a specialist in cast double-based technologies, or technologies to manufacture special propellant charges. There used to be a cast double-based facility in France in Angouleme but it was closed in 2005; everything has been transferred to the UK. So it is important to say that Roxel is one example of real French-UK technical mutual dependency. For all the French antitank missiles like ERYX, or MILAN, the propellant charge is manufactured in the UK. So it means that technologically speaking there is no overlap between France and the UK. After that you have two cultures, thus two design authorities, but we try to integrate to an increasingly greater extent. That is the reason why there is only one head of program for both France and the UK. At the moment, there are still two heads of engineering between France and the UK, but it is my objective next year to merge the two and to have only one head of engineering and one technical director.

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

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PROVIDING

MBDA 2001 Headquarters: Paris Staff: 10,000 Established:

Turnover 2012:

Export orders worth an unprecedented billion in

2012

MBDA, a multinational group that is the first truly integrated European defense company, is a world leader in missiles and missile systems. A merger of French Aerospatiale-Matra, British Matra BAe Dynamics and Italian Alenia Marconi Systems, their respective parent aeronautical and defense companies are the main stakeholders – EADS (37.5%), BAE Systems (37.5%) and Finmeccanica (25%). It has industrial facilities in France, UK, Italy, Germany and the US. The group has 45 products in service and 15 in development that meet a wide range of current and future operational needs of the army, navy and air forces.

The group has six subsidiaries (often owned together with other companies): Bayern-Chimie, the competence center for missile propulsion within the group; Eurosam, prime contractor and system design authority on the Future Surface-to-Air Family of missile systems; Matra Electronique, the electronic production center of MBDA; RAMSystem GmbH, involved primarily with the Rolling Airframe Missile naval self-defense missile system in Europe; Roxel, a tactical missile propulsion company; and TDW, leading warhead producer.

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€3 billion €1.4

Average of

50 patents

registered every year

Examples of its products and programs with French participation include the MILAN antitank missile, supplied to over 40 countries in the world, and the Exocet antiship missile, in its surface, submarine and air-launched variants, which represents the main naval superiority weapon of navies throughout the world. Its air-to-air missiles include the Meteor, currently in the pre-production phase, to be integrated on the Eurofighter Typhoon, the Gripen and the Rafale. Surface-to-air missiles include the Aster family group, the principal weapon of the British PAAMS air-defense missile system. Aster also equips French and Italian FREMM multipurpose frigates. This group of missiles also includes the Mistral, in service since 1988.

MBDA is a prime contractor for strategic multinational programs, such as the Franco-British conventionally armed long range cruise missile, Storm Shadow/SCALP, a deep strike weapon with the warhead optimized for hardened targets. The weapon has seen much success in Iraq and Libya operations, and is currently in service in UK, France and Italy. Plans include integration on F-35 Joint Strike Fighter. Other

DEFENSE LEADERS • FRANCE 2013

PROVIDING

examples include the six-nation Meteor air superiority weapon, a family of air defense systems based on the Aster missile for France and Italy (for ground and naval based air defense) and for the UK (naval air defense for the Royal Navy’s Type 45 destroyers).

Of particular note is the Anglo-French defense cooperation through MBDA, which has received a boost after the Lancaster House defense cooperation treaty signed between the two countries in 2010. Case in point: the two-year study contract on how long-range strike missiles such as the Storm Shadow/SCALP and Exocet could be replaced around 2030. The Next Generation Multiple Warhead System (NGMWS) is yet another project being funded by the British and French defense ministries that is a new bunker buster warhead since it aims at hard and deeply buried targets. The joint FASGW/ANL antiship missile program is currently awaiting approval and is aimed at arming the French navy’s NH90 and AgustaWestland AW159 Wildcat including others. A new inter-governmental treaty to be signed soon is expected to further enhance Anglo-French cooperation on missile development, in terms of sharing defense costs and capabilities through installations of centers of excellence in a bid to rationalize development of new programs.

Innovation is a strategic objective for MBDA and is a key condition for enabling the company’s future growth and sustaining its position as a world-leading player in missile systems. Key innovative programs include the 2011 CVS401 Perseus, a visionary land and naval attack weapon system.

2012 has been a record year for MBDA with regards to exports – a whopping 1.4 billion euros – largely due to the company’s contract with India to jointly develop a short-range surface-to-air missile (SRSAM). The latest French White Paper on Defense will affect MBDA’s proposal for the development of, among others, the Aster block 1 new technology air defense missile, an indication of curtailed demand in its domestic markets. There will therefore be a renewed focus on exports to maintain its current turnover level.

Antoine Bouvier, CEO We are adopting a global approach, incorporating an export perspective in order to THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

create the conditions that are favorable to the launch of new programs. These aspects are essential if we are to maintain sovereign capabilities within Europe and if we are

to increase the export attractiveness and competitiveness of our missile systems and the platforms they equip.

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STATE SHAREHOLDING STRUCTURE 33

26

12.1

12.5 13

49.9

66

¯¯ Sofema ¯¯ Sofresa

46.3

12

37.5 ¯¯ BAE Systems  37.5% ¯¯ Finmeccanica  25%

50

70

¯¯ Germany  12% ¯¯ Spain  4% ➥➥ ➥➥ ➥➥ ➥➥ ➥➥ ➥➥

100

Airbus Military Astrium Eurocopter Cassidian Eurofighter (46%) Patria (26.8%)

DEFENSE LEADERS • FRANCE 2013

The prevalence of the state in French shareholding structure comes from a tradition of historical state monopolies in different sectors such as powder and explosives (SNPE), land arsenals grouped in GIAT Industries, now Nexter, and naval construction in the Direction of Shipyards (DCN), today DCNS. The state also strongly influenced aeronautical industries by nationalizing them in 1936 and then by reassembling them over time into bigger companies such as Aerospatial, today EADS or Snecma, now a subsidiary of Safran.

50

OPTROLEAD

27

35 50

50

63.58

30.2

50

100

Aerospace Propulsion ➥➥ Snecma ➥➥ Herakles ➥➥ Techspace Aero ➥➥ Turbomeca

50

Aeronautics Equipments ➥➥ Labinal ➥➥ Hispano-Suiza ➥➥ Messier-Bugatti-Dowty Defense & Security ➥➥ Sagem ➥➥ Morpho

These shares, valued at 12.25 billion euros at the end of 2012, are at the heart of the French industrial debate. First, because the sale of a portion of shares is envisioned in order to free additional exceptional resources for the defense budget while waiting for the budget crisis to pass. Second, because the idea of consolidating European land and naval industries is often evoked, as in the case of aeronautics through the EADS consortium. And yet, it is impossible for entirely private European partners like Rheinmetall, Krauss-Maffei Wegmann and ThyssenKrupp Marine Systems to accept becoming joint shareholders with the French state which has a reputation of basing its decisions more in political, than purely economic, reasoning.

A recent report from the French Court of Auditors evaluated the role of the state shareholder in the defense industry. The record of the state as shareholder was shown as positive overall, with success in modernizing the French defense industrial capacity.

However, according to the Court, the state has proved weak in making numerous choices, leading to loss of control in several of these groups. For example, the state has handed over 46.3% of its Dassault Aviation shares to Aerospatial which merged with EADS in 2000 and of which the state now only holds 12%. In the same manner, the state has lost its blocking minority over time in Safran despite the Group’s strategic business activities.

Sense of ownership Shareholders Subsidiaries French state

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

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PROVIDING

Patrick Boissier CEO of DCNS DCNS is a high-tech company that designs, builds and provides support services for submarines and surface ships as well as the accompanying systems and infrastructure. DCNS also provides services for shipyards and naval bases, also offering a wide range of solutions in civil nuclear energy and renewable marine energy. The company employs 13,200 people and generates a turnover of 2.9 billion euros.

What are the principal activities and areas of expertise of DCNS?

billion in turnover

Exports

represent

30%

How far along is the DCNS “Championship” strategy of 2009 aiming to double turnover in the next ten years?

We are on schedule to double our turnover sometime between 2010 and 2020. Over the course of three years, our order book grew by 45%, our turnover by 22%, and our operating income by 38%.

The first reason for this success lies in our ability to satisfy our customers, foremost among them the French defense procurement agency (DGA) and the Navy, in the project management of complex manufacturing programs.

22%

revenue growth in

3

years

72

DCNS is a world leader in naval defense and is an innovative player in the energy domain. Certain that the sea holds the planet’s future, DCNS invents hightech sustainable solutions to secure and develop its potential. Specifically, DCNS offers submarines such as the Andrasta or Scorpene as well as surface vessels like the Gowind OPVs (Offshore Patrol Vessels) and other types of vessels, and FREMM multi-mission frigates. We demonstrate our expertise everyday taking on programs as ambitious as the ballistic missile submarine, Le Terrible, or the Charles de Gaulle aircraft carrier. In the field of civil nuclear engineering and marine renewable energy, we are one of the few actors investing in four major developing technologies: offshore wind (floating and fixed), tidal stream energy, Ocean Thermal Energy Conversion (OTEC) and wave energy.

What are the principal elements of DCNS' strategy?

Our strategy is comprised of three inseparable pillars. First, we aim to become a leading export naval shipbuilder by expanding our naval offer with new products (surface ships and smaller lift capacity submarines) and services (design and maintenance of infrastructure, crew training, etc.).

Second, we are growing our overseas market. We have been particularly successful in Malaysia and Russia. Finally, we are expanding our activity to civil nuclear engineering and marine renewable energy. We have also invested significantly in three key areas of development: R&D, employee training and trade promotion. Finally, in terms of alliances, we created a joint venture with Piriou providing maritime security ships (coast guards,

law enforcement authorities, customs, etc.) built to civilian shipbuilding standards. At the European level, in a fragmented industrial landscape, we strive to open a constructive dialogue with manufacturers.

What are the company's goals for the coming years?

DCNS is pursuing the ambition of developing a portfolio of activities evenly spread between naval defense in France, naval defense internationally and new markets (energy, surveying and sustainably developing the ocean’s potential). We are developing new growth initiatives in all of our activities. One of the main initiatives relates to a further expansion of our business to ocean-based sustainable development. This is an area where we can utilize our experience in the marine domain as well as our expertise and our industrial resources. Our approach is twofold. We can contribute breakthrough technology to sectors that are already mature, such as offshore. Finally, we can play a pioneering role in emerging sectors such as the development of underwater mineral resources or areas of industrial activity at sea.

How important are export markets for the French naval defense industry?

In the context of a structural decline in funding and increased competition, international opportunities are at the heart of the French defense industrial strategy. Companies are adapting their business models to new challenges and many have succeeded, making them world leaders. Today, exports account for 30% of activity for groups like DCNS. In addition, equipping the Navy, which utilizes some of the best hardware systems in the world and regularly demonstrates the quality of their external operations, remains a guarantee of enhanced credibility for state clients and therefore a significant competitive advantage (according titles such as “label France” and “combat proven”).

In turn, these exports grow the activity of our manufacturing sites and our design facilities in France. This dynamic cross-fertilization between the national and international levels plays a large role in growth. It reduces manufacturing dependency visà-vis to the state and contributes to the recovery of our trade balance. Thus, exchange must continue, accompanied by equipment and international system support as well as by an acquisition policy that takes into greater account of export constraints.

DEFENSE LEADERS • FRANCE 2013

PROVIDING

What were the determining factors for DCNS' success in its contract to construct the first Brazilian submarine assembly factory?

The signing of this contract represents the largest contract ever signed internationally by the company. It offers the most comprehensive range of naval integration and construction (submarines, naval bases, equipment and systems, etc.). This unique program focuses not only on design and implementation of technology transfer for four conventional-propulsion submarines, but also encompasses the design and technical assistance for the non-nuclear portion of the first Brazilian nuclear-powered submarine (2025). In addition, the contract includes a section on supporting the creation of a naval base and support for the realization of a shipyard. We are very proud that on March 1st, the President of the Republic of Brazil, Dilma Rousseff officially inaugurated the Brazilian Navy submarine construction facility, Itaguaí UFEM (Unidade de Fabricação de Estruturas Metálicas).

This manufacturing facility comprises all the industrial facilities and special tooling needed to manufacture the outfitted hull sections of the Scorpene submarines under the PROSUB program (PROgrama de SUBmarinos).

To what extent should the naval sector consolidate in France and in Europe?

We prove our know-how everyday, taking on programs as ambitious as the nuclear ballistic missile submarine, Le Terrible, or the Charles de Gaulle aircraft carrier. internationally. Against the backdrop of fiscal crisis, the move toward European consolidation is essential in the short and medium term. This is not easily achieved, however, because shipbuilding is not an industry that naturally focuses on such subjects.

Also, the industry is still very fragmented, which is inefficient for public spending and for international markets when responding to new Asian competitors (China and South Korea). Without consolidation, the European naval defense industry will be in a weak position, and its future will be in jeopardy.

We want to be ready to play a leading role in this consolidation. Our goal is to be in the best position to unite the industry.

DCNS calls for the consolidation of the naval defense sector in Europe. We need to improve the efficiency of defense expenditures: Europeans no longer have the means to develop four types of frigates or submarines and still compete THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

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PROVIDING FFSupplying to Russia:

STX France FFEstablished: 2001

The signature of a contract for two Mistral class helicopter carriers (LHDs) between DCNS and the Russian defense export agency took place in St. Petersburg on June 17, 2011. The first ship will be delivered to Russia in 2014 and the second LHD will be delivered in 2015. STX France will undertake the construction of the ships at its Saint-Nazaire shipyard under a subcontract with DCNS. The Russian shipbuilder OSK will provide part of the hull of both ships.

FFHeadquarters: Saint-Nazaire FFStaff: 2,210

FFTurnover 2012: €735.9 million FFProfile: STX France is a specialist in the domain of surface warships over 1,000 tons, surveillance ships, landing craft, replenishment ships and logistic support craft, special purpose ships and passenger ships. The company runs three subsidiaries with diverse complementary activities: STX France Lorient, STX France Solutions and STX France Cabins. STX France has established itself as a major player in the international shipbuilding market, whilst initiating a dynamic diversification strategy.

Ambitious assault ship (BPC) Dixmude, one of the Mistral class helicopter carriers

FFStealth and Multi Mission Ships:

CMN Naval FFEstablished: 1948 FFHeadquarters: Cherbourg

The Combattante Small Waterplane Area Outrigger (SWAO) 53 is a revolutionary concept by CMN with a unique outrigger hull capable of accommodating both helicopters and UAVs. Fast, agile and powerfully armed surface Combattante SWAOs have a targeting range of 40 to 80 meters. Over 90 of CMN’s acclaimed Combattante family of fast attack craft units have been ordered.

The ships are used to intercept enemy forces, patrol international waters, aid in air and surface surveillance, and for intelligence gathering purposes.

FFStaff: 375 FFTurnover 2012: €49.59 million

(total reported by CMN, mother company)

FFProfile: In the 50 years since the formation of CMN over 350 vessels have been built or are currently on order at the Cherbourg shipyard. This total includes over 285 military crafts in wood, aluminum, steel and advanced composite materials.The world famous shipyard of CMN is situated in the French port of Cherbourg.

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Combattante SWAO 53

DEFENSE LEADERS • FRANCE 2013

PROVIDING

Raidco Marine FFEstablished: 1962

FFHeadquarters: Paris

FFTurnover 2012: €22.74 million FFProfile: Raidco Marine specializes in a series of patrol ships destined for use by the state forces at sea. The design of the ship is centered on the double-chine deep-V hull which allows the ship to travel at high speeds.

FFVSMPs to the French Gendarmerie:

Raidco Marine will deliver a series of 11 patrol ships for the nautical brigade of the National Gendarmerie in April 2013. The ships are 11.6 meters long with a Yanmar motor of 315cv and a Z-drive propulsion system capable of reaching speeds of 37.5 nautical knots. The gendarmerie will be receiving these patrol ships..

Sillinger FFEstablished: 1962

FFHeadquarters: Mer (Loire-et-Cher)

FFStaff: 495 (Mother company, Groupe Marck) FFTurnover 2012: €4 million FFProfile: Present in more than 45 countries, 60% of Sillinger’s revenues in 2012 came from exports. Sillinger produces 100% of its boats in France. This French manufacturer is a small cap designer and manufacturer of foldable and semi-rigid boats dedicated to professional or leisure use, oil spill equipment and special inflatable structures. The company signed a contract with the Libyan military forces for 50 inflatable boats in 2013.

Nautiraid FFEstablished: 1936

FFHeadquarters: Vaiges

FFTurnover 2012: €1.18 million FFProfile: Army and Special Forces manufacturer since 1936, Nautiraid works in close collaboration with operational personnel to respond to their specific needs and to help evolve their technology.

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

F1200 F RIBUM Ship:

Dedicated to professional and military heavy duty, the 1200 RIBUM (38 feet) is designed for surveillance and intervention in open sea. The ship is equipped with twin inboard engines and armored cabin. It is also available with twin or triple outboard engines as well as with twin inboard engines with jet prop. The deep-V hull with sharp vertical stem allows the boat to sustain fast speeds at high sea.

FFThe SB Commando MK VI Kayak:

Nautiraid developed the SB Commando MK VI which is a twoseat folding kayak. The frame is comprised of two parts and several individual pieces and is specialized to serve in reconnaissance and infiltration missions. The military kayaks designed by Nautiraid have been in use for decades namely for the French Navy and Army as well as NATO.

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PROVIDING

Mike Duckworth Director of International Affairs of Nexter Formerly known as GIAT industries, Nexter is one of the global leaders in armored vehicles and ammunitions. After evaluating its business strategy with the “Grand Large” strategic review program, the group is very well positioned to continue growing, especially in export markets. The corporation is already working with several governments in Asia and in the Middle East, and firmly intends to capitalize on its long-term relationship in these regions to boost its export sales.

How important is the Gulf region in Nexter’s global strategy?

employees

9

production sites in France

76

The Gulf region is obviously very important for Nexter. The Gulf region represents between 50 to 60% of our future prospects. We are very conscious of how the work is done in the region being known and continuously present is key. We have a long presence in the United Arab Emirates dating back to the selection of the Leclerc main battle tank. It means that we have established a long-term relationship that serves us very well when we look across the region. Our track record and understanding of the UAE put us in a good position to develop and sustain our business relationships with local industry. We also had a long-term relationship with another country of Middle East more recently where a number of our systems are in service, notably, the CAESAR 155 Artillery; we have an even longer relationship with the several forces where a significant numbers of armor systems delivered in the days of GIAT Industries remain in service.

We also have a keen interest in supporting the Qatari Land Forces that is another important market where, of course, we have built a good relationship.

The excellent national relationship between France and Qatar has always been beneficial for our business.

Clearly Armored Vehicle for Infantry Combat (VBCI) is a priority for us in the Gulf. We have completed several demonstrations of VBCI in the region. We did one with the Kuwait Land Forces last year and it proved very successful thanks to the professionalism of their evaluation process and of course the vehicle itself. These are large programs that represent costly investments for our customers.

Their decision processes are necessarily detailed and this takes time. It is important for companies like ours not to be impatient. That is perfectly fine for us as we are here for the long run. Clearly the region is very important and, in order to position our products and offerings in the region, we very often have to develop products or tailor products for our customers. It means that we have to be prepared to invest. It also means that in order to invest we have to be capable financially of doing so. The Nexter Group continues to perform very well financially. Our return on sales is among the best in the defense industry even after a high research and development expenditure, which represents 18% of our turnover.

We have a business model particularly well adapted for the region that enables us to participate locally with industry.

What about Nexter’s project with Tawazun in the UAE? It is a project we have been working on for a number of years and where VBCI has performed well in the latest technical evaluations by the UAE Land Forces. The Tawazun project clearly demands a transfer of technology and industrial participation.

These features are important characteristics of the project. There is a strong demand for sustained industrial participation and this is completely coherent with the business model of Nexter after our restructuring from GIAT Industries to Nexter. We have moved from a vertically integrated business to a system engineering relationship with the customer.

We have a business model particularly well adapted for the region that enables us participates locally with industry. We have already proved this on a number of projects around the world. Our relationship with Tawazun progresses well and technically I know that the VBCI aligns well with the requirements of the user and has demonstrated its strengths during an extensive trial programme. As you know the competition is ongoing so it is difficult to add more other than to say that our company will continue support our customer to the best of our ability.

DEFENSE LEADERS • FRANCE 2013

PROVIDING What are the key drivers to the success of the company?

One of the key drivers is our capacity to invest on product development. It is probably one of the single most important competitive advantages we have today. We have always been a company associated with high technology and this will continue. We have created a stable performing financial environment and thanks to a major review of the competitiveness of our products called “Grand Large” we have been able to direct a large proportion of our product investment to benefit our export customers. That is something that we started in 2011 and it is now delivering results in terms of action inside the business. For example, if I take our 105 artillery project, we have improved the delivery lead time by 40% by reorganizing how we produce it, and we have reduced our cost by 20%. We have been prepared to modify the product to make it easier to manufacture. We have also used smarter production methods, and applied the skills of different suppliers (in the supply chains). This is an initiative that we have been applying across all of our products. Today, we are very confident in the way we are presenting our products and ourselves. The land defense market is a very competitive market – probably one of the most competitive – because it is the most accessible when compared with sea and air. We respect our traditional competitors and take note

of the professionalism of our new competitors from Turkey and South Africa, for example. We need to make sure we are in shape to continue to compete and succeed in the market place.

What are the prospects for Nexter in Asia?

Speaking specifically about 2012, we are absolutely delighted that the Indonesian Ministry of Defense has shown its confidence in the artillery system CAESAR and that we won the tender last year. We are confident that our relationship with the Indonesian Army will continue to develop, and it will present further opportunities for us in that market place. Regarding India, we have now opened a local legal entity, and we have been working seriously on the Indian artillery opportunities. The Trajan solution we presented at IDEX is what we are proposing for the Towed Gun System (TGS) program. The Indian Army also has a future requirement for our Mobile Gun System (MGS), and we are hoping that CAESAR can be offered in that requirement. If I speak of artillery as a domain, Nexter is very strong. There are few companies around the world that can provide systems of 105 Light Artillery which are helicopter portable to 155/52 calibre with the ammunition suite and fire control solutions to support them.

851

million of

One of the key drivers is our capacity to invest on product development.

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

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PROVIDING

Gérard Amiel Chairman and CEO of Renault Trucks Defense Renault Trucks Defense (RTD), part of the Volvo Group, is now a multi-brand holding company with Acmat Defense and Panhard General Defense. The company manufactures and designs tactical armored vehicles. Thanks to the three brands, RTD can now offer its customers a complete defense and homeland security product range. Following the recent acquisition of Panhard General Defense, RTD is aiming for revenues of 700 million euros by 2015, and plans on achieving this target with the help of export markets.

What was the vision behind the recent acquisition of Panhard General Defense?

The main aim of the acquisition of Panhard General Defense was to enlarge our range of armored vehicles. Panhard has two products lines.

The first one is the VBL which is an amphibious vehicle sold to the French Army and to 16 other armies around the world. The second one is the PVP, a four-year-old vehicle mainly sold to the French Army. They fit perfectly between our ALTV 3.5 ton vehicle, the lightest we are producing, and our 10 ton Sherpa Light vehicle. Another reason was to create a single commercial team for the three brands which are distributed in more than 54 countries worldwide.

This operation was finalized on the October 26, 2012 with the approval of the French authorities, following the announcement of our intention to purchase in July. We are currently setting up the organization of this multi-brand group. With the establishment of a multi-brand group based around Renault Trucks Defense, we have taken the long-awaited first step in the consolidation of the land sector through the creation of the leading manufacturer in the field of platforms.

What are the main advantages of reorganizing the corporation into a multibrand group?

RENAULT TRUCKS

IS REPRESENTED IN MORE THAN

different countries

78

One of the advantages of running a multibrand group is the different positions of the brands internationally. Thanks to its reputation as rugged and robust, ACMAT benefits from an excellent perception in Africa. On the other hand, Panhard is positioned more in Southern Europe, particularly Greece, and in the Middle East. Finally, Renault Trucks Defense’s strengths remain the Near East and Asia. These special characteristics will allow us to specialize the sales teams in their areas of excellence and to take advantage of their brand image to sell other products from the group.

How does RTD plan to reach its ambitious objective of 700 million euros in revenues by 2015?

a sister company, Mack Defense. This is why we are not selling our products directly in those countries.

The second dimension of our strategy is focused on homeland security products. Indeed, if we look at our exports in 2012, you will see that we sold more vehicles in the homeland security market than in defense.

As for France, we have forecasted a stabilization of the orders coming from the French Government.

The increase of our orders is completely attributable to exports. For 2012, the ratio was 30% export, and approximately 60% domestic. For 2015, we plan to reach a 50-50 ratio. In 2013, the group’s three brands will be taking part in about twenty trade shows around the world, including IDEX, Le Bourget and DSEI, to mention only the most important. This sales effort is also leading us to canvass new areas, especially the BRIC countries (Brazil, Russia, India and China). We will also be taking part in various trade shows in those countries and will be carrying out vehicle demonstrations. As you can see, nearly half these trade shows are actually devoted to security. This business sector is very dynamic, and most of the contracts we won in 2012 were for equipping police forces.

What are the benefits for RTD of belonging to the Volvo Group?

We have the chance to be owned by a civilian group, and in fact, we have the chance of using, in research and development, a convenient network for after-sales to civilian activities. As you know, the Volvo Group is the second largest truck manufacturer in the world, right there with Mercedes. So the doors are open to us in many different countries in the world. We can use Volvo’s network, and we can use the 40 different warehouses of spare parts all around the world. We can benefit from the high level of research and development as we have more than 7,000 engineers in the research department of the Volvo Group. There are lots of benefits for RTD, and we fully capitalize on those assets.

Our strategy consists of two points. The first is to expand the number of countries where we are selling.

We are already present in 54 countries, and we will increase until we have an average of 80 countries.

So, our plan is to be less aggressive in the countries where there is a local defense industry already. For North America, Australia, and New Zealand we have DEFENSE LEADERS • FRANCE 2013

PROVIDING

Jean Vandel Director of Business Development for Texelis Texelis develops and manufactures high-performance axles and powertrains destined for use in heavy-duty vehicles for public as well as defense purposes. A former subsidiary of Renault Trucks of the Volvo Group, it became an independent company in 2009 with Philippe Frantz, the President, becoming the main shareholder.

Where does Texelis currently stand in the defense sector?

Texelis’ main activities are focused on the train, truck and defense sectors. Today we aim to diversify our clients all the while keeping our old ones, principally Renault Trucks Defense (RTD). RTD is a partner on several projects. We supply a significant portion of the drivelines for Armored Vehicle for Infantry Combat (VBCI) and refurbishment kits for the aged Armored Vanguard Vehicle (VAB). Furthermore, we are now building our own product range using strictly Our own intellectual property. We are aiming to produce our own drivelines and control component quality. In this way our customers will also maintain their international competitiveness.

We are now building our own product range using strictly our own intellectual property.

In which domains does Texelis excel?

Texelis is very strong in terms of developing, validating and producing complete drivelines. This is our core activity. We have four sectors, three already existing (truck, rail, defense), and the fourth one currently being added (construction equipment).

We are currently developing a brand new range for rigid axles and independent suspension wheel axles. Some are being developed with our long-term partners; others with new customers. Performance, quality, life-cycle cost and competitiveness all make our products state-of-the-art.

Was the separation from RTD aimed at diversification?

RTD implemented a strategy where having a niche production facility for driveline was no more a core activity. It was important for RT and Volvo Group to find the best possible investor who would be able to

take over this activity, to transform it and make it first of all viable on its own, and then develop it so that Volvo Group including RTD would have a stronger partner for its own drivelines.

Does the work by Texelis on motorized wheels with Michelin have military applications?

Revenue 2012

The concept of motorized wheels is very advanced.

Recently and mainly in the US market, we have seen applications for prototypes of independent suspension motorized wheels. There is a future for this technology because it increases efficiency and reduces cost. It is still in the developmental stage. We have not been able to find a proper application for such a technology for French equipment.

What are the international prospects for Texelis?

In our diversification strategy, we try to locate the greatest potential for growth. The top six countries for defense are: the US, Russia, Germany, France, the UK and China. The US is too difficult a market because there is already a very strong industrial base for driveline manufacturers in place. We would definitely like to partner with Russian manufacturers. We believe there is a strong potential and we are working on two opportunities with Russian manufacturers.

What differentiates Texelis from its competitors?

In terms of defense drivelines, there are not many players in France or in Europe. Our USP is that we are fully independent, French, and face no export restrictions.

Second, we have a very integrated process – we do our own thermal treatment and make our own gears for example. This enables a complete quality check and allows us to determine the quality level we are delivering to our customers.

What are the prospects for growth for Texelis activities in the military sector given the potential budgetary slowdown?

We do not foresee a slowdown in terms of defense activity. We are not diversifying to subsidize or supersede but to increase our turnover. So, we are very optimistic about French government projects like Scorpion. The key question is timing – when will they be ordered? We also believe the French government is actively supporting export activity. Many countries seem interested in VBCI technology and we hope that this will bring us more orders.

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PROVIDING

Jean-Marie Mathelin Delegate Director General of Optsys Heir to the optical division of GIAT Industries established in Saint Etienne since 1967, Optsys is the French specialist and one of the European leaders in the field of optical and protected vision equipment for armored vehicles.

The LSAS modular system, with up to eight cameras and three independent control screens, allows for 360° vision.

What are the main activities of Optsys and its history as part of the Nexter Group?

Optsys, subsidiary of Nexter since 2008, is based in Saint-Etienne at the center of the optical and visual hub. We are the French specialist and one of the European leaders in the domain of armored vehicle optical and visual equipment, such as the VBCI, internationally renowned serving the French Army in a number of international operational theaters.

For over forty years Optsys has designed, manufactured and sold opto-mechanic systems and onboard optronics for land defense industries.

With the Optical division of GIAT Industries (today Nexter), Optsys has the experience, the technical capacity and the industrial expertise to modernize optical and onboard optronic equipment in all kinds of older vehicles as well as the ability to lengthen their durability.

Where can innovative optical equipment manufactured by Optys be found today?

Thanks to its team of highly qualified engineers and technicians, Optsys has developed an entire line of innovative day and night vision products that equip namely Armored vehicle for infantry combat (VCBI), Leclerc heavy tanks and also expedient route opening capability vehicles for Aravis, designed and produced by Nexter.

In the context of the VBCI program, Optsys provides the entire vision function series of manufacturing, the panoply of day periscopes, a Driver Vision Enhancement (DVE) system, and an optional Local Situational Awareness System (LSAS). Furthermore, since 2012, Optsys equips Aravis with Bulletproof glass and a perimeter vision system (LSAS product)

What are the technologies of the future that the engineers of Optsys are currently working on?

owned by

Nexter 80

The direct optical vision, day or glass periscope is a key element for armored vehicles that last.

However, they are increasingly often accompanied by digital vision in order to give teams a functional compliment such as a driving aid (maneuvering, night driving, cartography, etc.) and help carrying out the mission (onboard vehicle surveillance, detection, localization, etc.).

Thus, with two specific kinds of products, Optsys answers its clients’ needs through, on the one hand, the ViDOK (Video Display Optical Kit). The ViDOK is a multifunction module video, compact, independent and economic, adaptable to any day periscope.

It is offered with a wide variety of night vision sensors from different technologies to respond to the specificities of each user’s needs. On the other hand, the ViPer (Peripheral Vision), providing the LSAS modular system with up to eight cameras and 3 independent control screens with ergonomic and adaptive software, allows for 360° vision through its compatibility with all kinds of cameras (day, thermal). The particularity of our ViPer line is that it offers the ability to record 72 hours of the previous mission from eight cameras allowing for optimal mission preparation or debriefing.

In 2012, the know-how and the capabilities of our engineering teams allowed for the development of an exclusive thermal stereoscopic solution. Thanks to this system adaptable to any kind of vehicle without a specific kind of goggles, the pilot now has 3D night vision allowing for a better view of the relief for greater performance and security.

Is Optsys pursuing international opportunities independently of Nexter?

With a strong range of multi-vehicle and versatile products, we are pursuing a policy of development internationally that will be achieved in part through active participation in the EDEN cluster in order to create and develop our network: exclusive relations with SMEs in Rhône-Alpes. Independently of the cluster, Optsys participates as well in diverse international conferences such as Eurosatory, IDEX, DSEI and LAAD. Optsys develops robust and reliable surveillance systems for dual applications with strict specifications, namely for civil security applications.

Our range of capabilities as well as our network of partnerships allows us to provide a global solutiondevelopment, production, setting up operations and maintenance of operational conditions- adapted to our clients’ needs.

DEFENSE LEADERS • FRANCE 2013

PROVIDING

A Shift in Paradigm Sofema has been a major player in the international expansion of French aeronautics, space and defense shareholding companies and was originally designed as a public office to support their export sales. Ingrained in civil service culture, its mission was centered around promoting French industry overseas through the use of an influential network all over the world.

While our business model had been working reasonably well for decades, difficulties of a more general kind affected the French aerospace and defense industry, triggering a decline in our business. The first factor is a decrease in French exports: figures show that even though French export figures in sales value has kept very satisfactory thanks to a few important reference markets, both in terms of number of units as well as number of state-customers, French aerospace and defense footprint has significantly reduced.

Another factor that impacted our business model is the merging of major shareholding French companies: as companies grew bigger and bigger, they could afford to hold their own structure and rely on their own services to reach their export potential. As our business model was aging and becoming less relevant, it was urgent to reinvent Sofema. When I joined the company in 2007, we knew we were on a declining slope and lacking sustainable recurring business.

A report published in 2007, written by Yves Fromion, an MP specialized in defense matters, states that the centre of gravity of international requirements and demand in aero-defense – in volume – lies in the medium tech/medium cost range rather than in the high tech-high cost range. However, French market players offer exclusively high tech/high cost. This is fair, given that a high percentage of their turnover is spent in R&D, but that also leaves a big part of international customers without access to French technology.

ours and the client country would pay to use it according to how much it uses it.

Competition is scarce on this specific market: OEMs face costs that are too high and state-of-the-art training companies sell very expensive services and very high standard training. But in Africa, training a Gazelle pilot does not need the same standards as training a Tiger pilot, for instance. Training requirements are relatively basic and should not induce high costs. To me, this demonstrates our flexibility and our willingness to tailor our offer to fit customer requirements.

What we are aiming for is a win-win sustainable business model that could inspire the defense industry as a whole. Our “niche” position allows us to be particularly efficient at suiting our clients’ needs, without being in competition with much bigger companies.

Let’s take a look at the broader picture: overconsumption is a problem in the Western world; our bins are full of items which are extremely valuable to other people. So what message are we sending to the rest of the world? We have to do something, we cannot afford to simply go on living as rich people. We have to be more innovative and generous than that, including in defense subjects. And that is exactly what Sofema is all about.

To put it simply, there are more countries that cannot afford to buy high-tech equipment than countries that can, and these countries represent the market we chose to address. It is not always easy to get a quantitative analysis of such a market, but those countries are located mainly in Africa, Maghreb, South America to some extent and Southeast Asia, and there are lots of them. Our approach is very customer oriented and, thanks to a broad diversification of Sofema’s activities, we now distribute Original Equipment Manufacturer (OEM) new and second-hand products on a case-by-case basis, according to our client’s needs.

The next step I am deeply interested in is establishing a business model where we would buy some of those equipment as our own and use it to offer training solutions and even more… My analysis is that for a customer with limited budget, it would be very hard to get 1 million euros, but he could use credit lines to get perhaps 1,000 euros per month. To such a customer, we would rather sell hours of equipment rather than the equipment itself. Let’s take the example of a nation that needs to join in a UN operation: we would buy the equipment, it would remain

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

Guillaume Giscard d’Estaing President and CEO, Sofema

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PROVIDING

Thierry Gaiffe Chairman and CEO of Elno Thierry Gaiffe is both CEO of Elno and the President of the Defense Commission of the Comité Richelieu. Dedicated to high technology innovation since 1927, Elno is a French leader in acoustic technologies providing state-of-the-art products for both defense and civilian sectors.

What defines the Elno business strategy?

My strategy is very simple. It has three parts.

The first point is innovating products. The only way to survive is to have, particularly when selling in Europe, new concepts all the time. The second part of my strategy is to push exports. But that means developing products that are compatible for different kinds of armies which requires using standards as much as possible. The third part of my strategy is transportation. Even in a global economic crisis, the transportation market is still growing because of a global population boom. There are some impediments involving environmental issues given the Kyoto regulations, but we decided to take advantage of this growing market.

What are some of the technologies that were developed and patented by Elno?

10,000

headsets sold to the French Army for the

FELIN project

At Elno, our added value is communication in harsh environment. We manage many different technologies and products in order to fix difficult problems of communication in noisy environments, such as our soldiers and Special Forces can face in real operations.

Our most impressive and latest development is in bone conduction technology. This is a way of communicating through a radio receiver using bone conduction technology. Basically, we developed a headset, but instead of a headset that covers your ears and a microphone that covers your mouth, you have sensors that fit on either side of the temples. The sound of your voice and that of your interlocutor are transmitted via the skull. The sensors can detect the vibrations of your jaw. In this way, the microphone does not detect sound from the surrounding environment. This allows soldiers to use their guns but the noise will not be transmitted. So you can whisper and your partner can hear you. For tactical use it is absolutely perfect. When I explain, it may sound like science fiction, but this is a reality: we have already sold more than 10,000 headsets to the French Army for the FELIN project. They are now used by the French Army in Mali.

We also develop new intercom technology based on IP (internet protocol) with patents pending.

These intercoms are both used by the defense industry for tanks and armored vehicles but also for the transportation sector, namely for trains and tramways.

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It is a new technology so people have to be convinced which is typical in the defense industry.

Even though we have already delivered thousands of products to the French Army and have sent others for demonstration, we still have to do a lot of convincing. Most of the time, new technology will be integrated as part of new programs for soldiers such as we did for the FELIN project. We also deliver some products for security businesses, firemen, policemen and homeland security forces in general.

How is the ability to innovate and develop new products integrated into Elno’s investment strategy?

At Elno research accounts for 13% of the turnover.

For me innovation is the only way to maintain competitiveness and a high level of technology in western countries.

Innovation is the only way to maintain competitiveness and high level of technology in western countries.

For the past 15 years I have been the President of the Defense Commission of the Comité Richelieu.

The Comité Richelieu is the association of innovative and high technology SMEs. It is a very selective association requiring members to invest between 10%-20% of turnover on research and development.

Today it is easier for companies to do so. Four years ago, a new tax law was created in France called the research credit tax which allows the French government to push and help innovative French companies. As a matter of fact, 30% of research and technology expenses are paid by this tax discount.

Knowing that 30% of everything will be paid by the government in one year helps tremendously.

DEFENSE LEADERS • FRANCE 2013

PROVIDING What is the difference in the evolution of the defense market in France and those in other countries?

The notion of the economic cycle is very important.

Between the time when you start with an idea and develop a prototype and then market the product, and the time you get your first revenues out of it, you can expect five years. So we have to fight to reduce that time pressure issue. One year ago everyone knew that the budget for defense in France would be reduced. And nobody was able to predict the way it would be done, not even the Minister of Defense, Mr. Le Drian. It was a very brutal cut. We need time to develop exports and to develop civilian products.

The response we get from the government is to try to sell in the Middle East and develop civilian business. Of course, I want to do it, but it is not that easy. This is why Mr. Le Drian decided to help SMEs last November through 40 guidelines. This means that everyone, the Ministry of Defense, the DGA, and the army agree on some kind of plan to help SMEs. We are going to follow-up on these 40 guidelines to make sure they do not stay ideas but that they become pragmatic principles.

There is a big difference between Germany and France. Five years ago the status of ETI was created in France. So, after the SME and before the big companies, there is a middle classification called the ETI. ETIs are independent companies with between 250 to 5,000 employees. If you compare ETI growth in Germany and in France, there are 7 times more ETIs in Germany than in France. This is due to a threshold effect, after 250 people, France has decided to push SMEs that means that after 250 people you are not an SME anymore. In Germany ETIs are much more evenly distributed.

In the defense industry, the relationship between suppliers and buyers is one of monopsony. There is one purchaser, or rather six main players, and then there are numerous suppliers. This is a dangerous situation because if the governmental budget collapses, there is nothing to do. In this way, suppliers have the least say in what happens.

In France there are some industries seeing positive results in terms of trade balance. The defense industry is one of them. Here we can see billions of euros of trade surplus and because the defense industry is a hi-tech industry and a major source of innovation, its fluctuation has consequences on other industries. Elno is a good example of this because what we have technological innovation essential for both defense and transportation aeronautic sectors.

Research credit tax allows the French government to push and help innovative French companies.

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Franck Aglietta Account manager of Sterela The Toulouse-based Sterela, created in 1980, brought together two fields of expertise: digital electronics engineering and the aeronautic industry. Sterela works with prestigious partners such as EADS-Airbus, the Air Navigation Technical Department and French defense procurement agency.

What have been the milestones for Sterela in supply and manufacturing for the defense sector?

of turnover from defense activities

30

engineers working in

R&D Aim to

double

turnover in years

3

Sterela covers four major services: engineering services, defense, road traffic and meteorology.

The portion of our revenues coming from defense activities varies from year to year. Last year for example, defense accounted for 54% of our revenues. Two years ago it was 40% defense and 40% road traffic. Now the defense sector has become very important over the last two years.

For the past 20 years Sterela has worked with the French Army. Sterela began by producing small target systems and the line evolved naturally over time. Now Sterela proposes the entirety of products needed for the training of infantry and cavalry.

We have small target systems for the infantry that are very light, and we have targets that are much heavier that are meant to be kept outside 365 days a year which are solar powered.

Our products are used for four kinds of training: basic training of new recruits, used to improve shooting skills of the soldiers on a regular monthly basis, we also help troops prepare before they are sent for an operation in Afghanistan or in Mali, and finally our systems are used to assess the troops’ quality every year, giving a grade based on our system.

What distinguishes Sterela’s line of products from those of its competitors?

Our product line is characterized by three particular types of products: fixed antitank targets which equip the French Army, mobile infantry targets consisting of multiple targets on the same rail that allow to simulate troop movement. This allows the targets to move in different directions in order to simulate real world conditions, and tactile tablets.

Tactile tablets are roughly one year old and allow for

There are currently robots used in the army for transportation or for land drones. And now, we provide robots that soldiers can use for targeting.

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complete control of the firing range including all of the equipment.

A major Sterela advantage is our design office of roughly 30 engineers where all Sterela products are entirely developed including the mechanical and electrical components.

Given the reduction in Western defense budgets, how has Sterela been affected?

For the moment the firing range market has not been affected. France continues to send soldiers abroad that need training and preparation. There are three central reasons why we have not felt the economic crisis: the need for renovation of dated equipment, the need for training and a need for state-of-the-art equipment to train forces in an environment that resemble on the conditions on the ground.

Do the technologies employed by Sterela for the Airbus A3XX programs have applications in the military domain?

We provided the electrical equipment that tests the sub-systems of Airbus A3XX planes on the Final Assembly Lines in Toulouse. We are also developing robotic platforms that will be used to inspect the planes before taking off. And these same technologies are going to be re-used in the defense domain. The defense sector is looking for intelligent targeting or targeting based on robotics. There are currently robots used in the army for transportation or for land drones. And now, we provide robots that soldiers can use for targeting.

Survision was purchased in 2012; what are the future implications for Sterela?

Survision is principally a design office who fell victim to their own success. With new contracts signed with the gendarmerie two years ago, they faced a new demand for their products. So Sterela took over the manufacturing for these contracts while Survision focused primarily on research and development. Since Sterela bought Survision, Sterela has taken on another dimension because Mr. Bousquet, CEO of Sterela, is pushing the company to progress and advance. We are at revenues of around 25 million euros with a goal over the next three years of 40 million euros in revenues. Thus, Survision represents a tremendous growth trajectory.

DEFENSE LEADERS • FRANCE 2013

PROVIDING

Etienne Lacroix Group HauteGaronne, Toulouse Staff: 600 Headquarters:

€100 million Sales from exports 2011: Turnover doubled between €42 million 2003 and 2010 Turnover 2012:

Created in 1848 by Etienne Lacroix, a fireworks manufacturer, the Etienne Lacroix Group is the world’s leader in pyrotechnics, at the cutting edge of the field. It provides products and services for defense, entertainment, industry and logistics. Roger Barès, after marrying into the family, gave new direction to the company through a renewed focus towards defense products and a strong innovation policy.

Important milestones include the acquisition of the countermeasures division of the Groupe SNPE in 1999, a French company specialized in manufacturing powders and explosives for civil and military purposes; and the acquisition in 2006 of Alsetex, a company specialized in products for peacekeeping. Considerable advances in its R&D department have enabled the Group to offer off-the-shelf products from 2002. The two individuals heading the Group are 5th generation brothers, Jean-Jacques Barès (CEO) and Etienne Barès (Chairman).

Lacroix is the branch which provides a broad range of components, devices, ammunition and pyrotechnic systems for the armed and security forces (air, sea and land) as well as for civil protection, i.e. individual and critical asset protection. Some of its partners include DCNS, Nexter and Safran-Sagem. Its defense activity represents 50% of the sales volume. Lacroix has been one of the pioneers in naval countermeasures: its DAGAIE decoys have set the standard for selfprotection and are in use in navies of over twenty countries. These decoys have also proven their effectiveness in combat. The costeffectiveness of the newer SEACLAD decoys has made it the choice for the French navy since 2005, and has also made a significant dent in Asia. Its pyrotechnic solutions have been used by nations such as France, Singapore, Italy, UAE, Saudi Arabia, Taiwan and Thailand. With regards to air defense, it has in store missile countermeasure systems that include decoys for use in combat, transport aircraft, helicopters, as well as VIP, business and commercial aircraft. Its latest spectral flares have done well and are an example of how Lacroix drives the market.

Moreover, its pyrotechnic components have also been integrated in missiles and satellites. Air forces of countries such as France, the US, Italy, Sweden, Norway, the UAE and Kuwait use Lacroix’s technology.

label, responsible for pyrotechnic art for entertainment purposes and which brings in 10% of the Groups revenue. Ruggieri set up a branch in China in 2006 in order to expand its market. Moulages Plastiques du Midi (MPM), acquired in 1960, is an expert in transforming plastic materials, and is contracted by a range of sectors including aeronautics, defense, electronics and medical. Its services yield 10% of the turnover. Lastly, the Group recently launched a logistics branch, which offers comprehensive services for storage and transport of hazardous material in France and abroad. Currently, the Group is working to develop a new plan for its activities from the period till 2020.

It is today generating half of its revenue from exports and will further continue its internationalization. The thrust is outwards to the Middle East, Asia and Latin America. To establish a foothold and entry point in the Middle East and Central Asia, a facility was been set up in the UAE four years ago to offer logistic services. It is currently in the process of establishing itself in the Latin American markets. Moreover, it has a strong base in Francophone Africa through its subsidiary Alsetex, which facilitates access for the entirety of the Group. This is not to the detriment of the other continents however; there is a potential opportunity of re-entry in the American market with the signing of a contract with the US Navy, and the Group plans to exploit any and all potential in Europe, in particular NATO countries. Its competitors in this part of the world are the US, the UK, Germany and Israel.

The Group’s company Alsetex offers a wide range of products for law enforcement and public security. It also deals in security products for individual companies. It exports 60% of its products and brings in 20% of the revenue. The Group is also represented by the Ruggieri

Jean-Jacques Barès, CEO

The challenge for the Group today THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

is to strengthen its development (without sacrificing efficiency and operational security) with regards to provision of added value to its products and to

position itself further on the international level.

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PROVIDING

Jean-Luc Logel President of EDEN Cluster Federation European Defense Economic Network (EDEN), the first defense, security and safety cluster, was founded in 2008 and includes 90 SME members, with a total of over 6,500 employees and a total turnover of 650 million euros. EDEN customers benefit from a dual advantage: direct access to a global and innovative network, and the reactivity of dynamic SMEs.

The idea was to create an association capable of pooling all of this information exchange.

What are the origins of the EDEN Cluster?

How are the SMEs faring?

Originally, EDEN consisted of five entrepreneurs from Lyon who met from time to time during defense conferences, bursting with ideas and exchanging information on market evolution as well as experience in exporting French projects.

Once outside the conference they stopped, but started up again six months later. The idea was to create an association capable of pooling all of this information exchange. In parallel, the DGA organized a defense study in the region and asked the Chamber of Commerce to handle it. This was the catalyst for EDEN since the study showed that defense industries in the region of Rhône Alpes were particularly strong. Although there are fewer actors in the foreground, it is home to a multitude of subcontractors or specialized actors. We registered the association statute for five member companies in 2008. In 2012, we had 40 members, and today we count 90.

The defense sector creates innovation, but for sustained growth one must look elsewhere. In general growth is no longer in Europe; it is concentrated in the BRICS. The companies which are positioned for exports are able to take advantage of the growth.

This is where EDEN plays a pivotal role since we are able to utilize the experience of companies that are already positioned for exports to enable even more French companies to do likewise.

2011 represents a turning point when Brittany region decided to create its own cluster at a local level. Similar local clusters have sprung up in the region of Centre (2012) and Provence Alpes Côte d'Azur (2013). We expect EDEN Midi Pyrénées to be launched next year, which already has 10 candidate companies.

In total today, 90 companies are involved with two types of activities: activity focused on pooling individual commercial means turned toward exportation, and activity geared toward R&T.

In R&T, what is EDEN working on without a prime contractor?

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We do not have a prime contractor, but the market dictates the need. EDEN is very market oriented, and there is no political direction in the French sense of the term. We operate via a bottom-up structure, meaning that we have the freedom to create and to grow on our own. When we counted only 50 members, we listed 200 projects where two or three companies were working together.

Concerning combat equipment, several companies are in competition for the pilot equipment project for the Rafale and develop the equipment together.

Because we represent SMEs, it is necessary to insist on the fact that we have the ideas needed to reinvigorate the French economy.

Because we represent SMEs, it is necessary to insist on the fact that we have the ideas needed to reinvigorate the French economy. A little more labor market flexibility and a reduction of labor costs could create a greater ease of employment. I know many SMEs that refuse export contracts because these are too demanding. One out of two SME CEOs in France does not want to grow because there are too many constraints.

What is EDEN’s strategy regarding large French contractors and particularly Renault Trucks Defense (RTD)?

The DGA sponsored us in the initial stages. We have a privileged link with the DGA who showed an initial interest in SMEs. Also, we have excellent relations with the French Board of Defense Industry (CIDEF) which promoted EDEN in the working group for the French Defense White Paper. With RTD DEFENSE LEADERS • FRANCE 2013

PROVIDING our strategy is one of pooling our efforts. In the beginning, there was a case in which RTD and its manufacturer, an SME from EDEN, collaborated in order to win a market. Without this collaboration, neither of these groups could have done so. RTD understood the advantage of collaborating with manufacturing companies, smaller but more agile, which can bring useful information.

One of our regional clusters is on the verge of bringing us our next big enterprise partner.

Regarding international development, which zones are of particular interest to EDEN? We have specific target development. The BRICS interest us the most. Three targeted countries where we already begun operations include: India, Brazil, and Malaysia, not to mention our participation in the Milipol Qatar conference.

While we have been partners with Brazilian Defense and Security Industries Association (ABIMDE), this year has borne fruit given that one of our specialized societies in precision plumbing won a contract where we needed local partners.

Thanks to ABIMDE, we were able to find these quality partners.

With Germany, the process is the same with more original products than what the Germans normally produce. The German cluster is more positioned for the field of security while EDEN is focused more on defense. Consequently, this complementary positioning facilitates business.

Is the Special Forces market of interest to EDEN? This market is interesting in two regards. First, because we have many companies that produce the equipment for infantry. This is interesting for the Special Forces. Second, because the Special

Forces want strong performance. So, this gives us the opportunity to innovate. This proximity is strengthened because SMEs, in terms of confidentiality, can handle this kind of relationship.

What are the principal activities of Centralp Automatismes?

This company that I am in charge of was created in 1971 by two engineers from Lyon at a time when industry was shifting from mechanical cables to electronics. In the 1980s, the company won the first nuclear facility equipment markets with strong environmental constraints. The company developed a critical know-how in hostile environments, meaning wide ranging temperatures, vibrations, shocks, magnetic fields, humidity, dust, and salt fog. When we took control of the company in 2000, we quickly won markets in environmentally hostile domains such as military, train transportation and medical, thanks to this technical expertise. In 10 years we doubled our revenues. We are in charge of the design, production and production testing. The military market is shared between France and exports, bearing in mind that it is a market in which we do an enormous amount of research and development. With 200 employees, 50 working in R&D, and a 2011 revenue of 27 million euros. Defense projects allow us to advance. We have satellite and aviation projects. This is a sector that was sidelined, but it is today an expertise that we are in the process of rebuilding.

Today Centralp Automatismes products can be found on the Bundeswehr tanks with land navigation systems provided by Northrop Grumman. We are also present in the production of the Rafale, and we have command posts stationed on the Charles de Gaulle. Finally, we are involved in the emblematic heavy mortars project, for TDA, subsidiary of Thales.

EDEN Bretagne EDEN Bretagne was created July 2011 following a DGA study on regional defense industries. With roughly 20 SME members, this cluster is above all positioned in the French subcontractor market.

The companies evolve through niche technologies, like for example, the society Inpixal which develops stabilization, amelioration and improvement of the video image for drones and combat vehicles.

The cluster is organized around four technical poles. The first brings together information system and telecommunication security specialists. The second is devoted to sensors, guiding and navigation instruments. Finally, two poles are centered on mecatronic systems on the one hand and material and component processing on the other.

Targeting transversal markets, the cluster deliberately chose not to specialize in naval domains despite the maritime history of the region. The cluster leaves this task of structuring the regional naval sector to its competitiveness cluster, Bretagne PĂ´le Naval.

After little over a year since its creation, the leaders of the EDEN Bretagne cluster take pride in having already initiated roughly 15 SME collaborative projects. The objective is for these SMEs to position themselves together in order to meet the needs and tender offers of the military, like the EDEN RhĂ´ne Alpes cluster does today.

In the goal of maintaining the organization’s coherence, the EDEN Bretagne cluster carefully chooses its members, preferring those companies with a certain turnover in the defense sector.

The cluster, for this reason, will only host roughly 40 companies by 2015.

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PROVIDING

Gilles Benhamou CEO of Asteelflash Asteelflash operates 23 manufacturing sites in four continents with a headcount of over 5,700 employees. The company was founded in 1999 and offers comprehensive and integrated design and manufacturing services. Asteelflash’s growth has outperformed the market for the last 10 years.

Through which activities is Asteelflash involved in the defense sector?

We are involved in the defense of our DAT (Aerospace Defense Transportation) segment. On other segments of our industry, we have a series of about 50,000 units per year. On the DAT segment, we provide 25 or 30 “multi-units” per year. This requires a very special way of working and organizational style.

2

revenue growth in years

$ in expected revenues for

2013

However, this segment has real benefits. It fits well with our global borrowing. It is a market where outsourcing is not necessarily a priority strategy, which allows the maintenance of an engineering structure and development in countries such as France, Germany, England and the United States.

They are stable long-term contracts, which are much longer cycles of production and thus a much longer conquest markets, but with production cycles of 5-10 years. This is a segment that, until now, has not necessarily been a target segment, given the variety and complexity for global corporations.

Many electronics companies manufacture local services and what distinguishes us is precisely the ability to display our global expertise. With Thales for example, we are in France but also in Germany, and in China on some products. We would like to start quickly in the UK and the US The DAT makes up 11-12% of our sales. This figure is expected to climb to 15% in the coming years. Asteelflash is one of the only global groups with defense licenses in the US, France, Germany and Britain.

What manufacturers does Asteelflash work with?

The share held by us in the defense and aerospace sectors relative to the size of the global market, is extremely limited. We would like to work more with Airbus, and we are developing our relationship with Thales, Safran and with Zodiac Aerospace, to name a few in France.

At the international level we provide to Rheinmetall in Germany, Lockheed Martin, General Dynamics and L3 in the United States. They are our customers, but the market share held by Asteelflash today is extremely limited compared to the potential customers. We are in the pursuit of organic growth, and our ability to keep pace with them technologically needs to be better known if we want to grow in the future.

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What is the company’s mission with regards to clients’ needs?

Our mission is to manufacture for all upstream services. However, the product research and design is not our area of expertise. It is the specialty of our customers, and this is especially true in the defense sector where the lifeblood of large groups is to be able to design products and create innovation.

When we work with our clients’ research centers, our mission is to interface as soon as possible.

Starting from the design stage, we help them prepare to develop products at the lowest cost possible. In general, research centers do not have a sufficiently up-to-date vision of the latest industrial tools, technologies and components, or new assembly methodologies because they are cut off from production centers.

Our role is to interface with them at the design stage, to give them access to our most interesting sources in terms of the cost of components.

Beginning with 25 or 50 units, we provide consulting for using certain types of components, which allows us to share the same types of components used with several customers, and thus reduce the cost.

DEFENSE LEADERS • FRANCE 2013

PROVIDING Once a military or aircraft product is completed, it costs astronomical sums to redesign and qualify.

The upstream work is essential and necessary.

What downstream services does Asteelflash provide?

Our job is also to source upstream our qualified preferred suppliers in order to be able to handle all technologies and to complete the integration steps.

This means we need to have enough knowledge to make the computer chip, but also to cover the integration to deliver the complete subassembly.

Subcontractors then integrate these modules into more complex assemblies.

The other type of service, particularly in defense, is to ensure the operational maintenance of equipment. We can intervene with our partner, Adetel, to redesign a computer chip or when a component is aging, find solutions to support our customers. We can also provide all service equipment repairs and offer a warranty.

Where do you see Asteelflash in five years?

Asteelflash upstream assistance services range from the selection of upstream components to the selection of parts to manufacture. We do so, for example, by testing the software design of the client and alerting them of the possible sources of failure.

I intend for Asteelflash to stay in our niche markets, to achieve two billion euros of sales and to do our job well. We believe that today’s demand, regarding our business model, ensures our growth without too much difficulty.

All exchange is only possible if we interface very quickly starting from conception. Once a military or aircraft product is completed, it costs astronomical sums to redesign. The upstream work is essential and necessary. A large portion of our engineering is dedicated not only to manufacturing computer chips, but above all, to carry out upstream work with the client on this aspect of manufacturing.

Today, all manufacturing groups have a policy of consolidating their EMS (Electronic Manufacturing Service) subcontractors. Some large global groups have 20 or 80 subcontractors and do not know how to gain a global vision of all the products supplied by their subcontractors. In some cases, the transformation takes time. We have, for example, a client who is willing to give us 13 million euros of the market, but he does not know how to transfer technical data. His subcontractors were so scattered that it will take years to file and organize all of the data.

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France | Qatar | Brazil | Turkey | UAE

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PROVIDING

Défense Conseil International (DCI) 1972 Headquarters: Paris Established:

Staff:

338

Turnover 2012:

The history of DCI is closely linked to the history of French arms exports. It all began in 1972, with the creation of Cofras (French Specialized Assistance Company), to support the sales of 300 AMX-30 tanks to Saudi Arabia, by former GIAT Industries, now known as Nexter. At the time, neither GIAT Industries nor the French Army had the capacity to train foreign forces on a large scale, a requisite for this massive contract. Therefore, the French government created Cofras to address the need for Saudi crew training on vehicle implementation, operational use, and maintenance, the first step towards the creation of DCI. In the same manner, throughout the 80s and the 90s, the French government created Navfco (French Naval Company for Training and Consulting), following the sale of “Al Madinah” frigates to Saudi Naval Forces. Airco was created to support the exports of Dassault’s Mirage 2000 to Latin America and the Middle East. Finally, Desco was created to support all the other types of arms exports. In 2000, the French government merged the four companies, for obvious complementarity reasons. Thus, DCI was born.

As of today, DCI is an intermediate-sized service company, in which the French government is the majority shareholder with 49.9% of the company, the rest being divided between Sofrema, Sofresa, Eurotradia International and other minority shareholders.

DCI’s main mission consists in providing operational training courses based on the expertise of the French Armed Forces.

Thanks to its unique and cross-disciplinary military culture and excellent service, DCI operates in the entire spectrum of defense and security with its four departments, Cofras, Navfco, Airco and Desco.

The Cofras department is in charge of transferring the French military expertise of the French land forces, and notably of the army light aircraft corps (ALAT), the gendarmerie, and the defense medical services. The Navfco department shares French Navy know-how with friendly foreign navies at all stages of a naval

Jean-Louis Rotrubin, Chairman and CEO

We were created 40 years ago in Saudi Arabia and after 10 years we established links with the United 90

Global presence:

€338 million

Saudi Arabia, United Arab Emirates, Kuwait, Qatar, and Singapore

or naval aviation program, whether in the context of equipment sales or for the supply of specific operational training services. The Airco department transfers French Air Force know-how to foreign air forces and tailor-made services to foreign air forces in order to optimize the use of their military equipment. It also advises and assists civilian or military users on defense and security systems, in the field of aeronautics. Last but not least, Desco is the armament department of DCI, specialized in exporting the expertise and proficiency of the French defense procurement agency (DGA).

DCI has a crucial role to play in France’s defense industry exports, especially in a context of reduction of governmental budgetary allocation, leading companies to increasingly rely on export markets. As part of this strategy, DCI is betting heavily on the Middle East and Asia, and opened earlier its latest representative office abroad in Singapore this year.

Arab Emirates, Qatar and Kuwait. Now we are very well settled and very close to the armies of these four countries.

As an example, we have a long-term contract for helicopter

maintenance in Kuwait and this contract was renewed for three years in 2012. In 2011, we also opened a helicopter pilot training academy in Qatar.

DEFENSE LEADERS • FRANCE 2013

PROVIDING

Admiral (RET.) Alain

Oudot de Dainville Chairman and CEO of Odas

Sofresa’s successor was created in April 2008 to better adapt to the new needs stemming from the evolution of the French defense sector. It is a platform outside of the strict commercial structures that promotes government-to-government contracts, on the behalf of the French state, primarily for defense and security.

What do government-to-government contracts involve?

First of all, the clients need to accept the conditions of a state-to-state contract. All countries are not necessarily familiar with this kind of partnership though an increasing number of them are coming to it because they find it in their interest to do so.

First, the equipment will be delivered according to the procedures used by France, a reference for international activity provided by the French defense procurement agency (DGA), which has an excellent reputation worldwide. Furthermore, countries are guaranteed audited costs and deadlines are met.

These are significant benefits in a contract or for a weapons program. Moreover, France currently needs to export, and the government-to-government contract is a relevant tool to this end.

What are the export regions Odas concentrates on?

Mainly due to the fact that Sofresa was run by a single Defense Minister from 1974 to the end of its existence, Odas has historically focused more on Saudi Arabia. Today, we live in a world where having a single client is very risky. My responsibility, vis-à -vis the managers and employees of the company, is to minimize risks and thus to diversify Odas’ activities.

For example, we have already worked with Vietnam, UAE, Kuwait, Nigeria, Greece, and the UN.

How competitive is the French defense sector?

In France, we produce high-quality products which are easy to maintain and perform very well technically.This is a vital element for competitiveness in the defense sector, which also involves competing technologically. On the other hand, we are known to be more expensive, which is not always a justified argument. Indeed, certain countries with lower prices do not offer the same level of quality. Thus, overall I am one of those that believes our prices are not inflated, taking into consideration the quality and performance levels of our products. Moreover, a substantial rationalization effort has taken place, and in most cases, we provide offers with fair prices all the more so that the French arms industry enjoys an excellent international standing.

What are the current technological priorities?

Technological priorities are linked to the evolution of strategy. I firmly believe that strategy, today, is all about controlling flows; the Mali operations are atypical. Tomorrow, with globalization, there will be a need to control an increasing number of flows, whether commercial, energy or information. There is therefore a definite priority given to cyberdefense.

Another priority is the fight against asymmetrical threats, since today, it is very easy for a small, organized group to attack vital interests of a nation, as we see regularly happening. It is thus necessary to develop information and surveillance systems; catching up on the delay with regards to drone is but one example.

In France, we produce high-quality products which are easy to maintain and perform very well technically.

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100 employees in

France and Saudi Arabia

turnover

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PREVENTING

PREVENTING

Knowing the Unknown The likelihood of major cyberattacks has increased since 2008, and cyberspace has become a field of confrontation on its own.

The 2013 White Paper on Defense emphasizes “knowledge and anticipation” as essential for preserving the French capacity to make free and sovereign decisions. These imperatives imply the need for continued investment in the industrial and technological base as developments in science and technology hurdle forward. Faced with these evolutions, the essential equipment for maintaining sovereignty lies in the domains of intelligence and information system security as a means for identifying new threats. The power to turn information into knowledge, and knowledge into predictive intelligence, is the key to the new French defense strategy.

This strategy implies certain ruptures with the former traditional fields of defense and security spending. As demonstrated in the 2013 White Paper, anticipating threats in order to prevent disaster will take place through investment in information system security and intelligence reinforcement as opposed to arms purchasing and amassing tactical means.

The likelihood of major cyberattacks has increased since 2008, and cyberspace has become a field of confrontation on its own. As stated Minister of Defense and Veterans Affairs, Jean-Yves Le Drian, “The challenge is not only the risk of denial of access or penetration of networks for espionage. What is at stake now is the ability to remotely control or even destroy vital infrastructure through digital networks.”

In France this subject is at the heart of the defense agenda. Mr. Le Drian has specified that one option to tackling the strategic field is through the work of the General Secretariat for Defense and National Security (SGDSN) whose scope widened considerably, to include issues of national security. The SGDSN will be in charge of increasing human resources, strengthening the security of state information systems, development of defensive and offensive capacity, building of military cyberdefense, and establishing an operational chain centralized from the Center for Planning and Conduct of Operations (CPCO). The other institution charged with protecting the state from cyberthreats is the Department for the Protection and Security of Defense (DPSD) which will provide protection of sensitive information and by extension the protection of relevant information systems.

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Under the decree of the Prime Minister on the 9th of May 2011, the French intelligence community now counts six services: Directorate for External Security (DGSE), Directorate Central of Internal Intelligence (DCRI), Directorate of Military Intelligence (DRM), Department for the Protection and Security of Defense (DPSD), National Directorate of Customs Intelligence and Investigation (DNRED) and finally the French service to track money laundering and financing of terrorism (TRACFIN).

In order to support these operational entities of the Ministry of Defense, the French Procurement Agency (DGA) is pursuing a stronger technical means of expertise in the cyberdomain by recruiting 40 high-level experts specialized in the analysis and prevention of cyberattacks every year. The DGA experts work to identify the susceptible paths for controlling information systems. At the same time, they attempt to improve the detection and protection capacities by imagining future cyberattacks.

The result of these analyses often leads to anticipating new security methods or reinforce existing ones. However, French companies are far from immune to cyberattacks. The French Network and Information Security (ANSSI) works continuously with the DPSD, alerting one another when companies fall victim to attack. The DPSD wants to strengthen its cyber capacities recruiting 13 additional SSI engineers by the end of the year to provide more guidance to defense industries and enhance its action against interference in the department, in coordination with the cyber chain of the Chief of Defense Staff.

Strengthening capacities is imperative now that the White Paper openly states that significant cyberattacks will be considered an official act of war, already the case in some countries like the US and Israel. Thus, a chain of command, centralized with the Chiefs of Staff of the armed forces, the DGA and military intelligence services will be put into place to develop offensive capacities as well.

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PREVENTING

Philippe Bensussan Chairman of Sofradir Sofradir is a global leader of cooled and uncooled infrared (IR) technology. It is the parent company of Ulis, founded in 2002, and US-based Sofradir EC, created in 2008. Sofradir specializes in producing cooled IR technologies mainly for very high performance applications in the space and defense industries, whereas Ulis is geared towards uncooled IR technologies targeting commercial applications such as security and surveillance, thermography and driver-night-vision-enhancement. As of today, Sofradir employs about 700 people in France and abroad.

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employees

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In which fields does Sofradir offers technological expertises?

How important is innovation in maintaining a leading position on the global market?

First of all, Sofradir prides itself on having a very good infrared (IR) technology, Mercury Cadmium Telluride (MCT) for which we lead the market. In 2012, we acquired three other (IR) technologies from Sagem and Thales: InSb, QWIP and InGaAs technologies, affording us a rather unique position of owning with Ulis the complete portfolio of IR technologies. Since the company’s founding in 1986, MCT technology, an alloy of mercury, cadmium and telluride, has been at the heart of Sofradir’s success. The huge advantage of this technology is that by changing the composition of the alloy, you can change the cut-off wavelength of the detectors. You can make short-wave, mid-wave, long-wave detector, or very longer-wave detectors, and even invisible detectors. So with only one production line you can cover all the needs of the infrared market.

MCT is known to be an extremely complex technology making the barrier to entry very high. We are among the few who are skilled at using it, which also gives us a significant advantage.

This year we are going to invest more than 25 million euros in R&D. Our customers are always looking for the ultimate performance level. The bottom line is that seeing further than the enemy can be vital.

We have set up a very interesting way of doing our R&D. We have put into place a joint lab with LETI, a Grenoble-based research institute for electronics and information technologies. One of the reasons why we are in Grenoble is the need to be close to LETI. Ulis’ technology also comes from LETI. The proximity has resulted in us being world champion in terms of speed of transfer of technology from the lab to the industry.

We even hire researchers from LETI to join Sofradir. It is usual for LETI employees to join the industry at some point of their career.

How does Sofradir secure its innovations against piracy and counterfeiting?

We have patents. But also we have a lot of knowhow. It is a strategic decision to patent or not, so, we

DEFENSE LEADERS • FRANCE 2013

PREVENTING

are very careful about that. Our technologies are so complex that it has been impossible to copy them.

There is some know-how out there as there have been some copycats who have been trying for 20 years, but have never succeeded.

What are the main differences between cooled and uncooled IR technologies?

Cooled IR detectors are more highly performing than uncooled ones. They are more sensitive, can accept faster frame-rates. Yet they are more cumbersome to use as you need microcoolers to cool them down to cryogenic temperatures which requires power and maintenance. Cooled detectors are thus primarily dedicated to high-end applications and uncooled detectors to less-demanding applications.

What is the reason for having two separate business entities for a similar technology?

One reason Ulis is not a division of Sofradir is because the fundamental technology is very different and the processes are not compatible. Some compounds used

by Sofradir are poisons for Ulis’ processes. Therefore, when we created Ulis, we had to separate the buildings.

The second point is the different ways of doing business. Sofradir rarely sells off-the-shelf products.

Most of the products we sell are customized because of our customers demand for ultimate performance.

Indeed our customers are not ready to make trade-offs in performance, so we have to adapt each IR detector to the exact needs of a given customer. On the other hand, Ulis only sells off-the-shelf detectors as cost is the top priority of customers over performance.

Why is the consolidation of the sector inevitable?

While the market is small, it is still highly competitive.

We are talking about hundreds of thousands of units, which is what any silicon company will make in a day, if not an hour! If you look at the number of iPhones and mobile devices, which are made every year, we are talking about billions of units. So, we are in a different world. Innovation provides competitive edge. We are thus condemned to grow our sales profitably because the needs for R&D grow exponentially. In order to stabilize and mature such complex technologies, you need to manufacture detectors in volumes. The market is too small for all the companies presently making IR detectors. There are two other companies in Europe.

One is in Germany and the other in the UK. A European consolidation is not on the agenda yet as no country is ready to give up a strategic industry such as this one. However, sharing our R&D funding and making an efficient use of it by preventing all partners from duplicating what one of the three already has would be a pragmatic way of initiating a European progressive consolidation of an undisputed world-class leader with no industrial rationalization as a prerequisite. Despite the present scarce resource and budget cuts, I have no success so far with this vision. I believe in it and I will keep trying.

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Didier Gardet Director of Security and Defense division of CS Group With a turnover of 170 million euros in 2012, 58% of which came from its defense, space and security divisions, CS Group positions itself as a particularly innovative mid-cap company that strives to develop French technological excellence. CS is designer, integrator and operator of mission critical systems.

In which security and defense activities is CS involved?

We are particularly active in the conceptualization and the deployment of operations command information systems (SIOC). Within this framework, we are currently renovating air operation centers (C2 AIR) on French military bases for the Air Force.

In addition and in complement to these, we will be deploying a ground-air radio communication system (SRSA) across the French territory to ensure a secure “end-to-end” communication, from the ground controller to the aircraft, regardless of their locations in the country. In the civil security field, we deploy Information and Command Centers of the French Police; 50 french departments have been equipped till now. Based on the Event and Business Management & Team Security (PEGASE) System, these centers provide emergency response management thanks to a radio and telephone-based system, which guarantees that the right command center takes the call, and to the geolocalization of forces on the ground.

How does CS manage technological edge?

to

maintain

a

We invest about 9% of our turnover in R&D. We are also involved in several competitiveness clusters developed by France. Furthermore, we have established an expertise division in our company which is integral to our activity and which we value

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as much as we do the management or project coordinators. This division stimulates our community of experts and architects. There are four levels: the experts at levels three and four are involved in auditing and consulting on various projects. They actively contribute to developing technological roadmaps of our products and solutions. As a systems integrator, we need to differentiate ourselves through our ability to innovate. Cases in point: the CLA and SRSA programs for air traffic control (contracts won in the early 2000s) and the interoperable and modular full-IP solutions under the French Air Command and Control System program (SCCOA). We are a medium-sized company compared to bigger defense integration actors, but our motivations are to be agile, reactive and on the cutting edge of technology in order to be competitive.

Any particular example?

The Stradivarius detection radar exemplifies our capacity to innovate. It is a radar for maritime surveillance based on a new type of wave that permits sighting of small boats more than 200 nautical miles away from the coastline, i.e. overthe-horizon detection. It is truly a groundbreaking technology given the use of a new kind of wave and the function it provides. It has been designed to respond to naval vessels’ every protection and detection need, whether for coastal protection, for example, or for civilian applications, such as oil platforms. It can even be used in the fight against DEFENSE LEADERS • FRANCE 2013

PREVENTING different types of trafficking. It is therefore a good example of a dual-use system. The idea is to detect further away and smaller objects with a cost-effective system: a relatively large exclusive economic zone can be monitored with transmitting and receiving sites. We have covered a large area overseeing the Mediterranean Sea with a single system in our previous trials. Currently, we are in the process of finalizing these tests and industrializing the product.

The technological breakthrough lies in the algorithms that allow smaller zones of coverage to be looked at, localizing even a small boat very precisely.

What is the logic behind the acquisition of Prelude?

At the beginning, we had developed an open source solution to monitor critical and complex infrastructure, VIGILO (based on NAGIOS), which allows management of high volumes of information at optimal costs. This solution essentially oversees performance; we were trying to complement the product with a capacity to supervise security events in order to detect intrusions through event correlation and thus implement responses tailored to infrastructure security. This performance monitoring solution allows picking up on surprising or erratic events with regards to the performance and availability of the system, but did not previously provide a more comprehensive protection package.

We were already using the Prelude’s open source version; with its acquisition, we could offer converged solution in tandem with VIGILO. We therefore had the tools to design interoperable Network Operation Center (NOC) and Security Operation Center (SOC), thus offering our clients effective protection of their infrastructure all the while providing a global coverage, in terms of performance as well as quality of service and security.

the launch and post-launch trajectory of a satellite, retrieval of data and the automatic processing of images for end users, whether civilian or military.

We have developed a solution for automated image processing for the purposes of Geo-Information or for the designing of an image intelligence chain.

Notably, we have contributed to the success of the dual-system satellite PlĂŠiade, with regards to the establishment of the programming center and the center of quality images. In the defense sector, we work on the Kheper section of the DNG3D program, for the production, qualification, management and the distribution of geographic data emanating from satellite imagery.

We are a medium-sized company but our motivations are to be agile, reactive and on the cutting edge of technology in order to be competitive.

Why develop an open source solution?

Open source allows us to have a more flexible solution that is cost-effective and interoperable with market tools, including intrusion detection sensors. In this field, we are facing mainly American competitors. Prelude is a French solution, thus sovereign, more adapted to the needs of big governments or even large French companies. We strongly believe in the development of this solution because it is efficient and interoperable with several sources. The open source version is already being used by many customers. We developed a version for enterprises with more critical features that cover a broader spectrum – including, in particular, reporting tools and complete mapping systems, which also allows to draw links with the monitoring solution and setting up of an SOC. Prelude is a Security Information Event Management (SIEM) system, and it is on this base that rests our mission to develop comprehensive centers with a view to converge NOC-SOC for a more effective protection of information and communication systems

What experience has the CS Group had in the space domain?

We have been working with the National Center for Space Studies (CNES) for a number of years, and with the European Space Agency recently for the supply of information systems for ground segments and space applications, particularly in the field of earth observation. These are systems that ensure THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

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François Sébès Chairman and CEO of Adetel Group Adetel, established in 1990, specializes in embedded electronic systems. Headquartered at Lyon, it raked in a turnover of over 50 million euros in 2012 with a staff numbering 600, of which 500 were employed in France.

What are the main activities of Adetel?

Adetel designs onboard electronic systems and power electronics, thus in highly constrained systems. We have two areas of strength, namely railways and aeronautics, and within our activity in the latter domain, a third is military-related and the rest notably on large civilian programs such as the A350. Our defense business has grown considerably over the last two years, and we hope it continues to further expand – not only in military aviation, but also in the naval sector or that of land vehicles, where we have some experience.

What products has Adetel designed, given the vertical nature of the company?

We are a tier-2 equipment supplier and are involved in the entirety of tasks: design, manufacturing, industrialization and the operational maintenance of equipment. We have in-house manufacturing experience, but we have also established a partnership with Asteelflash; together, we have the capacity to offer our customers a comprehensive product.

We have several achievements under industrial giants such as Thales and Safran on military aircraft programs such as the A400M or the Rafale and its M88 engine, on which we designed and manufactured certain sub-assemblies. The same goes for naval programs – we are designers and integrators of entire sub-assemblies in the FREMM program and are involved in maintenance services for DCNS, for the Scorpène and Barracuda programs.

In particular, we work on existing equipment obsolescence.

Today, Adetel often works as a white label service, and while we are not always known to end users, we play a comprehensive role as supplier to our clients.

Has the economic crisis adversely affected subcontracting by large groups?

We complement large groups such as Thales and Safran, but these big structures can become inwardlooking in periods of economic stress. However, we have adopted a make or buy approach with regards to design instead of solely a capability approach, i.e. delegation of tasks piece-meal according to individual capacities. We integrate our work in the strategies of our clients, who can choose to either

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make in-house, even using external engineers (who are an adjustment variable), or buy the particular function from outside. It is in the midst of industrial and procurement divisions of our clients that we are committed to high-profile programs. Thus, we are less affected than would be a company focused only on engineering.

On the other hand, we try to promote an approach more complementary to large groups and mediumsized companies vis-à-vis export markets. This approach is lacking comparatively to Germany, where large German industrialists going abroad bring along their best SMEs and are not afraid to present them to their end customers. In France, there is a real difficulty to become part of the team when our clients go abroad on an export mission.

The other obstacle is that as an SME, it is hard to collectively attract customers, that is to say with four or five SMEs together offering complete work packages abroad, that one could not sell on its own. This is one of our activities, through the joint venture we have with Eurogiciel. We are specialized in embedded electronics; Eurogiciel is specialized in embedded software – we therefore provide a multispecialist offer given our hardware-software complementarity. This could very well be done with other businesses, either horizontally with engineers of other professions, or vertically with businesses involved in integration.

The share of R&D and studies conducted related to defense for clients such as the DGA has increased from 5 to 20%.

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PREVENTING How much of Adetel’s turnover is invested in R&D and what proportion of it is related to defense?

We are a research company under contract, so we have an R&D budget close to 25% of our turnover.

This is a significant amount, and helps us develop our own products and remain state-of-the-art in the fields of our interest. The share of R&D and studies conducted related to defense for clients such as the DGA has increased from 5 to 20%. The interest of firms such as Adetel is to complement activities of big groups on smaller, less visible programs which are consequently less attractive to big corporates such as Thales and Safran.

Which regions is Adetel interested in, given its reliance on international markets to increase its sales?

The first region of interest is Germany. We are cooperating with big European industrials complementary to our French clients in Germany, such as Eurocopter or other European defense programs. We therefore wish to increase our presence in Germany in the coming years. Indeed, we recently opened an office in Frankfurt.

The second region is North America. We have created a company in Seattle, and we would like our base in Montreal to become a platform for aeronautics, railway and defense. We want to work on Canadian programs or on those that are cooperations between the US and Canada. Asteelflash acquired the company Catalyst, an electronics manufacturer certified by the International Traffic in Arms Regulation (ITAR) and which already works for big American manufacturers. Thus, this subsidiary in Montreal is very important.

The third imperative is to participate in programs for our clients in emerging countries; for example, we have been working towards building partnerships in India for the past year. We would like to be an SME working on the Rafale program in India, to which end we are trying to create a joint venture with an Indian firm located in Bangalore to be eligible for Indian programs such as the Rafale with local content.

One of Adetel’s strengths is its capacity to create partnerships. To expand operations abroad, we need to bring value additions to the industrial structures we are entering.

The aim is to continue growing so as to achieve a turnover to the tune of hundreds of millions of euros, and to ensure that at least half of this growth is due to international expansion.

We try to promote an approach more complementary to large groups and medium-sized companies vis-à-vis export markets.

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Male Drones: options for France The debate over drones in France is far from over: while France will soon be proud owner of two General Atomics MQ-9 Reapers, discussions are still ongoing with Israel. There is also uncertainty about the long-term strategy to adopt in order to eventually develop an Unmanned Combat Aerial Vehicle (UCAV).

Need

The French Harmattan and Serval Operations have heavily underlined the need for the military to broaden and upgrade its drone arsenal. The need to draw on US military material in the Libyan operation was an earlier indication for the need to increase military capacities, including that of drones. Given the need to cover greater distances at relatively high speed for longer periods of time, this modernization effort involves acquisition of Medium-AltitudeLong-Endurance (MALE) drones. The four Harfang MALE drones currently in service in the French Air Force as part of its Interim MALE Drone System are nearing the end of their shelf-life. While they have been of use in various situations, including deployment at Bagram, Afghanistan, and in Lourdes during Pope Benedict XIV’s visit, their advanced age is impacting operational efficiency. They are therefore not keeping abreast France’s growing military needs. Mali, for example, has revealed a need for surveillance over the Sahel, in spite of the French troop withdrawal – and this at a time when the US pivot will place greater responsibility on Europe towards Africa.

Apart from heightened Intelligence, Surveillance, Target Acquisition and Reconnaissance (ISTAR) needs, a second imperative that comes to the fore is an armed capacity, given the realities of on-call firepower and the high cost of fighter air cover. However, regardless of recent experiences, France’s UAVs would eventually carry weapons in order to engage in air-to-air combat or work in tandem with armed aircrafts, thus offering a lower cost option than the utilization of high-end products.

Short-term solution

A European-designed MALE UAV, in cards for 2020-2030, will not fulfill the French Air Force’s urgent short-term requirement. Further, according to the French Defense Minister, Jean-Yves Le Drian, the French has “missed its window of opportunity with drones” – at least those of the short-term variety.

In debate over the past three years, France thus seems to have finally settled on the American General Atomics Reapers with an official request sent earlier this year to Washington. The earlier adopted plan proposed by Dassault Aviation in

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conjunction with Israeli Aerospace Industries (IAI) to lease a UAV system based on the Israeli Heron TP (the success of the drone on which the French Harfang is based) was suspended last summer. A MALE UAV policy review that led to a vote in the Senate that amended the Finance Act 2012, cutting funding down from the 318 million dollars, the expected cost of acquisition of the Heron TPs, to 209 million dollars, the estimated offer price for the Reapers. It is not only the 30% less reduction in cost of the Reaper that seems to have swayed the French. The review clarified further differences, including higher payloads, more efficient sand specialized sensors, capacity to be armed, faster speed, the fact that the Heron has a more visible radar signature and its weak servicing (a damaged Harfang was grounded for 18 months in Israel at one point). Moreover, there is a potential for interoperability – already the thrust given budget limitations – since the American, British and Italian forces are already in possession of these MALE UAVs.

France’s UAVs would eventually need to engage in airto-air combat.

The request, confirmed during Le Drian’s visit to the US in mid-May, is for two Reapers Block 1; i.e. the initial, non-armed versions of the drone.

To be delivered by the end of the year, they will be sent immediately for observation missions to Niger to strengthen its actions in the regions.

Le Drian has mentioned a "Europeanization" of the drones, before a further 9 to 12 Reapers Block 5 drones, the current armed version, are acquired. The demand for these first and not the latter is due to, in part, the urgent operational need and consequent push by the French Air Force. Furthermore, there was the sense that a primary demand for non-armed drones might be more easily passed than one for the armed MALE UAVs: the ongoing debate on the legality of drone warfare in the US would have impacted American Congress decision on the sale.

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However, the gallacization process will require the model’s source codes, and till now, these have not figured in the contract. Another stumbling block is that the drones would either need to be operated from either the US or UK. While there is no longer a time delay (the time frame for the purchase and modification, set previously at two years had seemed too long – Dassault and IAI would have delivered goods 2014), there seem to be discussions ongoing with Israel as well, since Dassault and IAI have therefore kept their offer on the table. While this first purchase could see French support seesaw decisively against the Israeli model, in addition given to the fact that integration costs may be higher for the Heron TP than Reapers, Germany’s recent vocalization of interest in the Heron TP may keep France on its toes.

An option to extend the use of the Harfang UAVs to 2017 by upgrading its sensors had also been proposed by the EADS and IAI, as a gap-filler until the delivery of the Reaper; in light of recent events, this seems unlikely.

Going indigenous

An off-the-shelf procurement for short-term needs raises questions over an independent European MALE UAV in the long-run. Europe has gotten a late-start, and budgetary constraints and a narrow European market could render a sustainable European industry of drones impractical – all the more so considering export restrictions under the Missile Technology Control Regime, of which France is a member.

It has therefore been questioned whether it may not make more sense to continue foreign acquisitions of the product.

2.9 billion. EADS officially suspended work in February last year.

Mali has revealed a need for surveillance over the Sahel.

The 2010 defense cooperation treaty between UK and France over development of unmanned aircrafts led BAE Systems and Dassault to submit a proposal for the development of a MALE UAV based on BAE’s Mantis. The Telemos would be able to carry and launch precision-guided bombs. UK and France would each have to invest 500 million. While a fully independent program, there has been no further development. Indeed, Dassault has been pursuing with nEUROn, an experimental UCAV project. And in September last year, France and Germany expressed interest in a potential joint development program in this field.

Stakes are high, since whoever is given the contract will be dominate the UAV and military aviation market in Europe. Moreover, it would be a lead-in to developing and winning a UCAV contract. There is clearly no lack of available long-term programs for France to choose from; capital, however, is a limiting factor.

For example, Cassidian of the EADS has in the works Telarion. It submitted its bid in 2010, stating France, Germany and Spain would each have to invest 400 million euros, though the total cost of the program has been estimated at THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

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Philippe Petitcolin CEO of Sagem Sagem is a high-tech company in the Safran group and a world leader in optronics, avionics, electronics and critical software for the civilian and military markets. Safran group employs 7,000 people in Asia, Europe and North America, with 2,000 engineers and technicians working in RDTI preparing for the future.

With regards to observation UAVs, we have one of the best products available in terms of purchase cost and operating cost.

What are Sagem’s main activities in the defense sector?

There are several main product lines that are in the promotional stages. First, optronics products are currently in development. Portable optronics equipment and systems (binoculars, visualization systems, infrared and others) is a field in which I believe we are one of the world leaders. We are also a leader in optronics systems that are either installed on armed vehicles or on aircraft and helicopters. Making the most of our know-how in portable optronics for defense purposes, Sagem offers a wide range of products intended for homeland security missions, including day or night observation, identification and location, ideal for use by law enforcement, customs, coast guards, border police and sea rescue teams, etc.

Second, the soldiers of the future program, the FELIN program, is currently underway for the French army, and we are promoting it for export. Next, our navigation systems have military applications in the domain of missiles, artillery, military aircraft and helicopters. Sagem has developed unique expertise in all the technologies crucial for seekers: infrared sensor blocks, semi-active laser channels, image processing, decoy detection, real-time processing, cooling systems, infrared optics, irdomes, line-ofsight stabilization, inertial references, all designed to withstand harsh environments.

Working closely with missile manufacturers provides Sagem with an unequaled position and know-how in the seeker’s overall design and its integration in the missile. Sagem’s seekers are used on the following missiles and weapons: MICA (air-toair), MICA VL (surface-to-air), Mistral (air-to-air and surface-to-air), AASM (air-to-surface), Magic 1 and 2 (air-to-air). Sagem brings its infrared technology know-how to the seeker of the future Franco-British antiship FASGW(H)/ANL.

What distinguishes Sagem from international competition regarding unmanned aerial vehicle technologies?

Today, there are no specific areas of the world where the simple fact of selling products to the French Army or other countries will ensure an automatic advantage. Therefore, if you wish to succeed you have to be competitive worldwide. This means your product has to be state-of-the-art in

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terms of technology and performance, and further, it must be produced at an affordable price. In this way, national reputation no longer assures influence in specific areas of the world.

With regards to observation UAVs, I believe we have one of the best products available in terms of purchase cost and operating cost. The purchase price of the product is important, but in the defense industry, operation costs are becoming increasingly important for customers. This is an advantage to our observation UAV for example, which offers a very competitive price with an extremely low running cost. Our binoculars and our navigation systems fall in this same category.

The Sperwer tactical UAV system (also known as SDTI by the French army) is used on a daily basis in combat operations in Afghanistan. It is perfectly adapted to tactical missions at a brigade and Task Force level. The Sperwer was sold to six different countries, but today the design is ten years old.

We are therefore developing Patroller-S that we are offering to customers all over the world.

The Patroller-S was recently launched, and thus, the development of the line will depend on the success of this first version. If it is a success, we will go further with regards to additional functionalities and value-added components all of which, again, at the best affordable prices and meeting the needs of observational missions.

Patroller-S characteristics make it an efficient, reliable and flexible system, adapted to any type of homeland security missions in a joint-ministerial context or defense missions. Patroller-S is a highly reliable and robust system. It is designed to answer to highest flight safety requirements thanks to its airframe certified by EASA to civil aviation standards, its triplex Flight Control System, its certified and redundant actuators and its LOS redundant datalink.

Patroller-S is equipped with Sperwer Mk.II combatproven mission control system, including: avionics, datalink, imaging chain and ground control station.

Thanks to an engine confined in mid-plane module and an airframe entirely made of composite and carbon, the air vehicle features a very low noise, and its three retractable landing gears favor observation with no maskings.

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PREVENTING Patroller-S can easily be transported to the area of operation as the air vehicle fits in a trailer and the compact GCS is installed into a light all-terrain vehicle. The aircraft can be used in either piloted or UAV mode, according to requirements and flight authorization regulations. As a result, Patroller can easily fly to its zone of operation in non-segregated airspace and then carry out its missions from a local site in segregated airspace in UAV mode.

In which direction is Sagem heading in the next ten years?

Its flight capabilities allow it to cruise at 25,000 feet for more than 20 hours in its day/night optronics sensor configuration (EO/IR), with two additional fuel tanks under its wings. It may be equipped with additional payloads depending on the mission.

One third of Sagem’s activities are devoted to civil aviation where we are working to become a supplier that provides the very best international standards to the world's avionics markets.

With regards to FELIN program, which state-ofthe-art products does Sagem contribute?

We supply full design improvement as well as a full line of essential products for the FELIN program. Of course, there are many products that are purchased elsewhere, especially clothing. However, Sagem’s involvement is not restricted to the provision of portable optronics.The key truly lies in the integration of all the systems and the interconnection between it all. The added value of Sagem is not only the equipment such as the binoculars that we directly provide, but the integration of all the systems and the interconnections between all of the various components.

What is Sagem’s innovation strategy?

The determining factor in Sagem’s innovation is what are called “technological bricks” in the fields of inertial navigation, optronics and electronics.

A technological brick refers to a developed or developing technology that has multiple applications in numerous domains. We design and manufacture the products based on the maturity of the technology. When we consider that these technologies are mature enough, we propose the use of these technologies in the development of other new products. This is the philosophy of Sagem in the field of innovation.

Sagem’s vision for the coming years revolves around three axes. First, we want to be a first-class defense supplier in the areas of optronics, navigation and weapons on a global scale particularly in terms of optronic sights, portable optronics and inertial navigation systems.

of its production

Sagem currently exports 60% of its production.

The objective is to increase this number to 80% in the coming years. In my opinion, in ten years we will change our way to sell our products . Ten years ago we sold a lot of defense products off-the-shelf, but as we witness in other areas, for instance in civil aviation, there may be a need to create new partnerships with our customers in foreign countries in order to create joint ventures that allow to develop products tailored to these new markets.

We want to be a first-class defense supplier in the areas of optronics, navigation and weapons on a global scale.

2012

consolidated

sales

At Sagem, RTDI (research, technology, development, industrialization) represents 10% of turnover.

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Cassidian Established:

2000

Headquarters: Unterschleissheim, Germany

€5.7 billion Staff: 23,000 Patents registered: 2,800 Turnover:

Cassidian is one of the four pillars of EADS and is the second-largest division. It is a global leader in security systems and solutions for civilian and military purposes. Known as EADS Defense & Security till September 2010, the company was renamed Cassidian, a combination of two Latin terms – cassida (helmet) and meridian (point north), signifying global protection. This is in keeping with its motto of "Defending World Security". Given the nature of its business, there is a premium placed on developing long-term strategic partnerships with its customers. Specifically, it offers products and services for security of deployment forces, critical infrastructures, communications network as well as homeland security, major events security and advanced cybersecurity. Given the rapid pace of threat evolution, there is an emphasis placed on innovation at Cassidian, which has led it to work in areas such as lean manufacturing processes, green technologies, UAVs, radar technology and data fusion.

In order to offer its services in the various above-mentioned fields of security, Cassidian has in its product range air systems (aircraft and unmanned aerial systems), land, naval and joint systems, intelligence and surveillance, cybersecurity, secure communications, test systems, missiles, services and support solutions. Of significant note is its participation in the Eurofighter consortium, which develops and produces the Typhoon multirole fighter aircraft. It is also pioneering unmanned aerial systems. Cassidian provides for instance tactical systems such as Tracker and Atlante, and the medium-altitude-longendurance (MALE) Harfang, currently in use with French Armed Forces.

It has also developed a concept that optimizes operation, mission planning, logistics, training, data links and payloads that can be used by several unmanned aerial systems, thereby reducing fleet and operational costs. Since it holds EADS’ shares in MBDA, Cassidian is consequently involved in missile systems development. At present, it is participating in the Aster PAAMS naval air defense system, the Meteor air superiority missile system and the SCALP Naval ship and submarine-launched deep-strike weapon.

80 Customers and partners: 400 Operating countries:

but also homeland security. The Qatar National Security Shield is the world’s first fully integrated border and maritime security system that went online in 2007; Cassidian is now working on developing a national security program for Saudi Arabia to protect its 9,000-long border and an integrated solution for border surveillance and security for Romania.

The company focuses in particular on cybersecurity. As part of the strategic development of Cassidian Cybersecurity, the company’s subsidiary, to become a major European player in high-end cybersecurity products and solutions, it acquired Netasq last December and more recently, Arkoon Network Security, a European reference in network security, information systems protection and data confidentiality. Cassidian has had a successful track record of providing sensitive IT and data handling and training solutions such as the ECTOCRYP. It is a leading provider of digital professional mobile radio (PMR), a solution that has helped to secure events including the 2008 Beijing Olympic Games and the FIFA World Cup in South Africa two years later. In 2011, the Spexer range of radars for wide-area protection of sensitive infrastructure and coastal surveillance was introduced, in keeping with Cassidian’s continued investment in the development of next-generation active electronically scanning radars for air, naval and ground applications.

In 2011, the company continued to further its efforts to globalize its business beyond Europe. In the medium term, it hopes to generate as much as 50% of its business abroad. In fall 2012, the German Bernhard Gerwert was appointed as the new CEO of the company to implement a new strategy. A thorough restructuring of managing teams occurred. As a home country and strong pillar within the Cassidian strategy France will be managed separately by Jean-Marc Nasr, 50, who will also be responsible for the Cassidian Cybersecurity division while keeping his former responsibility as head of Secure Communication Solutions.

The company emphasizes provision of lead systems integration, increasingly vital for not only coastal surveillance and border control

Jean-Marc Nasr, CEO France

For nearly three decades, the notification solutions and services of 104

Cassidian have served critical communications needs within the public and private sectors. Notable cases of use include

Hurricane Katrina in the US and the H1N1 pandemic.

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Jean-Marc Masenelli Director General of Survey Copter The innovative start-up created in 1996 has grown significantly since the beginning of the millennium, becoming a subcontractor to EADS for 300 units. In 2011, Survey Copter became a 100%-owned subsidiary of Cassidian, the defense and security division of the EADS group.

What are your the main strengths of Survey Copter as compared to its competitors?

I will make a distinction between the French and the global markets. If looking at our projects abroad, our competitors are mainly Americans and Israelis. The biggest advantage of our machines and our systems – not taking into account the simplicity of their application, their operational quality and the information gathered by their sensors – is the exceptional quality of the autopilots, in particular of helicopters. Our subsidiary, weControl, not only provides us with autopilots but is also a supplier for other drone manufacturers in the world who produce bigger machines than ours but nonetheless incorporate weControl’s autopilot given its reputation as one of the best in the world. Another one of our strengths is that we master the entire technological chain of our systems, from the aircraft itself to the autopilot, ground stations and data links.

We are consequently not dependent on subcontractors for the development or operation of our products. This gives us greater reactivity and flexibility to respond to our clients’ needs. Further, in doing so, we can provide requested modification or changes with greater ease.

EADS brings us the industrial security that can be expected from a shareholder but also offers us export market opportunities.

And in the French market?

In the mini-drone sector in France, we are the one company that has by far the most important business volume. Effectively, we have more than 400 machines today that are in actual operational service and that fly.

Moreover, our UAVs are real aircrafts whereas those of our French competitors are closer to radio-controlled systems. As a result, these latter perform less well in terms of carrying capacity, wind resistance or flight precision. Furthermore, we have a parent corporation, EADS, which brings us the industrial security that can

be expected from a shareholder but also offers us export market opportunities given its sales networks in all corners of the world.

Why did EADS keep the brand when they bought Survey Copter in 2011?

Survey Copter’s buyout by Cassidian had the objective of providing Cassidian with a capacity to penetrate the mini-drone market. It is an interesting market as the potential sales volume is considerable.

The aim of EADS was also to supplement its product range with smaller-sized drones. EADS wanted to retain Survey Copter as a subsidiary in order to preserve the reactivity and competitiveness of an SME well adapted to this kind of market. A direct integration into Cassidian would have risked elimination of these advantages due to the complexity of running a large establishment.

What about Survey Copter's latest project, the MAVion Roll and Fly? The MAVion Roll and Fly is a good example of the potential interest, particularly in France where it is not often the case, in developing joint university-industry or Grandes Ecoles-industry programs. The MAVion Roll and Fly is a small drone weighing a few hundred grams whose purpose is to work inside buildings. It is a flying wing capable of movement and hovering.

Moreover, it is equipped with wheels which enable it to move in another manner, i.e. rolling against the wall and ceiling as and when necessary. This gives it a considerable advantage compared to all other similar options available in the market; their stability is not always guaranteed when faced with an obstacle and operating them becomes problematic. These drones are beneficial for their paramilitary applications, for use by law enforcement, police or special forces, in order to breach building interiors and to conduct inspection and intelligence missions while controlling the drone from outside. What is interesting about this project is that it is a system that was initially developed by the Higher Institute of Space and Aeronautics (ISAE) in Toulouse. After developing this patented concept, ISAE sought an enterprise interested in the industrialization and subsequent commercialization of the product. They approached us, and we accepted, noting the interest this system could arouse from our clients. Currently, we are finalizing the industrialization of the drone before commercializing it for military and paramilitary applications – for which we are the preferred suppliers – but also for civilian purposes if necessary.

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Thales Group 2000 Headquarters: Paris Staff: 67,000 Established:

€14.2 billion Order Book 2012: €13.3 billion Share of military revenues: 52% Turnover:

The Thales Group is the extension of French electrical system builder and designer Thomson-CSF. It was renamed Thales in December 2000 after the acquisition of the British defense electronics group Racal.

The group is a global technology leader for the defense and security, and aerospace and transportation markets. The name Thales was chosen after the pre-Socratic Greek philosopher Thales of Miletus, known for his pioneering ways, his pragmatism and his openness to different cultures. It perfectly reflects the group’s values and abilities to address complex challenges requiring extensive know-how.

In the defense industry,Thales is involved in a wide range of activities for air, land, naval forces, joint systems as well as training and simulation.

The group has been a partner to military forces around the world for a long time, providing solutions to increase operational effectiveness as well as to ensure the highest levels of protection. For the purposes of air forces, Thales provides electronic equipment to prestigious international military aircraft manufacturers such as Eurocopter, Dassault Aviation, Airbus, and Sukhoi. The group has also designed and furnished the electronic equipment for the flagship French Rafale fighter jet, which accounts for as much as 25% of the total value of the aircraft. More generally, Thales specializes in interoperable, scalable solutions and services for armed forces in terms of supporting operational missions (threat detection and identification, distribution of information, command decision support, engagement management, effects delivery) and in terms of optimizing operational efficiency (coordination of assets). On the security side, Thales serves governments, institutions and civil operators by providing access to relevant and reliable information at all times. Equally, it develops integrated solutions and services for critical infrastructure protection, border control and critical information systems.

Operating countries:

56

Share of revenues invested in R&D:

20%

control system for the Malaysian Ministry of Defense and the receipt of an additional order for Ground Master 400 system, a new-generation radar, from the French defense procurement agency (DGA). Both were successes of ThalesRaytheonSystems, the transatlantic joint venture specializing in air operation command and control systems, surveillance radars, and ground-based weapon-locating radars, which celebrates its tenth anniversary this year.

Since the end of 2012, Thales Group is headed by former CEO of Vivendi, Jean-Bernard Levy, who has new ambitions for the company.

The freshly-appointed CEO is currently reorganizing the Group’s structure by reducing the number of divisions, and aims to increase activities in high-potential emerging markets.

Amongst the recent successes of the Group figures the partnership with Renault Trucks Defense on digitized vehicle systems to develop innovative solutions for defense and security forces, signed in February 2013 at the IDEX 2013 show in Abu Dhabi. Other accomplishments include the finalization of the enhanced national command and

Jean-Bernard Levy, CEO

I am very proud to be appointed to lead Thales. I have been aware for many years 106

of the passion and the high-level expertise of the men and women who contribute to the group’s numerous successes in many countries around the world. In the global marketplace, Thales has

all the strengths needed to play a leading role. I know I can count on the energy and commitment of all to meet the challenges ahead and work together to develop our group.

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CNIM-Bertin Technologies 1996 Headquarters: Paris Staff: 2,772 Established:

Turnover 2012:

€722 million

Order book (by end-2012):

€1.2

billion

Global presence:

17 subsidiaries in 15 countries

The CNIM Group, with more 150 year of experience and a workforce of almost 3,000, is a medium-sized company providing turnkey industrial solutions with high technological content as well as expertise and management services in four different domains of activity: environment, energy, defense and industry.

The company is organized in three business divisions. The first division, Environment, includes products such as waste treatment systems and gas cleaning systems. The second, Innovation and Systems, covers the full life cycle of products and services with high technological components, from research and development to design, construction, commissioning and maintenance, for a wide range of sectors. Last but not the least, its Energy division provides innovative equipment, maintenance and operating services for energy management to industrials and institutions.

be deployed together or separately, either deploying two bridges of 14.3 meters, or one bridge of 26 meters. The Group also offers its PFM bridge, a motorized pontoon bridge. Both these products were sold to the French procurement agency and are currently in use by the French Armed Forces.

With regards to its involvement in the defense industry, the CNIM Group is well renowned for deterrent weapons and bridging systems. For more than 50 years, the group has participated in all of the nuclear strategic ballistic missiles developed by France through its involvement in the design and production of the launch tubes. Indeed, CNIM has participated in four generations of deterrent weapons: the M20 and M4 systems, the M45, and more recently the M51, the last generation of state-of-the-art nuclear missiles developed by France. For this latter project, CNIM ensures the development of the M51 launch tube for France’s largest naval defense group, DCNS. Currently, it is working for EADS Astrium on the test center’s underwater firing module, the assembly workshop and the handling shells, and the production of the tools needed for the integration of the tube into the missile magazines. Furthermore, CNIM is also involved in the Megajoule Laser Program, an experimental tool for the simulation program intended to ensure the reliability and safety of nuclear weapons.

Through its fully owned subsidiary, Bertin Technologies, the CNIM group is also involved in biological and chemical detection and identification equipment, surveillance and identifications (infrared technology and short-range unmanned aerial vehicles), and cybersecurity software.

CNIM has also developed an expertise in sea landing systems through the L-CAT (Landing Catamaran), a program fully selffunded and patented. This project is a completely innovative ship, based on the integration of a mobile loading platform into the hull of a catamaran. It is intended for the landing of troops, vehicles and equipment on any beach in the absence of port facilities.

With a length of 30 meters and a width of 12 meters, it offers a maximum loading capacity of 80 tons.

Moreover, CNIM has developed one of the most innovative rapid deployment bridging systems for military applications thanks to its modularity. The Assault Bridge includes two sections that can

Nicolas Dmitrieff Chairman of the Management Board

According to the progression of our operating income based on our fundamentals, we have consolidated THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

our positions in our high added-value markets, thus confirming our operational excellence and demonstrating that we adapt constantly to our markets. Our strategy is clear: we use

the excellence of our production to offer high added-value services for the entire value cycle, from design to operation and maintenance.

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PREVENTING Paul Boyé Technologies Jacques Boyé | President

FFProfile: Paul Boyé Technologies designs and manufactures

high-tech protective clothing for industry, civil security and defense purposes. With a team of engineers, doctors and technicians specialized in ballistics as well as the chemical and nuclear fields, more than 80% of its revenue comes from products developed in-house. It invests nearly 10% of its turnover in research every year. In March 2012, the company won a contract for the manufacture of NBC suits for the US Army through its subsidiary Paul Boyé Incorporated. In order to complete the contract, worth 96 millions euros, the company has associated itself with the American companies Tennessee Apparel Corporation and Creative Apparel Associates. Deliveries will start in 2017.

Proengin Patrick Bleuse | President

FFProfile: Proengin designs and manufactures biological and

chemical warfare agents field detectors using flame spectrometry.This technology allows detection of a wider range of toxic products. Its detectors have been installed in more than 45 countries, on all continents, and target armed forces and civilian defense services.

FFYear of establishment: 1976

NBC-Sys Philippe Burtin | CEO, Nexter

FFProfile: From design to production and customer support, NBC-Sys of the Nexter Systems offers numerous technologies against CBRN hazards. It develops and manufactures products and systems for detection, personal and group protection and decontamination. It devotes about 20% of its annual turnover to R&D and 80% of its workforce comprises of technicians and engineers.

FFYear of establishment: 2006 FFGlobal presence: in over 100 countries FFStaff 2012 (Nexter): 2,700

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FFYear of establishment: 1904 FFStaff: 234 FFTurnover 2011: €57 million FF2013 Outlook: The American choice for Paul Boyé's prod-

ucts may be perceived to some countries as an official recommendation from the Pentagon. Therefore, the part of military products in the whole activity should continue to grow.

FFQuote for 2013: “There is no doubt that winning the American tender will help us on some other international markets.”

FFStaff 2011: 49 FFTurnover 2011: €15 million FF2013 Outlook: Proengin’s range of AP4C Chemical de-

tector has variants fulfilling specific needs (for example, used aboard vehicles, buildings or ships). Its biological detector, MAB, has already been selected by several military forces and equips several NBC reconnaissance vehicles. It also offers accessory systems that allow it to offer comprehensive solutions.

FFQuote for 2013: “Proengin, European leader in chemical and biological detection.”

FFTurnover 2012 (Nexter): €742 million FFFields of expertise: Chemistry, biology, thermics, aerodynamics, plastics, electronics, measurements and tests and ergonomics.

FF2013 Outlook: NBC-Sys relies on expertise based on creativity, expertise and customer support to provide military and civilian applications. It offers products worldwide, mainly in Europe, Asia and the Persian Gulf. Currently the entire group is working towards renewing its product range, pursuing foreign markets and consolidating the terrestrial industry in France and Europe.

FFQuote for 2013: “Providing CBRN solution is our commitment.”

DEFENSE LEADERS • FRANCE 2013

PREVENTING GIE Defense NBC Bruno Vallayer | Chairman

FFProfile: GIE Defense NBC gathers 18 French companies to

provide products and services against nuclear, chemical, biological, radiological, nuclear and explosives (CBRNE) attacks to French and foreign security services, industrialists, medical personnel. It responds to the French strategy of continuity between external defense and internal security.

FFYear of establishment: 1981 FFStaff: nearly 500 in France FFTurnover 2012: more than €200 million

Mirion Technologies Thomas Logan | Chairman and CEO

FFProfile: Mirion Technologies (majority owned by American

Capital Strategies) offers a critical range of products and services to detect, measure and monitor radiation to protect people, property and the environment from the hazards of ionizing radiation in the nuclear, military and civil defense, healthcare and homeland security industries.

FFYear of establishment: 2005 FFGlobal presence: 13 production facilities in France, Germany, UK, Finland, China, Canada, US

Ouvry Ludovic Ouvry | President

FFProfile: Ouvry is a company specialized in the study, re-

search, development and manufacturing of CBRN personal protective equipment. It is also in charge of product monitoring, quality control, logistics and after-sales service. Ouvry specializes in filter protection solutions. Know-how and experience is drawn from diverse fields including chemistry, physiology and textiles.

FFYear of establishment: 2002

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

FFFields of expertise: Detection, alarm, identification and

control; individual and collective protection; decontamination; medical treatment; disposal of hazardous substances.

FF2013 Outlook: The range of products, services and solutions offered by member companies of GIE Defense NBC is in tune with the changing nature of threat, the evolution of the nature of aggression, and the environment imperative. It will continue harnessing new expertise over time to offer tailored solutions.

FFQuote for 2013: “GIE Defense NBC fully responds to the

need of democracies to secure citizens, assets and territories.”

FFStaff: 878 FFTurnover 2012: €84 million FFDivisions: Health physics; radiation monitoring systems; sensing systems; dosimetry services; imaging systems.

FF2013 Outlook: In a context of global renaissance of nuclear power, increasing demand for homeland solutions, and long-term growth in radiological medicine, Mirion Technologies is uniquely positioned to continue leading in the field.

FFQuote for 2013: “Mirion will continue to maintain a technology leadership position through innovative products and solutions.”

FFStaff 2010: 6 FFTurnover 2010: Over €1 million FF2013 Outlook: Having mastered two main concepts of

CBRN protection, insulation and filtering, Ouvry has developed systems that allow end-users of their equipment to carry out their tasks with minimal loss of operational capability while being fully protected.

FFQuote for 2013: “Our mission is to define with our clients

the CBRN system most ideal for their needs and environment.”

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PREVENTING

Gearing up to Take on Evolving Threats in Cyberspace The French government is taking aim to ready its forces and prepare both public and private actors against the kinds of large-scale financial and structural damages that information systems left vulnerable to attack are more and more likely to face.

Changing battlefields

The shifting landscape of cyber-threats was heralded by the first major state-centered cyberattack in 2007, when Estonian information systems were sabotaged by a successive wave of denial of service attacks. These attacks rendered a majority of the country’s critical websites inaccessible for weeks. The attacks left the country’s online banking infrastructure as well as the communication channels between government ministries completely blocked.

This incident, marks a turning point in the importance government officials give to protecting information systems. The Estonian case is the crowning example of how the information systems of an entire country can be exploited with relative ease if proper defensive measures are not taken in time.

As a sign of coming policy norms, the United States has taken drastic measures to raise awareness at home and abroad of the mounting dangers for critical infrastructure in cyberspace. Today, both as an offensive and defensive measure, American cyber forces have been scaled up with a specialized information systems command, the US Cyber Command.

Equipped with thousands of "cyberwarriors" working around the clock to prepare the United

110

States’ offensive strategy in the event of a serious cyberattack, this special cyber branch of the military also has as principal mission to protect the information networks of the US government.

The question for a growing number of countries, like France, is no longer whether to create a cyber component of the military, but rather when and with which offensive capabilities the cyber component will be equipped.

700

With growing dependence on the Internet for increasingly sensitive activities, defending the highly connected information systems that are essential for the financial and industrial sectors has become a French priority. On March 21, 2013 the Cyberdefense Committee of the IHEDN held a conference on the latest evolution in cyber weapons that currently threaten the defense sector in France. Since 2011 cyberattacks have been reported at the highest levels of French institutional organizations, from the Ministries of Finance and Economy, which in 2012 fell victim to a massive cyberattack aiming to collect vast amounts of sensitive information, all the way to the official residence of the French President of the Republic, the Elysée Palace, which in 2012 was attacked via the Facebook accounts of the collaborators of President Nicolas Sarkozy.

Most often these kinds of attacks are launched via e-mails containing attachments that when opened allows for malicious code to transform the computer station into a point of attack for infecting other computers in the network. This tactic allow the perpetrators to effectively cover their tracks and render tedious the tracing of the source. According to a study conducted in 2012 by researchers at the Foundation for Strategic Research (FRS), automated attempts at network intrusion are launched at a rate of 10 to 100 per second, and as a result, the largest companies in France are now consecrating an average of 2% of their turnover to securing their information systems.

Nonetheless, these kinds of cyberattacks do not stop at the level of e-mail hacking. Weapons aimed at information systems can be very powerful and are often used for a wide variety of highly specialized attacks on nearly every sector.

Certain highly advanced viruses can be used to interfere with or even shutdown infrastructures via their supervisory control and data acquisition (SCADA) systems. SCADA systems are industrial

500

The scale of the threat to defense industries

230

The extent of French awareness of the necessity to better prepare against evolving threats in the cyber domain has reached the highest levels of government. After the creation in July 2009 of the Network and Information Security Agency (ANSSI), which serves a national training center for cyberdefense, strategy, development and expertise, further efforts for better organization against cyber-threats have been clearly outlined in the report published by Senator Jean-Marie Bockel, unanimously adopted on July 19, 2012 by the Senate Commission on Foreign Affairs, Defense, and Armed Forces.

The Bockel Report has become the principal authority for guidelines to the French defense and security sectors in regards to protecting and preparing against cyberattacks. There is much work to be done in the way of building French cyber capacities. The Bockel Report defines the major policy steps necessary for implementing a heightened cyberdefense strategy. The report has become particularly pertinent within the context of the French White Paper on Defense and National Security, released on April 29, 2013.

DEFENSE LEADERS • FRANCE 2013

PREVENTING Defending the highly connected information systems that are essential for the financial and industrial sectors has become a French priority.

control systems that monitor and carry out industrial processes for a large portion of civil sector infrastructures such as power generation, water treatment, and oil and gas pipelines. They are also critical in defense sector infrastructures like civil defense siren systems, communication systems, airports, military bases, naval ships, space stations, etc. In this way, SCADA systems are at the center of operations and in need of additional protection. Laurent Hesault, Director of Security Strategies for Symantec, emphasizes that the defense industry sectors such as shipping, aeronautics, energy, research, armaments, and electronics, are the most frequent target industries for cyberattackers.

Furthermore, the non-state cyberattackers behind a large number of these attacks are nearly as well organized, competent and well structured as their national counterparts, and given the scale and the long duration of their operations, it is also likely that they are very well financed.

French capabilities

The French government has taken note of these threats and is working to increase awareness and reinforce cyberdefense. The ANSSI, created on July 7, 2009, is attached to the General Secretariat of National Defense and Security (SGDSN) which operates under the command of the Prime Minister. At the head of the ANSSI is Mr. Patrick Pailloux, a graduate of the Paris Ecole des Mines. As a national institution responsible for insuring the security of information systems, the ANSSI counts 230 employees and has an annual budget of 75 million euros. The French cybersecurity institution falls behind in comparison to German and British capacities whose similar agencies count between 500 and 700 agents. Although the ANSSI has seen its budget increased from 45 million euros in 2009, funding is still far from what the Bockel Report considers the ideal budget of roughly 90 million euros. Nonetheless, the ANSSI has put into place a governmental vigilance plan at the national level with the SGDSN that works to prevent, protect and prepare the public sector against cyberattacks and is working towards expanding its partnerships in scientific communities and with the military.

The case of Areva

A striking example of the havoc that can be brought by cyberattacks in the defense industry is that of the French nuclear company, Areva, attacked on September 29, 2011. For two years hackers had been penetrating the information networks of Areva and taking control of local computers in order to steal company secrets.

The attackers used Trojan horses which allowed them to access the administrative components of the information network. Nevertheless, Areva’s SCADA systems were left unharmed because they were intentionally constructed separately from the central network. However, in order to protect their internal networks which were under heavy attack, Areva immediately alerted the ANSSI of the security breach, all while deciding not to go public with information about the attack. This was a strategic choice that allowed Areva in collaboration with the ANSSI to analyze the characteristics of the attack, identify the infected machines, and wipe clean THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

the entirety of the company’s information systems. This permitted Areva to avoid tipping off attackers that their operations had been identified. Although the partnership between Areva and the ANSSI eventually resulted in the reestablishment of Areva to full functionality, the total cleaning costs to rebuild networks and put into place stronger security systems have been estimated at several million euros. The costs estimated were calculated without taking into consideration the economic losses entailed by the loss of sensitive information.

The ten priorities for improving French cyberdefense

In order to bring the defense of information systems to a sufficient level of importance for national security, the Bockel Report has set out ten priorities for the French government as well as the defense and private sector industries. These recommendations include making cyberdefense a priority for the 2013 French Defense and National Security White Paper which has been carried out. Also, the report pushes the government to formulate a French doctrine on offensive capabilities and in this way, increase the capacity and means of the ANSSI. A greater political will to work with private companies specialized in the domain of securing critical information networks as well as American and European allies, has been further emphasized as an imperative to strengthening the French cyber capacity. The bottom line for French defense industries is that larger companies most affected by these kinds of threats need to become more receptive to the idea of mandatory incident reporting. Such reporting will allow for the sharing of threats and attacks through institutions like the ANSSI to better protect industry from network attacks and intrusions.

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PREVENTING

Olivier Bohbot International and Defense Vice-President of Bull Combining computing power and security, Bull designs and deploys internationally renowned solutions for businesses and governments. Counting 9,300 employees, Bull is a trusted partner in over 50 countries. Bull offers its customers all the opportunities of the digital revolution while innovating cutting edge technology to manage its risks.

What are Bull’s field of expertise, its target markets, and defense sector activities?

Bull posted in 2012 a turnover of 1.3 billion euros with a nice growth of EBIT over the last three years of about 84%. Our organic growth has been particularly significant in the defense industry which, as a whole, represents 10% of our total activity. In the defense sector, homeland security is a growing domain including cybersecurity and critical infrastructure protection.

Bull is the European leader in critical digital systems. We have been around for a long time in the computer and digital areas, but we are now dedicated to developing and implementing solutions for strategic sectors. In other words, we develop highperformance computers. We are the only European company in this business today, and we are among the top developers. We sell to the security and the defense industry as well as to all strategic sectors like telecommunications, transportation, healthcare, finance, and government. We also provide valueadded solutions. Thus, not only do we build super computers, we also develop software applications in order to maintain end-to-end solutions. We offer

the flexibility of digital solutions while accounting for developments in security access controls, encryption, etc. In this way, the defense and security sector is at the heart of our strategy.

What are some of the current projects Bull is working on in the defense and security sector?

Today we carry out all processes from sensors to analytics. Sensors refers to the processing of different types of signals, and then handling the means of securing the signals, communication, IT etc. Analytics refers to how we manage the stocking and retrieval in real time of these types of signals.

There are specific areas where we want to push this expertise, namely in operational information systems.

Currently, we are significantly investing in operational and command information systems. We are witnessing an overhaul of military information systems due to the growing need for systems to be able to communicate with different platforms at ground, air, and naval levels and with different communication protocols. Bull positioned itself on this market and answered a tender offer for the SICS program. We brought real creativity to this program because we often operate in open source using civilian technologies adapted to the military world. In this way, we have the advantage of greater flexibility and agility in the systems we develop. This is what gives us the competitive edge in certain areas, such as data security and end-to-end development of future information systems.

What do Bull’s counter-IED activities, such as the Shadow product range, entail?

In countering IEDs, one way to respond is to jam the signal. A few years ago we won a market study that allowed us to develop a full range of Smart Reactive Jammer (Shadow product range).

Shadow is designed to intercept, jam and neutralize remote-controlled improvised explosive devices (RCIEDs). Shadow can instantaneously detect over 2,000 threats and is geared to respond extremely effectively to GSM and DECT bursts from mobile and cordless telephones. The Shadow product range responds just as well to the military as to the civilian needs, like the protection of VIPs.

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DEFENSE LEADERS • FRANCE 2013

PREVENTING

What is the scope of Bull’s international activities and strategy for expansion?

My job today is very connected to defense, but my vision of Bull is to use the company's platforms in countries where we are present. For example, Bull has several hundred employees in Brazil. There are challenges in the domains of defense and security in Brazil that are interesting, such as border control projects and large upcoming international events.

The second international activity involves cases where we are not yet present or not yet a wellknown actor in the domains of defense and security.

In these instances, we rely on local partners. I am particularly referring to India: with regards to electronic warfare, we signed a partnership with the company, Axis, who is very well-known in the country in the domains of aeronautic and ground warfare. In this way, our strategy is to find a local champion and to collaborate together.

Given the growing domain of cyber-threats, is there a particular French know-how evolving in the domain of electronic warfare?

It is difficult to really know which technologies your neighbors are using, but when you make a product comparable to what is being exported, and when I see the technologies internationally that we are competing against, clearly France has particular capacities in electronic warfare. Generally, we have advantages in the management of information systems and in the treatment of signals. We hope today to push certain niche markets that are not typically targeted by giant multinationals. This is our defining strength when it comes to exports.

theatres of operation. And we are in a great position today as the European leader in intensive digital development, providing security for the strategic sectors like defense and security but also finance, transportation, telecommunications, etc.

We often operate in open source using civilian technologies adapted to the military world.

1 9

In which direction is Bull heading in the coming years?

In the defense and security sectors, the mission is to target well-defined critical and strategic sectors so as to promote new technologies. Bull hopes to maintain its expertise, enabling the deployment of our information security systems in THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

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Olivier Franchi Chairman of Sysdream Sysdream was created in 2004 by Paolo Pinto, the founder of the "Hack Night" and of the magazine HackerZVoice, and today provides technical auditing and training in ethical hacking for professionals to improve information system security, all the while popularizing hacking and its techniques in order to inform the public.

What are the biggest challenges to cybersecurity in France today?

Cybersecurity has two main aspects, the reason why we provide offensive and defensive security training. Defense refers to putting yourself in a situation where you have to fight against the attacks and thus you have to create perimeter defense systems like antiviruses or firewalls. For businesses, we place a great deal of importance on finding vulnerabilities in order to remove them. For states on the other hand, there is a necessity to carry out offensive security, meaning retaliation. Defense is important, but the best defense is an even better offense with the ability to respond to attacks.

The Americans understand this, and they have earmarked phenomenal budgets for cyberdefense and cyberattack. We are talking of a range of 8-38 billion euros in the coming years. It is not by chance that we are talking about the Chinese attacking the Americans and the Americans attacking the Chinese.

It has become a new kind of Cold War. The problems for states are numerous because malicious hackers are certainly capable of attacking public institutions, but they will also attack private institutions like information and communication systems, electrical systems, or transportation systems.

of attacks concern information theft

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of showing people how to ameliorate and improve defense against malicious attacks. At Sysdream, we inform, we explain, and we advocate as well. This is the particularity of the white hat compared to the world of black hats who use these techniques, search for further ones and develop them, but to steal information and carry out attacks.

Does the French legal context limit this objective of improving the security of information systems?

The French law is very restrictive because it is based on the Godfrain Act for zero intrusion. We are never very far from the legal border when we are looking to improve the systems by analyzing them.

When I met with Deputy Godfrain, I advocated that this law hinders information sharing because a part of this technology monitoring – which allows us to secure networks, update servers and even inform information system builders and editors of the existence of vulnerabilities – is reprehensible in France today. During our audits, for example, we get along with certain clients but in general, we do not publish on French sites, on the editors’ sites, or on the French builders’ sites because French laws forbids it. This is a disadvantage for France.

Do the concepts of black hats and white hats exist in France?

What are the different events organized by Sysdream in France?

Yes, they exist. We use the English term “hacking”, for example. You have the black hats, who in France are called “pirates” and the white hats, who are called “information security consultants”. There is therefore no middle term, whereas in English, hackers can be the good guys or the bad guys.

This is why we use the English word. However, in the media when we talk about hackers, we only see the dark side instead of the bright side. The white hats analyze information systems but in the hope

We organize two events, the “Hack Night” in collaboration with HZV for the general public, and “Hack in Paris” for professionals. “Hack in Paris” brings together 400 professionals on one side, and the “Hack Night” 1,500 clients on the other. We hope above all to inform the public and to bring together enthusiasts once a year.

DEFENSE LEADERS • FRANCE 2013

PREVENTING

Network and Information Security Agency (ANSSI) Staff:

360

2013 budget:

€90 million

The French Network and Information Security Agency (ANSSI) was France’s response to the 2007 cyberattack in Estonia and the ensuing French Defense White Paper the following year. The document recognized cyberspace as a new field of potential security threats such as those against national infrastructure or those conducted for economic espionage. Established on July 8, 2008, it is the latest face in the long evolution of initiatives responsible for security of the country’s information systems: these include sensitive state networks as well as those of suppliers and operators of critical services. Placed under the General Secretariat of National Defense and Security (SGDSN), it reports directly to the Prime Minister. It is headed by the engineer Patrick Pailloux.

creating and providing secure products and information systems.

It also ensures provision of secure communication through electronic channels at any given moment. The External Relations and Coordination department (RELEC) is the outreach branch of the organization.

By the decree of February 11, 2011, ANSSI became the official national authority on security of information systems in France.

The strengthening of its powers is part of France’s strategy to defend its cyberspace. The organization’s critical role as a pillar of French cybersecurity is also apparent when looking at its growth.

From 250 employees in 2012, already double the number since its inception, it will house over 360 experts by the end of this year. Its budget too has seen an increase from 45 million euros to 90 million euros. Apart from being accountable for cybersecurity inside France, ANSSI also contributes to the formulation and orientation of European research on securing information systems.

In terms of specific activities, one of the major services provided

by ANSSI is certification of software systems. The 2013 White Paper on Defense makes it legally mandatory for businesses in the country to only use those products and software as part of their cyberattack detection systems that have been certified by ANSSI. Such certifications allow testing of systems to see if they meet security targets set by ANSSI.

ANSSI fulfils its mission through four divisions. The Operational Center for Information System Security (COSSI) is the service responsible for preventing threats or attacks and coordinating a coherent response in case of one. For this, it undertakes continuous surveillance of sensitive government networks in order to monitor, detect and warn; analyse; and identify vulnerabilities.

It is also responsible for the implementation of appropriate defense mechanisms, including urgent corrective measures. The department of Expertise (SDE) performs an advisory function to the government, industry as well as providers of security. The Secure Information Systems section (SIS) is in charge of ideating,

Patrick Pailloux, CEO

We needed to identify an authority that could take THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

The agency also acts as a public mouthpiece, educating the public and companies about cyber-threats and preventive as well as remedial measures. For example, the agency promotes a set of rules and practices to ensure better resilience of computer systems against potential cyberattacks. Its website is meant to be the reference point for securing information systems.

Particular examples of products created by ANSSI include the interdepartmental RIMBAUD network, used by 4,500 subscribers including over 300 senior government officials who are guaranteed secure communication that at times involves confidential information. The RIMBAUD system, military and commercial networks use a new generation telephonic encryption technology, called Teorem, also developed by ANSSI, for use both in everyday life and in crisis situations. A third example is the secure Linux-based operation system called CLIP. The set of security mechanisms that constitute this system allow for a greater level of resistance to malicious code, thus increasing capacity to protect sensitive information.

extremely urgent measures, if the need arose.

to face a cyberattack, which does not mean that nobody does anything.

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PREVENTING

A New Strategic Tool: Online Advocacy Online information now conforms to a new set of rules for communication and influence. The ease of access and permanent availability of updates on a real-time basis allow anyone with Internet access to consult an unlimited number of information resources from anywhere at any moment. Such a platform facilitates interaction and exchange of ideas on any type of issue, both global and local.

Unlike traditional media, online information accumulates instead of being replaced. In other words, today’s news builds on yesterday’s: we can speak of “online information sedimentation” where ideas, trends and stories can snowball.

Another point to consider is that content is radical, often controversial and strongly biased. As opposed to traditional media which favours consensus and where arguments must be tempered, the Internet offers the activists a new hub for contestation and pathos-based reasoning. This new logic is exacerbated by the phenomenon of social recommendation which accelerates the “viral” nature of violent content. This is often reinforced by the spread of radical opinions of the Web. Since the 2010’s, the Internet has become the most influential medium. It is responsible for molding information and often works as an amplifier for traditional media.

Further still, the interdependence of offline and online media has grown tighter. We see that most opinion leaders now conduct the majority of their research online before moving to more traditional resources.

The balance of power is reversed on the Web. We witness today a minority of very active users rapidly and efficiently delivering neutral or biased content that succeeds in influencing a majority of online users. These users seek easy access to information and rely on the first results of a Google search. Thus, a small handful of online “influencers” can lead the whole online opinion on a myriad of issues. When one influencer creates original content, ten connectors spread this content and via these connectors, hundreds of individuals silently consuming this information form the majority opinion. Furthermore, two-thirds of online content is anonymous. Hence diverse publications of varying quality are available on the Internet. Verifying the trustworthiness and joining public debates has become more difficult.

From isolated Web users to well-established groups, the general public is increasingly directly influenced by online public opinion. Internet empowers civil society on major public issues.

Thus, an asymmetry in information delivery can be observed.

While a few minor activists can easily spread their arguments online, most of the major companies and organizations remain silent and cannot cope with the constant barrage of contradictory user comments. So the major question facing these entities is: how can we take on a central role in guiding the online public debate?

either generate content and information by taking part in the online debate by producing relevant content, or remain silent and disappear from the public debate.

From large-scale societal controversies to specific local debates, all kinds of issues are now an object of discussion online.

A sampling of the diversity of topics include: State reputation: country branding, post-conflict narrative investment opportunities, business potential, and tourism appeal, etc.

Politics: political debates, referendum, taxes, international disputes and conflicts, workers unions vs. top management debates…

Economy: financial crises, wages and executive golden parachutes, public affairs…

Justice: corruption, accounting scandals, frauds, arbitration…

Healthcare: radiation from cell phones, Tamiflu, treatments for pandemics, contraceptive pills, Bisphenol A… Environment: CO2 emissions, shale gas, oil spills, climate change, nuclear power, GMOs… iStrat’s belief is that it is still possible to react and to participate in online public debates by generating suitable content to balance (or to counterbalance) the tone of the most visible online content, to propound and offer positive and educational insights and then to become an influential figure on key, specific, controversial and long-term public issues. Internet is a new battlefield in the information warfare. It has to be apprehended with specific approaches and that is the very reason why iStrat was created.

Arnaud Dassier CEO, iStrat

In order to cope with online public opinion on key business issues, there are only two options for companies and institutions:

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Alain Juillet President of CDSE Created over 30 years ago, the Club of Business Security Directors (CDSE) has solid experience in the field of business safety and security. The Club includes more than 90 companies operating in 187 countries representing 800 billion euros in turnover and 3 million jobs.

What are the main activities of the CDSE? CDSE is a club that today counts nearly 100 member companies, mainly the largest publicly traded companies such as those among the CAC40. We represent not only an important source of employment, but also of French economic activity. In line with the spirit of the Club, we have a dozen specialized committees in various security domains. Each strives to remain at the forefront of their specialty and remain a preferred partner for governments and businesses. We communicate on all matters relating to safety in the workplace. This includes all problems linked to the protection of people, equipment and intangible company assets, at both the preventive and operational levels. In recent years, the concept has expanded to include issues related to the protection of a company’s image and leaders.

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Does a classification exist of threats that French companies are exposed to either internally or when developing internationally?

There are many, but certain threats are more sensitive than others. First, there is the issue of expatriate security. We work closely with the French Ministry of Foreign Affairs, Interior and Defense, but also with insurance companies and Cindex (an inter-companies club on strategies and policies of international mobility). We must continuously monitor the situation to allow each member company to make the best decision possible regarding the safety of its personnel and their families living abroad.

A second risk that is much simpler, although not insignificant, is the problem of proliferation of acts of incivility and small attacks against companies.

Included in this category is the dissemination of confidential information by copying or forwarding via the Internet. This is a problem of training and

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PREVENTING ethics. We must make our employees aware of the fact that the protection of their jobs relies upon exercising caution and following the rules.

The third component – and the major problem today because of its importance and especially its growth – is cyber-threats. Criminal cyberattacks through information systems are growing at a breakneck pace. The latest developments in electronic warfare reveal viruses such as Stuxnet or Flame that attack industrial systems. In view of the dire consequences of competitors using such attacks against other manufacturers, we are required to get involved. Similarly, we have seen viruses or Trojan horses capable of entering a company’s network in order to search for or retrieve very specific pieces of information like maps or income details.

Why does Germany sometimes accuse France of being aggressive regarding this subject?

I think we must be clear. There is an old French proverb that sums the answer up nicely. “When one wishes to kill his dog, one accuses it of rabies.” Every time a foreign country criticizes French business intelligence, it happens that their own services are much worse. To this effect, we must defend our innovation capacities and our job market. In today’s world this requires information acquisition.

Nevertheless, according to the French theory of business intelligence that we stand behind, we will not take illegal measures to acquire information.

With the amount of information circulating between various countries, there is more than enough information available to meet our needs. We are able to obtain 95% of the information and with this amount of information we can know all we need to know through legitimate means. It is a question of know-how and expertise.

When researching business information, the real problem is not the research; it is the selection of the right information and the credible information, from the mass of information available.

Is current instability in the Sahel region a problem for French companies?

In a Club like ours, most of our companies work and invest around the world. The situation in the Sahel, from Mauritania to northern Senegal, Sudan and Somalia, involves us directly. Not only is the region risky for expatriates, it also represents a risk for investment and industrial facilities. The threat affects both prospecting investments and mining investments, from pipelines to railway transportation.

Everyone knows how important Nigerian uranium is for France. However, this is not a reason to forget that Chad is in the process of becoming an oil-producing country like Sudan, a region that is both very poor and very rich. Beyond capacities for current operations, there is a lot of potential wealth in this area. Either way, staff, experts, technicians, and safety supervisors are necessary in order to ensure safety under difficult conditions.

What initiatives have been taken with respect to business intelligence?

When we began, there was hardly any legislation on the matter. It was necessary to define French

business intelligence because it is a concept that must adapt to the country’s culture, and its technological level. Business intelligence is not carried out in the same way in China, the United States or in France. Furthermore, we had to define training programs to educate public and private staff on business intelligence.

We also had to help businesses to become more effective, although without providing state intelligence, rather by simply dialoguing and advising them. We had to learn to share valuable information as our American friends do with the “Advocacy Center”. Each year the 100 largest contracts have the support of all the services of the US government to promote their businesses and increase employment within their own territory. We started almost 20 years after them, but the delay was beneficial because we were able to study their successes and failures which allowed us to put into place a system which aims to be productive for both SMEs and large companies.

In France, two cases, Gemplus and Pechiney, raised awareness of our weaknesses. The sale of Pechiney to Alcan, without state intervention, led to the disappearance of nearly 70,000 jobs! This is not insignificant. Gemplus, the world’s leading smart card provider is now under the control of a high-performing American fund with the imaginable consequences in terms of technology.

Therefore, we armed ourselves with a legal arsenal, based on a decree which allows us to control foreign investment in France in certain sensitive sectors.

Initially, we were met with harsh criticism from the proponents of liberalism. The pleasant surprise was seeing most European countries quickly adopt the same type of text.

We also launched specialized investment funds so that small and medium-sized, yet strategically important companies can grow even though the banks did not give them enough credit. We were inspired by the United States and their In-Q-Tel fund.

Today, the French Strategic Investment Fund gives this approach a national dimension.

With the crisis in France and Europe, we need more investment funds capable of providing the necessary means for research or acquisition of technologies for innovation and increased competitiveness.

Other parts of the world are growing and want to gain market shares. We must find ways to continue certain key activities and maintain the level required to stay in the running. This is not only a problem of sovereignty, but a matter of balance and security for the future.

Most of our companies work and invest around the world. The situation in the Sahel, from Mauritania to northern Senegal, Sudan and Somalia, involves us directly.

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PREVENTING Lieutenant-General Jean-Marc Duquesne Director of Institute for Higher National Defense Studies (IHEDN) IHEDN emerged more than 75 years ago as the brainchild of Admiral Castex. In a vision extending beyond the purely military framework, Castex realized it was necessary to train senior civil servants and military officials in preparation for, and conduct during, the war.

With the coming of the Fifth Republic, the Institute became a place of comprehensive and permanent debate on defense policies, adapting its programs to the evolution of defense and security threats.

What is the main mission of IHEDN?

Developing theories and strategizing is the core of our mission.

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Our main mission can be summarized in three words: training, sensitizing and radiating. Why training, and how? Training is in reference to understanding a spirit of defense, as in the capacity of the nation to apprehend what could put it in danger. It is similar to saying that there is no longer a menace at our borders, but rather no boundaries to the menace. The definition of defense itself has changed. Thus, IHEDN aims to form a sense of economical intelligence where the notion of defense is understood and diffused to the elite, as well as the population at large. Next is sensitizing. We aim to sensitize the general public, to find direct access in order to communicate the goals of IHEDN to a larger public. Finally, there is radiating, or having a radius effect throughout and following the French strategy, which conveys a facility in expressing a point of view worldwide.

What are the main new threats IHEDN has identified since the last White Paper on national defense?

One of the major new threats since the last White Paper on national defense is the growing importance of cyberattacks and the need to develop new strategies to combat them. Cyberattacks are the next threat that we need to ward off.Thus, the Institute has planned measures toward a professorship in cyber-strategy. The technical aspect of the subject is obviously of crucial importance but is not sufficient.

Of course, we need to have a high technical level when we design solutions against cyberattacks but we also have to think beyond technicality. We need to theorize and define strategies – like we did for nuclear proliferation. Developing theories and strategizing is the core of our mission. The mission of IHEDN on that front, as for the nuclear threat, is to rethink the technical aspects of protection and even move away from the pure technicality of it since the means to protect us from these types of threats will be different altogether.

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What is the relevance of developing a European approach to defense?

The European perspective is at the heart of every single one of our training programs. We are, for example, conveying all of the French state’s contribution to the European Security and Defense College (ESDC), a virtual college designed to debate between member states on a number of defense topics. Europe is a choice made by France and it is the way to go if we want to maintain leadership at a global level. It is logical and necessary that the 28 countries forming the EU harmonize their military needs. Indeed, we need this harmonization in the definition of our needs so that our industries get a clear sense of what will be needed in the future and therefore, can address these needs with the best quality to cost ratio. The concern of the European Defense Agency is to promote teams and spaces that will render this mission possible. The challenge is to define common needs.

What is the role of private security companies at a time when government defense budgets are decreasing?

Generally, there has to be an articulation concerning the actions of the state, and those of a private security company. What is a private security company exactly? An interesting report in 2011 from MPs MĂŠnard and Viollet brings to light some different perceptions. The Anglo-Saxon approach and the French approach are divergent on the subject. In Iraq and in Afghanistan, we have seen a wide use

of private security companies. This is not the French mentality. The question is: where does it stop? When can a conflict be in the hands of private security companies, and when does it need to be taken over by state military? The French culture is simply less inclined to use private security companies.

We cannot ignore that private security companies profit from the conflict, thus, having no interest in acting towards the resolution of the conflict: we can observe that companies seem to do just enough to maintain the crisis at a status quo, which is never the adopted strategy for a state military. The state is thus necessarily involved as the foremost aim must be the reconstruction of the state where the crisis took place.

Europe is a choice made by France and it is the way to go if we want to maintain leadership at a global level.

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France: Defending its Interests The fourth White Paper on Defense indicates a broadening of the French understanding of military power.

Much noise has been made over the rationalization of the French Armed Forces and its defense industry. This "lean management", however, concurrently indicates France’s immediate strategic priorities it plans to protect. Take, for example, the concentration on France’s maritime and amphibious projection capabilities, guided missiles and drones.

Coupled with the aim of strengthening special operation forces and ability to deploy some 15,000 ground forces in a single overseas deployment as well as an Immediate Reaction Task Force deployable up to 3,000 kilometers within a week, the strategic guiding principle of intervention comes to the fore but in the specific geographic context of France’s near abroad.

The shift towards global multipolarity and the American eastward pivot has made a greater case for key military powers in Europe - like France - to engage themselves in securing their own needs. To this end, the fourth White Paper on Defense indicates a broadening of the French understanding of military power, no longer limited to defense and crisis management.

Concretely, the key geostrategic priorities are: promotion of stability in the European periphery (Balkans, the Caucasus) in order to avoid adverse spillovers; leading security efforts in the region stretching from the Gulf of Guinea to the Horn of Africa; pursuing its interests in the Persian Gulf, albeit through co-participation alongside the United States; securing the “strategic waterway” that is the Indian Ocean given the presence of the French overseas territories in the region; and lastly, strengthening diplomatic and economic ties with Southeast Asia and Latin America. This represents a reorientation of France’s axis of strategic priority from the "arc of crisis" from the Middle East to North Africa identified in the previous Defense White Paper. Further, a broadening of vision to include an expanded theater of operation than the erstwhile identified Indian Ocean and South and Central Asia region is testament to France’s fear of being denied access to strategic natural resources like rare earth metals, as highlighted the preparatory document for the 2013 White Paper. Indeed, China’s increasing influence in Africa is a geostrategic concern for France.

the Horn of Africa, Lebanon and Afghanistan apart from the recent Libya and Mali operations, and are in effect responses to protecting its strategic interests. France has also recently bolstered defense cooperation with UAE, Kuwait and Qatar, including setting up a military base in Abu Dhabi in 2009. Furthermore, it is reinforcing its strategic partnership with the US, Australia and New Zealand for security in the Indian Ocean.

For the French defense and security industry, this translates into an energized focus on expanding markets and partnerships with pertinent countries. Thus the adoption of internationalization strategies by several companies. It also means a potential for French companies to participate in the considerable peacekeeping market: France may see an increase in peacekeeping-related activities keeping in mind the areas of intended operation.

Geodis, GIE Access, Sodexo, Thales have, for instance, formed Global X Company to bid for UN peacekeeping contracts. There is also a niche market space for special forces’ operational needs since their activities and presence will undoubtedly rise in the coming years. Case in point, the recent deployment of French Special Forces in Niger to protect uranium sites run by Areva. In fact, France held its first trade show and conference on operation needs of elite force, SOFINS, earlier in May. Last but not the least, there is promise for the burgeoning French private defense and security service companies. France has had a more statecentric approach compared to its British and American counterparts. The entire defense and security service sector could therefore further the state’s strategic agenda as well as reap benefits of the geostrategic priorities set. For example, there is a great demand for private maritime security in the Gulf of Aden region (as well as increasingly in the Indian Ocean); currently there are only a few French firms in this field.

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Philippe Doucet Managing Director of Losberger RDS Losberger RDS is specialized in the support of men and equipment in the civil and military infrastructure sectors and crisis management markets for over fifty years, and is now present worldwide. The company is part of the Losberger Group, international leader of metal and textile structures mainly intended for the events industry.

With regards to the technology, the key word is “airtight” structures.

What are the activities and products Losberger RDS is involved in?

We have developed three main activities: crisis management, infrastructure supply and land use management. Since 1947, Losberger has supplied the Army, the Air Force and the Navy for many projects which are dedicated to protecting human interests or equipment. We are a NATO, Army and Department of Homeland Security supplier. We have developed hygrometry-controlled shelters where we keep the humidity below 45% in order to prevent the aging of the equipment. We are very successful in this kind of special equipment because very few companies are able to produce the same results in terms of power consumption and protection.

Overall, French military contracts are decreasing which impacts our turnover, meaning we need to compensate. In 2008, we were at 8 million euros turnover and last year we achieved 32 million euros.

Previously, the entire Losberger Group had a turnover of 30 million euros which is today 140 million euros.

What kind of technology does Losberger RDS promote? How diverse are the company’s services?

With regards to the technology, the key word is “airtight” structures. Within these airtight structures we provide the dehumidifiers that we are able to control, thanks to a software we have developed to further regulate the humidity of the tents.

It is important to note that we are not simply a tents supplier; we provide the entire infrastructure.

Therefore, we supply air conditioners, beds, medical equipment, panels, ceiling, roof, hard floors and walls, lighting, and even internal furniture. We are in this way, a “one-stop shop” because it is more practical to provide all of the services rather than make clients sign many different contracts. Thus, we are able to supply a structure which can be based on our dual technology. Furthermore, we provide a wide variety of frame types: PVC, aluminum, composite, steel, hot-dip galvanized steel, etc. The structure of the tent is at the core of our business, but we go a step further and ask what will be the purpose of the structure? This was the case in Kabul where we built a mobile hospital and supplied all of the internal medical equipment, lighting, air conditioning, etc.

Consequently, for most of our projects, the tent only represents about 10-15% of the entire project.

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How is Losberger RDS able to provide such a wide variety of rapidly deployable products and services?

In order to provide all of these different products and services, we began using a turnkey operation system. We succeeded in partnering with companies which can provide added value. We have to provide such a system meaning that we use them as a partner and not as a subcontractor. Most of the time, even if we are not specialists, as in the case for air conditioning, we are able to supply the HVAC and keep the price as low as possible.

Another issue was that our clients do not wish to merely acquire our products. They also want logistics support to help in the setup and maintenance. In turn, we now have a worldwide maintenance team who is able to respond within 24 hours anywhere in the world. We have a base in Dubai and in Kosovo where we have made real partnerships in order to expand and to provide more services to our customers.

We are the lead contractors because we have a team that can respond on the ground. There are three projects that really show what we are capable of. First, when hurricane Sandy hit New York we were the first company to supply tents for the National Guard within eight hours. Second, when they had the blast one year ago in Brazzaville, we deployed tents to accommodate 1,000 people in a couple of days. And third, we built a mobile airport in Egypt ten years ago, which is still operating.

DEFENSE LEADERS • FRANCE 2013

With 40% of turnover in exports, in which external domains, both geographical and market-based, is Losberger RDS likely to expand?

First, nuclear, biological and chemical (NBC) decontamination and collective protection are two issues that preoccupy many countries in the Middle East right now. They are looking for investment. They want to be prepared in case of problems, and therefore they are looking for products that can be quickly deployed and which offer real protection.

In terms of geographical zones of interest, we are looking at South America and Africa. The Middle East is not new for us as we have been working there for many years.

We are also interested in the US. However, they have special legislation, for example, the Berry Amendment or the Buy American Act, which stipulate that if you are providing a tent, you may not be allowed to sell to the American army, navy or air force if the PVC is not manufactured in the US. This does not apply to the Department of Homeland Security. If you have a good product they will be interested. The Berry Amendment is currently stopping us from exporting more to the US. So, we have set up a production facility in Frederick, Maryland and we are expanding.

We also have production facilities in Shanghai, Germany, and Strasbourg in France.

We are a “one-stop shop� because it is more practical to provide all of the services in one contract.

PROTECTING Cilas Philippe Lugherini | President

FFProfile: CILAS offers laser designators and counter-snipers, optical sight systems detectors, rangefinders, airborne laser sources and shipborne helicopters landing aids. CILAS is a subsidiary of Areva at 37% and EADS Astrium at 63%.

FFYear of establishment: 1966 FFStaff: 145 FFTurnover 2012: €2 million FFGlobal presence: Turkey, UK, Singapore, UAE

Alyotech Jean-Claude Alaux | President

FFProfile: Alyotech France is specialized in client relations

and services in the aeronautic, space, and security sectors, representing 30% of the group’s annual revenue. Alyotech is also involved in the early stages of R&T in system development.

FFYear of establishment: 2005 FFStaff 2012: 1,870 FFTurnover 2012: €115 million

FFOutlook for 2013: CILAS will focus greater energy on its

activities for the Mégajoule program in the context of preparing a future nuclear test simulation. CILAS will work in collaboration with the French Alternative and Atomic Energy Commission (CEA) to develop a giant laser designed to provoke thermonuclear fusion. CILAS will personally manufacture the amplifiers for the beams that will be compressed into a confined space to allow for calculations for atomic bombs.

FFQuote for 2013: “We are endowed with very sophisti-

cated equipment, namely decontamination machines that clean the different components before they enter into ultra clean rooms where the fusion will take place. The laser plaques, one of two major components of the amplifiers, will be integrated in a ISO 4 environment.”

FFInternational presence: Netherlands, Canada, Belgium, Lebanon, India, Morocco

FFOutlook for 2013: Alyotech was chosen by the French

defense procurement agency (DGA) to develop a software simulator of the marine environment capable of performance evaluation on detection systems and radar reconnaissance.

Alyotech will thus be highly involved in working closely with Thales and Onera who will also be contributing to the simulator called MOFREM. Alyotech will have the opportunity to develop its high technology, R&D and product design capacities.

Radar and signal detection systems will become a new field of expertise for this high technology French group.

FFQuote for 2013: “The reassuring aspect of a project recognized in external growth is that it is a major tool for encouraging financing and new partners to join our group.”

Amphenol Socapex Luc Walter | President

FFProfile: Amphenol designs, manufactures, and markets

electrical, electronic, and fiber optic connectors, interconnect systems, and coaxial and specialty cables. Amphenol has a diversified presence as a leader in high-growth areas of the industry and provides solutions for customers in the automotive, broadband, industrial, information technology and data communications, military and aerospace, mobile devices, and mobile networks markets

FFYear of establishment: 1932 FFStaff: 460 FFTurnover 2012: €43 million

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FFGlobal presence: India, China, US FFOutlook for 2013: Amphenol Socapex is a technology

innovator whose expertise meets the increasing demands of high-technology products. Amphenol Socapex’s engineering team will design 3D CAD modelling, state-of-the-art electrical test equipment and environment test chambers, providing the design systems of tomorrow. The meeting in February 2013 between 30 managing directors of the American Amphenol located in Asia, America and Europe, demonstrates the importance the group will place on the site at Thyez, France in the future.

FFQuote for 2013: “This visit was the moment for them to

get to know the interconnected systems developed by Amphenol Socapex.”

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Alain Donzier Director General of Acoem Acoem is a company that specializes in smart monitoring and acoustics and vibrations expertise, notably in the military field. It became independent in 2011 after it broke away from Areva, and today counts 320 employees, a subsidiary in Brazil and several sales offices in Asia.

How is Acoem involved in the defense sector?

Our defense division represents 15 to 20% of our business. It offers effective solutions for monitoring, detecting and localizing of threats for the defense and civil protection sectors. We also work on defense projects in a broader context, but our services are more inclined towards consultancy on noise and vibrations for vehicle manufacturers and with regards to naval applications. In fact, Metravib was created at the end of the 1960s to work on making submarines quieter for the French Navy. Therefore, our initial years were spent on conducting studies on acoustics on behalf of the Navy. Consequently, much work was done on sound and vibration technologies, and when problems arose during the Balkans conflict in the 1990s, a new need arose within the French Armed Forces to be capable of detecting small-arms fire, which is fleeting and thus difficult to detect with conventional radars. Our expertise in acoustics allowed us to find a way to detect it.

We were also fortunate to come across and fulfill a need expressed by the American Special Forces, which meant important contracts with them. This allowed us to publicize our products and there is an unquestionable advantage to promoting products that have been tried and tested especially by the American forces. Today, some twenty countries use our firing detection products.

What is the accuracy of Acoem’s gun-firing detection solutions?

The distance of a shot, which can go up to over 2,000 meters, depends on the type of weapon.

The effective range of the weapon also depends on its power and thus the noise it makes. There is consequently a correlation between the effective range of the weapon and our ability to detect it. The accuracy will also depend on the type of product in place, but we can achieve accuracy of about one to two degrees. Atop a vehicle, the precision is more in the range of three to five degrees, since we have to take the vehicle’s movements in consideration.

Finally, on a miniaturized system like our latest PEARL System, accuracy is at 8-10 degrees, the decrease in performance due to the miniaturization.

direction from which a shot was fired. Therefore, when a shot is fired, the PEARL system detects it and guides the soldier in pointing his weapon in the direction from where the shot came from. This works for a handheld arm but the system can also be mounted on slightly heavier arms with a tripod.

The system is also compatible with sight. Indeed, we are in the process of finalizing the system’s interface with third-party (Thales, Sagem) arms with such visual displays, for infrared vision, for example.

We can therefore integrate the resulting product with the camera’s viewfinder that comes coupled with these weapons.

We were also fortunate to come across and fulfill a need expressed by the American Special Forces.

Turnover

What is the importance of innovation for a technology company like Acoem?

We spend around three million euros each year in R&D for the entire company, amounting to 7-8% of our turnover. We focus our R&D on innovative future solutions as well as development of a range of products for military applications. We must ensure product support to our clients for several years in order to increase scalability. At present, we are also working on miniaturization for both civil and military applications.

60%

of turnover from

exports

What is the PEARL system?

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Charles Laubie Chief Executive Officer of SEMA World Antiterrorism Safety Features Originally a manufacturer of military uniforms, Société d’Equipement Militaires et Administratifs (Sema) has diversified over its history to offer a comprehensive range of ballistic, chemical, biological and anti-explosive protection solutions. This innovative company was the first to offer a complete range of body armor in France and has developed innovative products like the Flight Bomb Killer (FBK).

To what extent is SEMA World's innovation capacity the key to its success?

We made a prototype, we started the production immediately, and then the whole world came to us.

Take the example of bulletproof vests for journalists. Previously, journalists sent to the frontlines very rarely wore bulletproof vests.

Sema had already equipped press agencies, but journalists had been shot at with AK47 rifles in Africa while wearing vests that would only protect them from handguns. Indeed, one needs rigid plate inserts in order to be protected from AK47, M16 or Famas rifles. We have therefore developed specific vests for the press with rigid protection derived from our experience with the Special Forces, that were lighter than what was on the market and were suited to their professional needs; they must be able to carry cassettes, videos and press IDs with them.

In 2001, a journalist from a major TV channel was shot at in Ramallah in front of international media and was not injured. Journalists took a look at our bulletproof vest, which weighed 7 kilograms while they were usually wearing military jackets that weighed 14 kilograms. Word-of-mouth soon had all journalists flocking to us. We continue to innovate in this segment and have developed female vest models, something we had already done for the French police since their first female models had been designed by us.

attack through the use of anthrax letters. During the weekend, we thought of a solution and on Monday morning we had defined the product that was to be manufactured on the very same day, in the afternoon.

On that same afternoon, we filed patents and the following morning, we presented the prototype to our clients. This product is called Bio Bag and has been developed against bio-chemical terrorism.

Many people work with mail such as ministries, embassies, parliaments or media companies.

Before our Bio Bag, it was necessary to send any suspicious package to the lab and wait several days for the results. The anthrax letters killed five people in the United States in 2001. This attack cost the American Senate more than 20 million dollars and decontamination lasted six months for three offices.

With our device, people could open their mail safely.

If there was a problem, they just turned the bag over and there was no contamination of people or of the premises.

How has 9/11 affected Sema’s strategy?

9/11 was a psychological shock because everyone thought they were safe until it happened.

This new approach, "hyper-terrorism", has led to a new generation of threats. In France, for example, very few people are familiar with explosives and what they can do – perhaps a dozen people in the country. Yet, we now find on the internet manuals to make bombs that are less accurate and less powerful. After the 9/11 attacks, we had several bombs, several attacks at the same place. We saw that in Turkey, Spain, in London, Casablanca and Bali. Somehow, the "business model" of terrorism is to put several bombs in the same place in order to move people and bring them to another bomb.

In the end, mindsets evolved after the 9/11 attacks.

People are now aware that terrorism can strike at any moment and anywhere.

What other emerging threats has Sema identified and how is it responding to them?

We have seen, for example, the first anthrax

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What lessons did Sema learn from such experiences?

We see that in times of crisis we need a solution right away, when people need it. It is a matter of civic spirit. If we go back to October 2001 and the anthrax problem, which arose in the whole world, we presented our "Bio Bag" and immediately, people who knew us because of our body armors wanted to be equipped. We made a prototype, we started the production immediately and then, the whole world came to us, since the threat was everywhere. The importance of being responsive in times of crisis is one of our core strengths. To be this responsive it is necessary to master the technology, the skills, to have the means of production and a team that is totally committed to the project.

Where does Sema find inspiration to offer innovative solutions that respond to people’s needs ?

I find inspiration in observing nature. Looking at things as they occur in nature brings the efficiency level to its best. For example, for our Ground Bomb Killer (GBK) and Flight Bomb Killer (FBK), we were inspired by the pressure cooker! There have been accidents in the kitchen because people are cooking something in a pot, and the valve stops. And at that moment, it becomes a bomb with fragments everywhere. There was no question of using metal, and equipment that already existed were antibomb

blankets that could cover suspicious packages.

But when exploding the bomb raises the blanket, spreading horizontal fragmentation, only the ceilings were protected. People are not on the ceiling but on the sides. So, we protected the sides since the floor and ceiling were of lesser importance. We invented the GBK, the circular ring that is placed around the object without touching it. It allows a reduction of security perimeters and, since its insides are made of fibers, X-Ray controls are possible. In 2002, we developed the GBK and the FBK that were presented for the first time in Rome during the first organized IATA AVSEC after 9/11. Nobody had ever seen a device that could explode in an airplane without damage and how a suspect bag could be handled in an airport.

Weight

of journalist

bulletproof jacket

Nobody had ever seen a device that could explode in an airplane without damage.

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PROTECTING RDS Industries Herle Kaigre | Managing Director

FFProfile: With over 20 years of experience, RDS Industry is

the leading French creator of mufflers and silencers for professional military or civilian use. Its products can be used on the entire range of small arms and light weapons, from handguns and rifles to machine gun.

FFYear of establishment: 2008

PGM Precision F. Brion | CEO

FFProfile: A SOHO, PGM Precision specializes in the development and production of high-precision rifles for the military and police. It is an official supplier to the French Army as well as other French and foreign security services including the Swiss, Saudi, Slovenian and Lithuanian armies.

FFYear of establishment: 1991

Protecop Pascale le Carpentier de Leusse | President

FFProfile: Protecop conceptualizes, designs, manufactures

and provides individual and defensive equipment for crisis situations, for law enforcement, intervention forces (e.g. peacekeeping equipment) and ballistic protection (e.g. it is partner with Safran-Sagem for the FELIN program). It has equipped French public security services as well as foreign clients in more than 60 countries.

Groupe Marck Laurent Marck | CEO

FFProfile: Groupe Marck is an industrial French familial group

that designs, manufactures and sells a complete range of uniform, accessories and equipment for public authorities, armies and companies worldwide. It has seven manufacturing units in France and two abroad. It is also engaged in sustainable development processes.

FFYear of establishment: 1850 FFGlobal presence: 2 manufacturing sites in China and Tunisia

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FFTurnover 2012: €205,708 FFProducts: Vortex Silencer Series; the AR-15 Carbine, a

semi-automatic for subsonic firing, for intervention specialists; tactical accessories and ergonomics; stocks; detachable magazines.

FFQuote for 2013: “RDS Industry believes in protection

against acoustic trauma while taking into account the operational and tactical advantages of our products.”

FFStaff: > 10 FFTurnover 2012: €1.6 billion FFProducts: The company exclusively designs and manufactures: the ULTIMA RATIO rifles; HECATE II rifles; and PGM 338 rifles. It also makes tactical accessories for its entire product range.

FF Quote for 2013: "Our privileged relations with the best

partners allow us to provide our clients comprehensive, ready-to-use products.”

FFYear of establishment: 1982 FFTurnover 2011: €11 million FFOutlook for 2013: Protecop wishes to establish an inter-

national standard that its products will meet. Its R&D department is working with Laboratory of Biomechanics and Impact Mechanics to better levels of resistance of its products. It is equally advancing the creation of a new French standard for trauma.

FFQuote for 2013: “The company is able to offer original products ahead of competition.”

FFStaff 2012: 495 FFTurnover 2012: €120 million FFSubsidiaries: La Calaisienne; Marck; BBA; Sillinger; Sofexi; Balsan; VTN; Andor Star; Promo Collectives.

FFOutlook for 2013: With a recent takeover of Fasia Industries, the Groupe Marck is well on its way to becoming the French leader in uniforms. It also gains further capacity to compete globally. It will work towards its goal of achieving a turnover of over €150 million by 2015.

FFQuote for 2013: “Groupe Marck offers comprehensive

services in tune with expectations of demanding and prestigious clients worldwide.”

DEFENSE LEADERS • FRANCE 2013

PROTECTING

Hervé Maugeais Sales Director of Dirickx Group Dirickx Group’s core business is devoted to perimeter site safety and integration of security solutions for sensitive sites. The group’s capital is 100% French private owned. Dirickx Group operates in eight countries worldwide, with 850 employees bringing in a turnover of 141 million euros.

What characterizes Dirickx Group’s business strategy?

What impact have new asymmetric threats and actors had on security needs?

Our strategy is based on three platforms for development. The first one is international: our ambition is to double our turnover on the international stage in the coming three years. The second platform is innovation because we know that this is an important area to develop in order to remain a leader in our core products as well as in product safety. The third platform is the development of security in our group.

We see security needs in market segments that previously were less concerned about security. Today in the military domain there is a strong awareness of the need for greater safety and security for sites that are increasingly technological and that use configurable software solutions that are both open and secure. We are in the process of strengthening the Easy-detect system with Wi-MESH (wireless mesh radio network) for secure long distance transmission.

Dirickx Group is comprised of four companies in France that compose the elements of this offer.

First, Dirickx ProSeDe provides both the integration of sensitive sites with a specialized cell (Dirickx Security) and the design and implementation of solutions for active and intelligent detection.

Second, Dirickx Industries is in charge of the design, manufacture and distribution of physical and perimeter products. Third, Dirickx Espace Protect is responsible for the installation of perimeter protection solutions. Finally, Dirickx Services handles the commissioning of automatic solutions, access control and site maintenance.

What makes Dirickx Group’s products unique?

As opposed to other groups, we are able to carry out the design of the solution, the installation, and the maintenance. We control the project from start to finish. We provide a single contact with one company and provide a complete service guaranteeing our commitment in terms of performance. This distinguishes us from our competitors because many are specialized in specific parts of integration.

Our most successful product is Easy-detect, a detection solution produced in a light version for small sites and long distance solution for sensitive sites. Easy-detect is an autonomous system, meaning that there is no need for electrical cables to power long perimeters. It is resilient because it operates in a network so that each sensor has an address that allows you to see the zoning area in which there was an alarm. Easy-detect is flexible and open, allowing for interconnection with existing systems like alarm centers and video recording; it also has its own PC supervisory system.

Another phenomenon is that these technologies are now more affordable for industrial actors more civilian in nature insecure over theft of raw materials.

Today, the Dirickx Group has large customers such as the French national railway company (SNCF) was very interested in increasing security measures after being confronted with cable theft for copper raw materials. It also wanted to strengthened security to eliminate service disruption; they can be targeted by protesters or as an act of terrorism.

In which geographic markets is Dirickx Group active today?

We are now focused on the Middle East with the new Turkish joint venture we have undertaken. Turkey is a very dynamic market with strong growth and very important national issues in the coming years concerning infrastructure including the Bosphorus tunnel and the a national communication channel project for trains. We are not only targeting perimeter fencing, but also the safety market. The market was easily accessible with a complementary industrial partner. Already a raw materials supplier to Dirickx Group, and already developing security projects, we both wanted to save time in development by combining forces. Turkey represents a springboard into the Middle East. In this way, the joint venture works as a development base with close cultural links and exportation projects in place.

THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

Turkey represents a springboard into the Middle East. In this way, the joint venture works as a development base with close cultural links and exportation projects already in place.

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PROTECTING

Eric Thord Director General of Sorhea Sorhea, created in 1987 by Yves Monneret, expanded from the infrared market to other technologies from 2000 onward. Today Sorhea offers a wide range of periphery protection solutions through the integration of infrared and high frequency technologies which it seeks to export.

The major difficulty of perimeter control stems from the fact that the electronics are external, subject to wind and rain.

What is the importance of technological innovation in maintaining Sorhea’s competitive edge?

Over the past four years, Sorhea’s strategy has put emphasis on R&D by creating an entire design and research office in order to develop our own solutions, including thermal cameras.

We have created a range of all technologies used in perimeter protection. The goal is to make all of these technologies ourselves and to centralize all the information from these technologies in a hub that we call a “concentrator”. From this hub we send a unique signal to the control computer that then manages the response. We have drawn from our past experiences in perimeter protection since we know our clients’ need. They want very reliable products that are easily managed on-site. The major difficulty of perimeter control stems from the fact that the electronics are external, subject to wind and rain. As a result, we have decided to make our products more trustworthy. Today, we reinvest 8% of our revenues in R&D, a considerable amount, and we develop easily installable products that are reliable. To greater simplify installation, we decided to concentrate all of our alarms in one place.

Is there no risk in centralizing all of the alarms in a single hub?

second, the G-fence, which is completely solarpowered and can be easily installed. These two products have been very successful in France as well as internationally.

In what way do new asymmetric threats redefine security needs?

Threatening actors are much more creative than we would like to think. We now realize that one technology is not enough to protect a site. It is necessary to use a mix of technologies. Video capability is a very important aspect of perimeter security and security in general. Although video will never replace perimeter detection, it can be a useful compliment. Until recently, perimeter detection was based on sensors which sounded an alarm but provided no images. The video allows us to show and confirm the source of the intrusion. Our challenge is to make the products more interoperable in order to integrate our alarm signals, removing any doubt through video transmission. This is necessary in responding to new threats such as espionage, terrorism, and environmental extremists. The answer lies in having technologies connected to the video feed in order to provide an image and to allow for rapid evaluation of the risk and measured response.

We can double the security by installing two concentrators in the same location in case one concentrator is disabled. Next, the alarm central is vulnerable to IP connection and can thus be hacked.

For sensitive sites, the system can be designed separately from the Internet, kept internal and managed on a closed system. But this is not our decision to make.

Which of Sorhea's innovations has seen a particularly strong success?

8%

R&D

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We have developed our own cable end equipped with a special sensor technology that we recently released in string form. The second innovative product is a unique solar-powered infrared barrier that is entirely autonomous. We redesigned the product in order to reduce energy consumption so that the smallest solar panel will be able to run the entire system with the aid of a battery. This is a first for this kind of technology. Therefore, we have two products: first, Solaris which is entirely radiocontrolled and requires no civil engineering, and DEFENSE LEADERS • FRANCE 2013

PROTECTING

Francis Bensoussan President of Alcea Created in 1995, Alcea has broadened its scope from automated building systems to access control. It has equipped more than 4,500 sites around the world, including in Saudi Arabia, the UK and Qatar, and is today a leading French company dealing in security systems and access control. It aims to double its export turnover in the coming years.

What are the specificities of the approach used

by Alcea in this sector?

Alcea functions in its own particular manner. We conceptualise the equipment, therefore we make products. However, we are not simple “providers”; while we leave the actual installation to the installer, the entire development, implementation and often system maintenance is done by Alcea. We also do remote maintenance. Everything is managed and secured from our headquarters, including backup of client data. We can restore a system when it is down, and we can do so immediately regardless of whether the requirement is in France or abroad. For example, we equip oil rigs in the Antilles, and we often have engineers fly out at night so as to be able to work on them the next morning. Failures may occur, as they can everywhere, but we have very reliable hardware.

The problems are often linked to human error.

What would be an effective security system?

Security is a suitable mix of architectural design and intelligence. It is a system adapted to a site and a security architecture that enables the product’s use at any given time. There is a lot of intelligence and training behind the system. A security strategy needs to be put in place at a site and the people who are doing the work need to have been seriously trained. France has considerably advanced in this respect, but in other countries, there is still progress to be made. Having money and technology is not enough. In many countries, there is plenty of money and security systems, but no security in practice.

Security is a full-time job. Setting up 300 cameras in a parking lot alone does not secure it. You need to know how to handle the system.

With regards to how to approach security, what kind of progress needs to be made in France?

For many years in France, there was a distinction between electronic and human security. In the past two or three years, under pressure from certain individuals, including me, we have encouraged the idea that these two are not mutually exclusive but go hand in hand. Professionals specialized in human security are opening departments of electronic security, realizing that intelligent security is a mix of both. Today, we are confident about systems that are efficient, but we will regularly discover and introduce new ones. However, we will not be able to do so without the humans behind these machines. While

a system will detect an error or an intrusion, humans will always be needed to go see what is happening, dispel doubts, observe and reflect. The system will never do so in our place. Regardless of advances in the realm of artificial intelligence, at the end, we will need humans to finalize decisions. Therefore, the best security will come from an electronic and human security mix. It is on this point we need to move forward.

Security is the suitable mix of architecture and intelligence.

Turnover

Why open a subsidiary in Qatar?

Firstly, Qatar is one of the biggest gas producers in the world with one of the highest levels of purchasing power. It is a country that is making itself known to the world in an intelligent manner, like its successful bid for an upcoming FIFA World Cup. But we created Alcea Qatar well before it won the bid.

Moreover, there is a positive attitude in Qatar, people listen, and have a desire to progress, even if not everything is perfect. This is a very liberal country, where it is easy to work when you have a Qatari sponsor. This is the business model used throughout the Gulf. Alcea is sponsored by a member of the royal Al Thani family. But it is a healthy undertaking to try to conduct business in the most consistent manner possible, since Alcea does not function in any other way.

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11% R&D

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France: Protecting its Borders Border protection is at the heart of a state’s internal security. Alain Bianchi, former director of the Border Police of the second airport in Paris, explains how France protects its borders.

In Europe, the concept of state boundaries has continuously evolved over the centuries – according to state constitutions, their hegemonic appetites or, instead, their desire to strengthen their borders. After a relative relaxation of borders during the 19th century, the First World War resulted in a marked tightening of frontier controls in Europe, with, as a corollary, the introduction of passports, to control emigration of their national citizens as well as the immigration of foreigners. Simultaneously, the European borders that were until now easily crossed became obstacles, guarded barriers protected by the state who armed itself with entire administrative and technical arsenals in order to enhance border controls.

In France, the border police was first a subdirectorate of Central Directorate of General Intelligence (RG), successor of the railroad police created in 1845. RG became autonomous in 1973 and was named the Air and Border Police (SPAF). This service became a full-fledged directorate in 1994 and was renamed Central Directorate of Border Police (DCPAF).

Set up on the external borders of the country (maritime, land and air), the PAF ensures control of entry and exit of people, whereas the customs is in charge of controlling movement of goods.

The police force is also present throughout the country, regularly conducting inspections of establishments likely to employ illegal immigrants.

However, the rationale behind border control has undergone a sea change since the adoption of the 1990 Schengen Agreement and the ratification of the convention implementing it in 1995. The Schengen Agreement dates back to the early 1990s, when the European economy was booming and intra-European travel was rapidly growing. European leaders had agreed that the model of control of borders inherited from the two World Wars reflecting a deep mistrust in relations with each other – as evidenced by the trucks standing in interminable queues at each border crossing – had become obsolete.

contradictory requirements were fulfilled with the signing of the Schengen Agreement between France, Germany and the three Benelux nations in June 1990, which entered into force in March 1995. By this time, other countries had joined the Schengen area (Spain, Portugal); the area today includes 26 countries, not all of whom are members of the European Union (Switzerland, Finland, Norway and Liechtenstein are members whereas the UK and Ireland remained outside).

In light of the agreement, the original countries behind the initiative conceived the idea to place border controls along the external boundaries of the Schengen area in order to facilitate the movement of people within.

The European political context during the 1990s rendered this a feasible and realistic option, since the eastern frontier of the Schengen area was along the Iron Curtain, thus guaranteeing impenetrability. A number of measures were put into place alongside, with the aim of ensuring control of immigration flows and threat of terrorism: random checks; mixed teams working on both sides of a common border; right of pursuit; right of observation; the Schengen Information System and so on.

Consequently, while previously each country’s police force exercised independent control of its respective borders, it now took into account the interests of other member states in the Schengen area.

The introduction of biometrics in passports and visas is overall an advantage in the field.

The Schengen Agreement and European border cooperation

With the customs union and the single market having radically transformed economic relations, it was necessary to find a way to relax internal border controls in Western Europe without weakening the monitoring, and in turn control, of immigration. These two seemingly

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DEFENSE LEADERS • FRANCE 2013

PROTECTING France has the advantage of having mainland borders that are natural barriers which ensure effective control of its external Schengen borders.

Tools facilitating this collaboration were developed, such as the Schengen Information System, which has remained more or less unchanged despite a natural evolution since its inception in 1995.

When a PAF policeman is conducting a passport check at the border, he checks with the Fichier des Personnes RecherchĂŠes (FPR; Wanted Persons File), an exclusively national file only containing reports issued by France. At the same time, the query software runs through the N-SIS, a database with reports from all the member countries. The system is updated very rapidly; this allowed, for example, the PAF at the Orly airport to stop, only hours after the incident, the perpetrator of a murder committed in the Netherlands as he was about to board a flight to Guyana, from where he would have had little difficulty in reaching his home country, Suriname.

FRONTEX: a European agency established in 2004

Cooperation in the field of immigration has been enriched with the setting up of a new organization, FROTNEX, in 2004, the European agency of external borders of the member states of the European Union, headquartered at Warsaw.

Its mission is to streamline operational cooperation between member states with regards to management of the external territorial lines through assistance to member states for the training of their border guards.

It also evaluates risks in real-time and pursues evolution of research in the field of monitoring and control of external borders. If necessary, FRONTEX can assist member states in circumstances where they require increased technical and operational assistance at their external borders, and also provides them with necessary support in organizing joint return operations. Finally, it is responsible for deploying Rapid Border Intervention Teams (RABIT) in member states facing urgent and exceptional situations resulting from a mass influx of illegal immigrants, for example.

European cooperation to control illegal immigration is constantly evolving. The most recent instrument to this effect is the European Visa Identification System (SIV), operational since 2011.

Currently in the process of being implemented (the first targeted geographic region is Africa), SIV should eventually allow for a more effective management of the 13 million visas issued every year by the 25 countries party to the Schengen area.

France: a unique case

France has the advantage of having mainland borders that are natural barriers (mountains, oceans, seas, rivers). This ensures effective control of its external Schengen borders, namely its ports and airports.

The main difficulty corresponds to the overseas departments facing heavy migrant inflows (from Haiti towards the Antilles; from surrounding nations towards Guyana and Mayotte).

There are several difficulties in monitoring our overseas territorial borders. Mayotte, for example, the sole island in the Comoros archipelago that chose to become part of THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

France, faces multiple daily docking attempts of makeshift boats called "Kwaassa-kwassas", overcrowded with prospective illegal migrants working their way towards France. These vessels are very fast and lie low on the water and thus elude the surveillance system in place all too often, despite the system being constantly upgraded.

Anxious to ensure its continued effectiveness in the Schengen area, France has consequently excluded its overseas territories and departments from its scope of responsibility.

However, contrary to those who advocate the closing of internal borders, the migratory pressure on France remains stable, from year to year, and is close to the European average. It is naturally impossible to accurately estimate the number of illegal migrants in the country.

Moreover, the situation is not comparable to the metropolitan France or the most affected overseas departments (Guyane, Guadeloupe, Mayotte). In the case that disturbances to public peace and order are due to the presence of illegal immigrants in these latter regions, it is very much constrained geographically. Indeed, the proficiency of controls at our airports renders attempts to enter the mainland via these overseas departments very risky.

Close to about 17,000 foreigners are held in transit at airports and city ports, of which more than 90% are at the Roissy Airport.

This figure reflects a genuine effectiveness of control measures, increasingly automated. The introduction of biometric visas has significantly reduced the possibility of "DIY fraud".

The introduction of biometrics in passports and visas is overall an advantage in the field. It must not however be forgotten that this greater security of travel documents has as corollary a greater difficulty in detecting identity theft, no longer limited to forging visas or passports but getting them through falsified or counterfeit documents. A false identity supported by authentic biometric documents is almost impossible to detect, since the falsification relates to the identity itself and not the travel document; PAF document fraud experts, while recognized for their expertise, therefore remain powerless.

Illegal immigration observed in France is the result, in most cases, of a legal situation becoming illegal: the immigrant enters the country through a short-term visa and stays on illegally. It is due to systematic search and monitoring of likely host areas that illegal immigrants are caught. They are then placed in the administrative detention center pending expulsion to their country of origin. In 2012, nearly 37,000 foreigners illegally staying on in France were deported. While such cases are closely monitored by all successive Interior Ministries, the figure is steadily increasing.

There exists yet another facet of illegal immigration that France alone cannot tackle: the illegal immigration of citizens from Asian countries (mainly China, Sri Lanka, Cambodia and Vietnam, among others) who use the socalled "Balkans route" and enter Europe through Greece via Turkey. Only consistent efforts at the European level can stem the ever-increasing flow, currently very difficult to curb.

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PROTECTING Prefect Rémi Thuau CEO and Chairman of Civi.Pol Conseil Civi.Pol Conseil is the consulting and service company of the French Ministry of the Interior, offering consulting, audit, technical support and training services in the areas of homeland security, civil protection and territorial administration. Civi.Pol Conseil is also the principal shareholder of Milipol, the number international exhibition of internal state security that also promotes the expertise of the Ministry of the Interior.

What are Civi.Pol Conseil’s main activities and areas of expertise?

Our four main client groups are the French Ministry of the Interior, the European Union, foreign governments and French companies who are active abroad.

First, concerning its work for the Ministry of the Interior, Civi.Pol Conseil carries out international cooperation projects in its name and on its behalf, managing all or part of each project.

Civi.Pol Conseil covers all of the fields of the Ministry of the Interior, from basic policing to the most sophisticated tasks like the protection of highprofile personalities, projects for institutions like the elite French police force known as RAID (Research, Assistance, Intervention, Deterrence), combating drug trafficking, counterterrorism, etc. We also work in the field of civil security providing training in risk management and risk prevention. In all of these areas, our job is to contribute to the project as the assembler, manager and provider of different specialties.

The European Union has become a very important client, for whom we carry out many projects under tender offers. Civi.Pol Conseil is a mandated and recognized consultant for European Commissionfinanced cooperation programmes, notably in the area of justice, freedom and security. We often apply to offers as a leader of a consortium, which brings together a number of other actors (public and/or private, French and/or European).

The third client group is foreign governments to whom we sell our services directly. In this regard, we carry out projects that are either financed directly by those governments or that receive funding from French sources or international institutions such as the European Commission, the World Bank, the United Nations and NATO.

Our job is to contribute to the project as the assembler, manager and provider of different specialties.

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Finally, we provide security in sensitive countries for French companies located internationally.

Civi.Pol Conseil supports the international development of French companies by combining its expertise with their export offers or by helping them safeguard operations in regions experiencing social and political instability, terrorism, high crime, health risks and other security issues.

Finally, our company also works with other French ministries and agencies, such as the Ministry of Foreign Affairs, the Department of Immigration and the Inter-ministerial Mission Against Drug Abuse (MILDT).

Concerning the content of our activities, we are active in all of the areas of expertise of the Ministry of the Interior. We select experts who are either on active duty at the Ministry or young, highly regarded retirees who continue to have the ability to work internationally.

A number of our activities pertain to the organization of training, for example we are contributing to the creation of a police academy, which is a long-term project. Our experts also support and help trained professionals in carrying out their missions. For instance, we have begun a pilot police station in one country where we now need trained personnel with well-defined requirements for equipment, tools, etc.

Are law enforcement and counterterrorism still the main fields in which Civi.Pol Conseil is most well-known internationally?

We work in the field of counterterrorism in sensitive zones. However, we do not publicize our work because it is a complicated and sensitive world where we do not want to expose our operations to information leaks. I can nevertheless say that we are very present in the Sahel countries with projects launched by the European Commission.

As for law enforcement, it is a long-standing company tradition. Our law enforcement service covers three branches consisting of major events management, command of security and intervention platoons and “democratic management of crowds”. This recently created concept, which is a softer term than law enforcement, consists in taking into consideration the right to assemble and the respect of human life, while maintaining order and reaffirming the authority of the state. There are different techniques to this end, and it is an area of expertise that we are developing.

DEFENSE LEADERS • FRANCE 2013

PROTECTING

In which geographical zones is Civi.Pol Conseil most present today?

First, we are very active in the Mediterranean region. For example, in 2011 we began a pilot program called Euromed Police III, which aims at facilitating police cooperation between countries of the Euro-Mediterranean partnership in the fight against organized crime, human, drug and weapon trafficking, terrorism, as well as money laundering.

We also intervene in many African countries, especially in the Sahel region, where we continue to develop our activities.

In Eastern Europe, Civi.Pol Conseil used to work a great deal with the countries that were taken in through the enlargement of the European Union, especially in the fields of fund management and capacity building. Today, we are still present in the Caucasus and beyond the borders of the European Union in various countries such as Moldavia and Ukraine.

On the whole, we intervene very little in Asia, but last year we began two police training and risk and civilian management programs in China, also financed by the European Union. We play the role of manager of the consortium partners and manager of these two programs for logistics, financing etc.

Entering the Latin American market had been a matter of reflection in the past, but it was concluded that we did not have the critical mass nor the prospect of making significant progress in markets where we do not have any existing setup or means of entry. The market is dominated by the Hispanic world and the Americans. In reality, it seems that there are more opportunities there for the French than we had imagined, and we have therefore seized several opportunities and begun exploratory missions in that zone.

Finally, there are two areas in which we are working to develop our expertise outside of our traditional fields. First, information systems or

cybersecurity is one of the subjects where we can increase our contribution, bearing in mind that we are not information system specialists. However, cybersecurity is a field in which there is already a lot of competition, and we want to be sure we have found the right niche before engaging in it.

The second field is linked to immigration and civil register, which is related to information systems.

We are currently in charge of restructuring the government records system of Cameroon. This is a service that was bought by Cameroon in order to define a legal framework and structure the administration in charge of the framework. And we have to do so with technological tools necessary today and adapted to the needs of the country

What is the mission of the Milipol exhibition?

Milipol is the number one international exhibition of internal State security. Each new edition, the exhibition seeks to improve and provide an even better service to the companies and government departments responsible for the safety and security of people and assets. In 2011, Milipol counted 887 exhibitors, two thirds of which are based outside France. The numbers demonstrate that Milipol is not just a French event. We welcomed 110 delegations from 59 countries in 2011 thanks to the patronage of the Ministry of the Interior.

What are the factors that will contribute most to Milipol’s success this year?

Milipol will be a success if our attendance grows in comparison to 2011. It is important to have a growing number of exhibitors and visitors but also international delegations. The international delegations need to be present, and we will foster the relationship they create with all of the exhibitors under the best conditions possible. Furthermore, Milipol will be a success if we continue to develop the opportunities for exhibitors to meet with potential clients.

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Morpho 2010 Headquarters: Paris Staff: 7,200 Established:

Turnover 2012:

85

More than subsidiaries and branches in over countries

Morpho, a subsidiary of Safran Group, is a high-technology company that is a market leader in security solutions and has seen its integrated systems deployed in more than 100 countries. The company, created in 1982, was merged into Sagem in 1993; in 2007, Sagem Security was established, under Safran, which was renamed Morpho in 2010. The company is a pioneer in identification and detection systems, No.1 worldwide in ID documents integrating biometrics (since its buyout of the American L1) as well as in trace equipment, to name a few achievements. It is also a major player in e-documents. The company uses technologies such as secure data processing, smart cards, secure printing, cryptography, X-Ray, tomography, and mass spectrometry. It has greatly expanded its global presence, and is today found across five continents. For instance, it recently created a subsidiary in Chile after receiving a major contract for the production of identity cards and electronic passports.

Morpho is organized in three divisions. Its Identification division offers identification products and solutions for the use by governments, national agencies and administrations for law enforcement and criminal justice, civil identity management, border control, road safety, secure biometric access and gaming and betting purposes. These solutions also serve private companies who require secure physical or logical access control.

Morpho boasts of more than 35 years of experience in biometric innovation, which has led it to become the world leader in automated fingerprint identification systems. Given its prowess in the field, it has equipped more than 450 government agencies worldwide.

Its eDocuments division takes advantage of unbound mobile communications to offer integrated digital security. It fulfills requirements for blank and personalized documents (i.e. cards, secure token, passports, inlays or modules) across all market sectors. Its services include hardware, software, consulting and services; all of these are focused on Smart Cards for the benefit

Jean-Paul Jainsky, CEO

Our global development strategy is based on a dual objective: to offer 138 138

â‚Ź1.4 billion 40

8% of annual turnover invested in R&D

of consumers and providers in the telecommunications, health, identification and banking sectors. It is one of the world’s leading companies for SIM cards and produces over 600 million cards every year.

Its third division, Detection, deals with protection of people and property in core and sensitive locations. Its customers include governments, militaries and other high-risk organizations for a variety of purposes including air and ground transportation, first responder and critical infrastructure. Morpho has over 20 years of experience in dealing with advanced technology aviation security solutions, and is thus today No.1 globally in explosive detection systems for hold baggage. Moreover, over 22,000 of its trace explosive and narcotics detection systems have been deployed worldwide. CBRN detection solutions are also available, as are cost-effective X-Ray solutions for screening and other business applications.

Given the nature of its products and services, an ever-advancing technology is necessary. Its R&D department is thus of particular importance. For example, Morpho is the project coordinator for the European Turbine (TrUsted Revocable Biometric IdeNtities) project, focusing on the study of biometric identity and pseudo-identity with a primary objective to reinforce respect for privacy through fingerprint authentication. Another example is the Fast and trusted Identity Delivery and ePassport check leveraging Traveler Privacy (Fidelity), a large-scale integrated project involving 19 European partners. A third example is the eID, a digital identity solution to prevent online fraud.

Between 2010 and 2014, the market for identity security solutions is to grow between 4.3 and 6.7 billion euros; Morpho will play a central role in this growth.

products on the international market while maintaining a local presence in order to better meet the needs of clients who entrust us with sensitive data.

The challenge is to secure the identity assigning system while at the same time securing the data and documents contained within.

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Arnaud Dessenne Chairman of Erys Group In face of proliferation and diversification of security services in France, the founders of the Erys Group decided in 2010 to focus on specific activities related to operational support and security. This approach has proven to be extremely pertinent and effective given the rapid growth of Erys.

What explains the great success the Erys Group has achieved?

Our success is due to the fact that we were not a new entity per se, given that the heads of the company are clearly known in the sector. We were legitimate, but we came with a new offer, a new structure and a completely new approach responding more closely to client expectations. We propose tailored solutions adapted to the needs of each individual client. We believe that each customer has a unique security culture with particular needs and imperatives. We therefore respond to this demand and our size allows us to do so in an extremely precise manner.

At present, there is no French citizen belonging to French defense and security services market that is participating in such an activity. The law has no direct impact on arming our personnel since it does not prohibit us from buying, holding or carrying weapons but rather acts as a general legal framework. Unlike the UK, in France there exists no legal authorisation for acquisition, possession and transport of weapons for the defense and security services market.

How is the private security market evolving at the French and global levels?

Having local staff allows us to better understand the security situation.

It is a market that will grow as all indicators are showing. In fact, a recently published survey shows that French citizens recognize the growing importance of the security market in the future. In the French market, we will invariably see mergers since it is still too fragmented. What is more, these groupings will be indispensable in the bid to impose a French brand, a French touch in the global market.

The more the French market will consolidate, the more we will have the capacity to face our AngloSaxon competitors, knowing there is a real demand and interest for the French approach by foreign countries. Our biggest clients, for example, are Brazilians and Americans.

What are the specific problems related to the French approach to security?

What is the Group's international development strategy?

We are still somewhat behind the Anglo-Saxon world, particularly in the following case: when a company with an English mindset initiates a project, wherever it may be in the world, it will integrate a security budget from the get-go. In France, it is only once a company has won a contract and has to implement it that it starts to think about eventual security needs. It is a cultural problem since in France the function of security is still considered more a cost than a profit generator. In the AngloSaxon world, it is the opposite: security is considered as an indispensable parameter that contributes to profit.

Our international strategy is to set up by ourselves and through local partnerships in order to respond, as closely as possible, to the needs of the client.

Having local staff allows us to better understand the security situation rather than having a support mission with French personnel who may not necessarily be aware of the local context. Once again, it is because of this kind of personalized approach that we are able to propose customized solutions. It is principally for this reason that we were the first and only ones to go to Mali in January 2012, a few months before the coup, and that we are still very active there given a return of French investments in Mali. We are also very active in Libya.

Is there a legal problem notably with respect to the law passed in 2003?

In France the function of security is still considered more of a cost than a profit generator.

This law is a red herring; it oversees the activities of mercenaries. Today, no French enterprise comes under this law. The law prohibits participation of French citizens fighting for the benefit of third states.

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Alexandre Hollander CEO of Amarante International Amarante International, created in 2007 by Pierre Antoine Lorenzi and Alexandre Hollander, has aimed to become the qualitative reference in the French security and defense services market (ESSD) since their first contract protecting the Ariane space launchers. Today the company operates 17 subsidiaries worldwide.

What are the defining features of Amarante International in the ESSD market?

What are the main differences between the French and Anglo-Saxon approaches to ESSD?

We have focused our entire development strategy on the quality of products and of services that we provide for our partners in the way of security. It seems that today Amarante benefits from a very good image that we are working to maintain. This reputation is largely thanks to our teams. We have one of the most qualitative manager pools in Paris.

We cover extremely varied domains of expertise, with people who have a strong operational legitimacy and a very good knowledge of the private sector, of its expectations and its demands. Moreover, we pay particular attention to the recruitment of the people that we hire and who we select through a process that is extremely rigorous. This allows us to deliver high quality products, benefit from partner confidence and to be able to propose interesting positions to people who typically come from the military domain with strong operational experience.

We thus rely on the virtuous circle comprised at the same time of our Parisian team and our experts that we send on the ground.

We have a strong integration appeal and are able to take into consideration the reality on the ground of the operational solutions that we conceive. The solutions that we propose are in this way adapted systematically to the environment in which we are located. Our French culture allows us without a doubt to avoid processes that are too rigid, and thus, we are capable of adapting to situations and environments as well as to the expectations and needs of our partners. I insist also on our ability to evolve intelligently with the security forces of the country. This is the great strength of the French approach which is visible today in Mali. The French Army has succeeded in bringing together the troops from all African armies and to make sure that their concerted efforts are a success. The French are thus capable of leading operations in close cooperation with local authorities which is an area in which Anglo-Saxons sometimes face difficulties. This ability to listen, integrate, understand and cooperate is, in my opinion, a strength of our armies and of the French model. Applied to the private sector, this approach allows for highly sustainable solutions which in themselves facilitate local technical development, training, and sharing of expertise with local personnel. For example, local workers that we train beforehand gradually replace expatriate personnel that we employ in Algeria.

What are Amarante International’s specific domains of expertise?

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Consulting and support are today at the core of our turnover. French companies have invested in zones that are very likely to grow but which have serious security issues. These companies need to be accompanied for reasons of moral responsibility and also legality. In this way, laws are more and more severe regarding companies who do not pay sufficient attention to the security of their employees abroad. The likely growth of the sector encourages further proposal of our services to foreign companies, notably those deployed in French speaking countries, where we provide a true added value service. The other aspect that we hope to develop is providing aid to states, particularly in the domain of training. There too exists real French expertise. For example, the French approach to riot control which is focused on the notion of the gradual use of force. At a time when numerous countries are confronted with serious social problems, it seems to me that the exportation of the French model would benefit countries who do not necessarily have this expertise and who are looking to develop it. Today, we possess a very strong know-how in this domain.

What explains the late arrival of the French on the private security market?

The French market has realized rather late that there is a need to protect companies. This need began to express itself in the 90s, namely in Algeria.

Since, this need in security has only grown, namely with the crisis that is hitting our Western economies and which now places growth drivers in complex zones. In this context, the distancing of the state and the dissolution of the notion of the public company have simultaneously led companies to resort to the private sector to assure the security of their investments. I think that the private sector succeeded in demonstrating that it was up to the task of ensuring the externalization of certain security posts in the right conditions. However, our French model of “centralizing” makes it so that we will never go further than the Anglo-Saxons in this domain. And yet, certain questions remain open. For example, in the case of a person imprisoned for not DEFENSE LEADERS • FRANCE 2013

PROTECTING having paid his taxes and who needs to be transferred to the hospital for a medical visit, is it financially reasonable to have his transfer supervised by two gendarmes? Would it not be better to give this kind of mission to an ESSD company?

How do the events in Mali affect Amarante International?

Few companies were present in Mali. So the events only had a very small direct impact on our activities or on our partners’ activities. However, the current situation in Mali is proof of a larger conflict concerning all of the Sahel countries. The jihadists nebula, of which a portion is concentrated in Northern Mali, actually concerns a much larger territory stretching from Morocco to Egypt and from Mauritania to Cameroon. So, I think that the terrorist threat has already had more of an impact on our profession than the war in Mali itself. The level of vigilance in these zones has been raised since French interests in this entire region have been directly threatened since the deployment of the Operation Serval. I think that companies today are starting to feel the “butterfly effect”, already in place in Sahel for several years. In a zone with few partitions like this one, an event in Mauritania can have repercussions two days later in Niger. This is what needs to be understood globally in this zone and it is this understanding we aim to bring about.

Thus, our team of analysts is constantly working to give context to new information, through reports

The distancing of the state and the dissolution of the notion of the public company have simultaneously led companies to resort to the private sector to assure the security of their investments. and more importantly by crossing border barriers which are not necessarily relevant in this region for understanding risks and threats. So it is necessary to conduct a dynamic and intelligent watch that allows us to not recognize our problems just as they arrive, but to place them in a context that can be understood transversely with all of the possible ramifications.

The correct understanding of the evolution of the level of risk allows us, above all, to gradually adapt protection measures so that they properly scaled to the threat (limiting traveling, reinforcing personnel security, evacuation, etc.).

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Gilles Sacaze CEO of Gallice Backed by the Holding Group Centaure, Gallice Security was set up in 2007. With an annual collective turnover of 36 million euros, both are eminent French enterprises in the global security market. Gallice Security was the first private French security company to enter Iraq, winning a contract in 2010 to protect the country’s public institutions, and is today the only one to have a lasting presence in this budding market.

The weakest sector of activity for Gallice is still growing at 10% per year.

What are the specificities of the French defense and security services enterprises in the global security market?

What we represent and advocate is a singularly French approach. Without caricaturizing the AngloSaxon model, we offer a better approach defined by interculturalism. Especially since we are the only French company to have developed something lasting beyond the provision of ad-hoc services in Iraq. Obviously, we faced competition from our Anglo-Saxon peers, who have been present there for a longer time and have already recovered their investments. We therefore entered the competition purposely with a “French touch”. We may have had to prove our way of working in the beginning, but today we are even working for American companies there. Our competitors worked in a deteriorating environment, probably at a time when there was no other option than to do what they were doing, that is to say being high-profile, extremely visible and forceful. At this juncture, they did not have a choice. Today, we believe the technique needs to change. We need to adopt an intercultural approach and keep a low profile, meaning we need to have externally unidentifiable convoys which offer no

visible distinction between the West and the rich local businessman. We are working with Iraqis, with Sunnis in Sunni areas, with Shias in Shiite zones, with Kurds in Kurdistan. We therefore sincerely advocate interculturalism, and, in Iraq, it makes all the sense to do so.

What are the main obstacles for French defense and security service providers?

The first obstacle often comes from within our institutions. Our embassies, for example, often lack culture and information about the jobs and the actual strategic issues in question. We are often confronted with a dogmatic attitude that is against the security market, considered as a mainstream government function. The French Enterprises Club for Security Abroad (CEFSI), created last year and to which we are party, forms part of the response. We need to become more professional, guarantee transparency, and most of the actors in the field are serious people who are in favour of this transformation. CEFSI is only a first step forward but now we need to be able to remove these roadblocks that have become more pressing in the context of the current economic crisis.

What is the potential for the private security market in the global arena?

The market is in a state of growth, in all sectors and in several geographic locations where we are present. This is true whether talking of intellectual or operational activities, for both institutional customers as well as private clients. The main hindrance today is institutional and legal. I would say that the weakest sector of activity for Gallice is still growing at 10% per year. Other sectors are seeing a growth of 30%. This means we can claim a double-digit growth in all sectors. It is a highly promising market but we regret the fact that we are not better followed, particularly by banks. This is unfortunately the situation at large for French SMEs. The activity continues to scare people: we return once again to the cultural block. Bankers find the business very promising once having taken our statistics into account, yet they are not reassured and remain concerned about the nature of the activity, etc.

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General (RET.)

Jean Heinrich President of Geos

The Geos Group was created in 1998 to assist French companies in their need for security services, at a time when they were powerless in the face of new emerging threats. Geos began operating in Algeria to gradually expand its geographical coverage and the scope of its services. Now with 500 employees and offices in more than 18 countries, Geos is a major player in the sector in France.

What differentiates Geos from its competitors?

Differentiating ourselves from our competitors is not a goal in itself. In our field of expertise, it is quite impossible to compare what companies offer. In our case, we believe we are the only ones in continental Europe to provide our customers with a comprehensive offering. This means that our range goes from basic risk analysis to major crisis management through security engineering, site and travelling personnel security and even provision of engineers and technicians in exposed areas.

We add to this our expertise in HSE (health, safety, environment) and economic intelligence which we believe provides the information that makes a difference. All told, we offer our clients a full range of services which can be deployed with confidence in areas at risk.

What are the specific issues related to France and its legislation regarding private security companies?

It is clear that France does not facilitate work in high-risk areas the way English-speaking countries do it, for example. Legislation is very restrictive and, despite various committees set up by the National Assembly, neither relaxations nor changes have been made. This unfortunate situation puts us at a disadvantage compared to our competitors and causes us to lose contracts. This is particularly the case for the fight against maritime piracy where we do not have the possibility to use armed men on board vessels. The Spaniards, however, after an attack against their tuna fishing vessels in the Indian Ocean, allowed gunmen on board, which solved the problem immediately. We are obliged to charter support boats and work in cooperation with local naval forces to meet the needs of our customers.

What are the main differences between the French approach and the Anglo-Saxon approach?

I would say it is cultural. The Anglo-Saxons favor securing sites through heavy means that we call “bunkerisation.” They put forward their well-oiled skills, their well-honed procedures they apply to the letter regardless of the territory. The advantage is safekeeping on-site. The system is effective for a limited period of time. We prefer, whenever possible, the “socio-cultural” approach, which means knowledge of the environment, negotiating

preferably with people who know the area, involving local population rather than excluding locals. The goal is to have our presence perceived as an aid to the population rather than as a constraint. Building a school or a clinic in Africa is cheaper and more effective than using barbed wire and watchtowers.

Should French authorities provide more support to the private security companies?

Undoubtedly yes. We are still regarded as a black sheep interfering with government action. This is an aberration. We further government action.

While we are facing a serious economic and social crisis, we leave the field open to American or British companies on markets not only interesting to our own companies and therefore to the job market in our country but we also obstruct the development of companies reluctant to venture in some areas. This is pathetic. If the root of the problem lies in the distrust of ESSDs, means of control to ensure their ethics and behavior are needed, and if the cause is more obscure, it is necessary to engage in a dialogue to move forward. This “wait-and-see” attitude is proof of the inability of our leaders to adapt to the realities of our time.

We offer our clients a full range of services which can be deployed with confidence in at-risk areas.

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Daniel Benchimol President of Eurogiciel Eurogiciel is a French mid-cap company established in 1989 in Toulouse. It is a project support service company for the aerospace industry, for large civilian and military projects. Currently, Eurogiciel is present in France, Germany, the UK and Spain through its subsidiaries and in China and India through local partners.

What are the main activities of Eurogiciel?

The Group works through its three main subsidiaries. The first is Etop International, the project management consulting branch. We support the management and the organization of the construction of large assemblies – a plane, a satellite, a train – through the various implicated requirements: planning, risk analysis, cost control and so on.

The second consultation branch deals with management of quality, Equert International. It is involved first at the level of Quality Management System with the establishment of standards, writing up of reference material or of Capability Maturity Model Integration. Equert’s second activity revolves around product quality control, from design to the assembly line. The third step is evaluating the quality of the supply chain, which in this industry is a long and global process, and thus needs to be structured and defined through lean management. The final division deals with environmental quality. This is with regards to the dismantling of aircrafts and everything related to environmental norms, chemical hazards and to risks associated with embedded products in aircrafts and satellites.

The third subsidiary is Eurogiciel Engineering. This involves both onboard embedded critical systems, such as critical electronic software, and ground systems, like testing facilities. Our product range is mainly dedicated to avionics and aircraft functions.

How is Eurogiciel specifically involved in the defense sector?

We work primarily with equipment suppliers for the armed forces such as DCNS, Eurocopter, Airbus Military and Thales. This work translates into 15-20% of the group’s turnover. We are engaged in the management of activities related to the combat systems of surface ships and submarines; previously, we have worked on the FREMM program, NH90 fly display system, the A400M and on the AASM missiles.

for offshoring and offset activities. This means that when we want to work on a program like the Rafale in India, it is important that we are involved starting with the design of the contract itself. We need to have partners in India that allow us to be eligible for offsets.

The more that programs are being offset with an outsourced supply chain, the more that project and quality management is becoming important. The quality of the supply chain for all the collaborating enterprises is crucial, since there is often a problem on-site with regards to competence, maturity and local training. Therefore, our two consulting branches go set up base so as to oversee quality control of the supply chain. Indeed, we often end up helping choose the supply chain.

What plans do you have for Eurogiciel in the coming future?

The transition from today to tomorrow will essentially rest on internationalization of the group.

We want to grow through recruitment of local teams and consultants in countries where we do business.

As options, there are European countries, but also North America and Asia. Less than 10% of our revenue is from international markets: the objective is to reach 40% in five years.

How do you differentiate yourselves from your competitors when it comes to exporting?

Project management and quality management consulting is doing good business in several countries, including North America. This is true even when the industries are mature. The supplier’s knowhow is just as easily exported. We have no complex compared to American manufacturers. There is extensive expertise in this country which we should internationalize. This is an issue of real importance for French SMEs and mid-cap companies.

The more that programs are offset with an outsourced supply chain, the more that project and quality management becomes important.

Does Eurogiciel's consulting activities allow it to be involved in major international contracts where a part of the production is done on-site?

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Philippe Morsillo Director General of Ausy Created in 1989 by Jean-Marie Magnet, current president and main shareholder, Ausy is specialized in the fields of engineering and consulting in high technology. The company has seen strong growth over the past three years with a turnover that has doubled to 320 million euros and 4,000 employees.

What explains Ausy’s incredible success in recent years?

NEW PROJECTS

Defense revenue 2012

2009

Ausy is a world leader in high-technology consulting and engineering, with positions both in the fields of information systems and R&D outsourcing. Our success is due to our last two business plans. The first, Cap 2009, started in 2006 with the goal of rapidly positioning Ausy among French and consequently European leaders.

The logic was one of achieving hyper-growth in order to take on bigger projects and to be in a position to capture significant market shares of our most important clients. With this first plan, we grew 77% in three years. By the end of 2009, we wanted to further accelerate our growth rate and thus launched a plan called Avenir with a first-step goal of 100% growth in three years. We have seen a 109% growth due to both internal and external growth. With regards to the latter, we have acquired four companies, including Aptus, a major group and competitor positioned in the aerospace and defense fields, in 2011. This was an important step for us since they had 800 employees. Concurrently, we continued to experience rapid internal growth, given that we hired 1,100 employees last year.

What sets us apart primarily is our ability to steer and manage projects in extremely complex technical environments, particularly in all areas related to software for aeronautics and space programs.

Another important factor contributing to our success is our particular approach to partnerships.

Effectively, we have developed extremely important partnerships with some clients that we respond to tenders with them and we help them win further business, knowing of course that we will carry forward the work. This is a particularly differentiating factor from the competition, since we engage with our client-partners through co-investing in their pre-sale and call for tender phase. In this way, our relationship becomes a true partnership. We also have an R&D department that allows us to develop our own solutions.

Is the Ausy Touch an example of the engineering and innovation department?

Absolutely. Ausy Touch is a self-funded product.

It is a program for developing applications with a touch screen. The first focus of Ausy Touch is on mobility and ergonomics, as well as on functional aspects dedicated to user experience for tactile

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applications. For example, we have developed a mapping application for pilots. This seems simple, but making such an application tactile, portable and usable from a functional point of view is complicated.

We have used the concept of “Big Data”, and we create simple and functional interfaces for large volumes of data. The second focus of Ausy Touch is on large-sized touchscreens. The challenge is to set up the large databases needed – for the program we developed for the DGA, we had to set one up related to ship maintenance. The goal is to develop a capacity that allows manipulation of a large amount of information in an extremely simple manner as well as the capacity to have multiple operators at the working at same time on the tab.

Further, related to this field, we have an expertise delivery center in Sophia-Antipolis. Ausy Touch has been very positively received in the market.

Moreover, this solution is applicable to domains other than in aerospace and military.

What does Ausy’s involvement in the defense sector entail?

The aeronautics, space and defense division represents 28% our activity, and is thus the most important, followed by telecom (24%); services and transportation (21%); banks, finance and insurance (14%); energy and environment (7%). The sector in question yielded sales worth 35 million euros in 2009, which grew to 90 million euros in 2012. Thus, our growth in this sector has been phenomenal and it has been a real sector of growth for Ausy.

Which particular defense contributed to this growth?

projects

have

We have, for example, worked on the M51 project and a landing UAV system with the DGA, and we regularly work on cybersecurity, data security, and information and command systems (one of our core businesses). We also work for Dassault Aviation on its civilian projects and we also hope to work on the Rafale soon. One of the problems on the Rafale project has to do with defense offset given the need to have a legal structure that addresses this issue in India. A few weeks ago, we entered into a joint venture with Defiance Technologies, a subsidiary of the Indian Hinduja Group. We created this entity in order to be able to deal with defense offsets. We therefore have a key solution immediately available which would allow us to work not on projects related

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to the Rafale but also for the suppliers working on the Rafale, such as Thales. Few companies have this capacity, and this is therefore another differentiating factor.

What are the main difficulties to work in India?

The difficulties are first and foremost cultural – beyond the logistical difficulties of time difference and language, it is not always easy to understand how a part of the world rather far away from Europe works. We circumvented this problem with a twoheaded management: while the head of the two units in Delhi and Bangalore is French, there is a local management comprising of two Indians who have had experience working in Europe. They were easily able to bridge the cultural gap between Asia and Europe in the joint venture. This helped us significantly in starting up our operation there, and today, our Indian branch has rapidly developed, becoming profitable from its inception. Furthermore, Indian engineers have an excellent level of education. We also have teams come to France in order to better internalize our working methods. We have a system called “extended department” where our technical managers, responsible for engineering teams, have Indian employees in their teams with whom they are accustomed to work with on several projects. We started this approach first in Germany and then adopted it in France, and have seen excellent results.

What is Ausy’s international strategy?

We have experienced rapid international growth in the last few years; current turnover achieved outside of France stands at 87 million euros at present. We started with Belgium and Luxembourg, and then tackled Germany through a partnership with a German group. Currently, our preferred zones are Benelux, Germany and Scandinavia.

Our international growth strategy has always been based on an initial partnership with a local company followed by penetration by our company by itself.

We are today seeking partnerships in emerging countries.

The aeronautics, space and defense division represents 28% our activity, and is thus the most important.

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Maurice Ricci Chief Executive Officer of Akka Technologies Founded in 1984, Akka Technologies is a European engineering and technology consulting company that assists service enterprises and industrial businesses throughout the lifecycle of their projects including R&D, which serves to reinforce industrialization. Today, Akka Technologies counts 11,000 employees in over 20 countries.

What have been the milestones for Akka Technologies?

Between 2010 and 2012, the company doubled in size with the integration of Aeroconseil in France and MBtech (Daimler Group) in Germany, two companies from the industry with a very high level of expertise, the first in aeronautics and the second in the automobile industry. With a strong presence in France and Germany, the two largest engineering markets in Europe, and our implantations in over 20 countries, we have the capacity to assist our clients in the most complex projects, most often transnational. Today, we aim to accelerate our growth by concentrating on the construction of a group worth over one billion euros.

Akka Technologies is a preferred partner of big name defense manufacturers and equipment suppliers like Thales, Sagem, MBDA, EADS, DCNS, Dassault Aviation, and Nexter.

In the defense sector, Akka Technologies is a preferred partner of big name defense manufacturers and equipment suppliers like Thales, Sagem, MBDA, EADS, DCNS, Dassault Aviation, Nexter, etc. Thanks to our expertise in mechanical and process engineering and on-board systems and industrial computing, we have contributed to important projects such as the A400M and the Rafale.

What are the services and competitive advantages that allow Akka Technologies to succeed in gaining the trust of industry leaders?

Our main competitive strength is our dedication to across the board services that provide a strong value added offer. We work on the entire lifecycle of a project, responding directly to the clients’ needs by proposing our services in consulting, Design Engineering Centers (DEC), and Software Design Center (SDC).

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Another recent distinguishing factor is the integration of MBtech and Aeroconseil which strengthens the company’s offer by giving us a position of leadership in the automobile engineering and aeronautic sectors in Europe. By successfully handling transnational projects, we demonstrate our capacity to assist our clients wherever they are, in France, Europe, and the rest of the world.

Akka managed to gain the confidence of the industry leaders through our presence in every sector of the industrial activity and through the capitalization of our expertise. We offer our competencies in various sectors, a strategy known as cross fertilization. In this way, thanks to our flexible origins, Akka Technologies was able to gradually evolve the business model, build new competencies, learn the client’s business and adapt to changes.

As one of France’s fastest growing technological consulting and engineering service companies, what explains Akka’s international evolution?

The rising strength of Akka also follows the same logic, in line with our balance strategy; it relies upon the sector and client balance, technology balance, and geographic balance. Thus, thanks to our efficient policy of external and organic growth, we have enlarged our international presence and accelerated our development.

Our clients, international contractors, ask us to get involved in the same projects we have done for them in the past. We know their processes, their way of working, and so it is pretty natural that they consider we are the right partner to accompany them in putting into place production process, installing R&D engineering. This is what Daimler in China asks of us.

The presence of Akka is as strong in France as abroad. International operations have boosted the number of Akka personnel to more than 11,000 engineers, spread out mainly in Europe but also in North America and in China. We deploy in each country the totality of our offer, favoring the mobility of our collaborators and answering our clients’ needs with flexibility (offshore, nearshore).

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SERVICES How was Akka able to post a 50% increase in profit in 2012 despite the current economic downturn?

Defense activity is tightly linked to the state budget and the defense policy led by the government.

The French defense procurement agency (DGA) drives the entirety of our army’s needs. The agency addresses the entirety of the big accounts and more recently those of the SME sector. However, the budget has gone down continuously. Furthermore, the transition to a professional army 20 years ago augmented the cost of maintenance of operational forces and reduced the amount of investment. The big manufacturers thus shifted toward exports in order to get rid of their dependence on the French state and to garner renewed growth. As in all sectors, defense also needs to modernize and provide itself with the latest systems. We often talk about defense in terms of capacity for military engagement, power of dissuasion, protection of territory, etc., but the defense sector is also focused on subjects such as the security of sensitive sites and the protection of data in order to fight industrial espionage and terrorist threats. These are very important issues that Akka helps its clients combat.

Today with more than 82% of revenues pro forma in mobility, we are working predominantly for clients from the automobile manufacturing sector (Powertrain, EMC), the aeronautic manufacturing sector (electrical controls, beams), trains (all wheel drive systems). These three axes represent our principle perspectives for diversification.

As both leader and creator of Akka Technologies, what projects are of particular significance?

In the defense sector, we can see the example of our collaboration with Nexter, one of the major actors in the sector of land defense and with whom we have collaborated since 2009. They have benefited from our know-how in software development, proximity solutions for Bourges and Satory sites, from our capacity to carry out their projects with a dedication to results in a context that has put us into competition, forcing us to be innovative and competitive. This is the experience gained over the past 30 years that serves as a trampoline for developing new activities.

Moreover, Akka Technologies has positioned itself more and more in the domain of cybersecurity. This is an offer that we want to develop in the sectors where there are a high number of attack victims.

This means protecting data but also protecting the production and management systems that can also be attacked by networks (nuclear power plants for example). Our most important clients in the defense sector are in the process of equipping themselves with an offer for state actors but also for civilian applications. We want to create an offer to accompany them on these subjects as well.

Finally, Akka hopes to position itself in the drone market. With our know-how, ambition, and collaboration with MBtech, we could become a strategic partner in this sector.

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Emmanuel Bouvier d’Yvoire Global Head of Commercial Banking & Trade of Crédit Agricole Corporate and Investment Bank Crédit Agricole Corporate and Investment Bank (Crédit Agricole CIB, formerly Calyon) is Crédit Agricole's corporate and investment banking entity. With a staff of 12,000 employees in 32 countries, Crédit Agricole CIB is active in a broad range of capital markets, investment banking and financing activities. Clients are primarily corporations, governments, and financial institutions.

At which stage does CA CIB take action in signing large export contracts?

CA CIB provides services to both exporters and importers around the globe. This is what strengthens our organization in the field of international trade.

We are present in all major countries with a worldwide network of professionals highly skilled in all areas of export and trade finance.

As is often the case in the defense business, we are brought into the process pretty far upstream by our exporting clients on prospective contracts with importing countries in which we have our own business contacts, often through a permanent local presence. We can also become aware of a business perspective before the exporter actually approaches us about it, thanks to our presence in the importing country. It is, for instance, the quality of our contacts

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with the Indonesian Ministry of Defense that allows us to provide quality information and support for our exporting clients in the defense sector. In every negotiation of a financing package supporting an export contract, the key factors of success are the long-standing business acquaintance of all the parties as well as a rigorous and innovative financial engineering capacity. Export finance is a highly technical area, as any buyer’s or supplier’s credit involves at least four parties: the exporter, the importer, the export credit agency that bears the majority of the commercial and political risk of the transaction, and the bank (or a pool of banks). The ability to bring together these actors and to write a well-drafted contractual documentation requires a level of expertise shared only by a small group of major international banks, probably no more than 20 worldwide, including Crédit Agricole.

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SERVICES A trend has emerged for some time now, whereby the importer increasingly often has the final word on the choice of the advising or financing bank. This makes the quality of our relationship with the major importers increasingly crucial.

What is the role does CA CIB play in financing?

We see ourselves as providers of global solutions to secure and finance international exchanges of goods and services. The “toolbox” to structure these solutions includes a wide range of financial instruments used to either guarantee the performance or the payment under a commercial contract (international guarantees, letters of credit, documentary collections) or to provide financing in connection with these contracts: factoring or forfaiting, i.e. the purchase/discounting of trade receivables, mostly on a non recourse basis and, for the medium/long term tenors, buyer’s or supplier’s credits, with a cover from an export credit agency such as COFACE in France or Euler Hermes in Germany. Foreign exchange, interest rate derivatives or cash management products are also frequent ingredients of our global offer.

In our view, the role of the bank is not just to sell products, but to advise our clients, at both ends of an international transaction, on the financing package that will best meet the objectives and accommodate the constraints of all parties.

The CSR issue is of paramount importance to Crédit Agricole Does CA CIB also assist SMEs in the process of exportation?

CA CIB’s customers are mainly large corporate groups, but CA CIB’s teams are also available to assist other entities of the Crédit Agricole group to provide adapted support to their SME clients.

We should keep in mind, though, that some types of financing, for example buyer’s credits, are better suited to large contracts (for amounts expressed in multiples of 10 million dollars or euros) because of their relatively high structuring cost per transaction.

When dealing with small contracts, we often encourage our clients to resort to “lighter” solutions such as confirmed (and possibly discounted) letters of credit or supplier’s credits.

Once again, being able to adapt the financing solution to the characteristics and the size of the underlying commercial contract is part of the bank’s responsibility towards its clients.

have the duty to act responsibly in this area. To that effect we have, for some time, developed strict and transparent compliance policies in this field as well as in others (nuclear energy, shale gas, etc.). Our CSR (Corporate Social Responsibility) policy takes into consideration the Ottawa and Oslo treaties, as well as the existence of the European code of conduct on arms exports.

The CSR issue is of paramount importance to Crédit Agricole. Our compliance policy in the defense market is based on a classification of weapon types into three categories: first, “controversial” weapons which are essentially antipersonal mines and cluster bombs, second, “sensitive” arms (e.g. NBC weapons or arms of mass destruction) for which proliferation is tightly controlled in most jurisdictions, and third, other types of defense weapons and equipment.

For the first category, our policy is straightforward: we absolutely refuse to participate in any activity related to production, acquisition, storage, import, export, brokerage, financing, and so on of these weapons. As a result, we have a list of prohibited parties with whom we refuse to work because of their involvement in these activities. We remain extremely vigilant in this regard.

As for the second category, we do not finance international trade of these weapons or their launchers.

This means that we only intervene in the last category and, even there, we use very strict criteria.

For any single transaction, we always refer to our compliance bodies in order to decide whether or not the bank’s involvement may be considered.

Does CA CIB only assist French manufacturers?

We are indeed a French institution but we are an international bank too. Therefore, we are obviously and naturally serving French exporters, but without any general rule of exclusivity: we often accompany some large international clients as well.

Being able to adapt the financing solution to the characteristics and the size of the underlying commercial contract is part of the bank's responsibility.

Are defense markets unique in respect to export?

The defense market is very specific, not necessarily in terms of specific technicalities in the structuring of financing packages, but simply because it is a highly sensitive environment and banks in general, and Crédit Agricole in particular, THE EXECUTIVE GUIDE OF THE GLOBAL DEFENSE AND SECURITY INDUSTRY

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Jérôme Rivière Lawyer at Cabinet Arcole Arcole is a law firm in the defense domain assisting SMEs and ETIs in their relations with the DGA and foreign governments. Jérôme Rivière, an Arcole lawyer, was deputy and reporter of the defense equipment budget from 2002 to 2007. He was also a member of the French National Assembly delegation to NATO.

What is the French legal framework for the sale and exportation of war-related materials?

Sometimes we are surprised by the lack of certain SMEs’ knowledge of the specific legal framework for war materials. First, an authorization for the manufacture and commercialization of war material (AFCI) must be obtained. War materials may refer to weapons, but can also apply to laserbased products or those products which may not necessarily be intended for arms use. An SME that develops a small plane capable of being equipped with an autopilot system, transforming it into a drone, may be required to get an AFCI from the DGA. It is necessary to meet certain criteria such as those concerning war materials manufacturing.

An administrative inquiry is then conducted by the authorities to ensure that the shareholders are in good standing, that there is a majority of French of European capital, or that the company meets the security criteria for protecting information that they might be vested with. This procedure could last one year which is relatively long for SMEs. One of our clients, LH Aviation, also spoke at the Defense Committee of the National Assembly, attesting that this is a heavy and restrictive procedure for those SMEs which are highly product focused.

Once the AFCI is obtained, the procedures are eased for exporting companies. In the past, it was strictly forbidden to engage in trade discussions with a foreign partner without prior authorization (PA). Today, you can launch trade talks while taking precautions to explain that the final purchase will be subject to authorization from the Ministry of Defense.

After sufficient progress in the discussion phase of the contract, the company must apply for prior authorization. This takes the form of a meeting with the zone officer of the International Directorate of the DGA responsible for the region affected. If the case is prepared seriously and the company does not intend to sell in countries that are specifically prohibited, prior authorization is issued. This allows companies to initiate discussions about the specific details of the product such as the price or the terms of the contract. Once this is set in place, companies must ask for permission from the Inter-ministerial Commission for the Study of War Material Export (CIEEMG) which includes the services of the Ministry of Defense as well as the Ministries of Foreign Affairs, Finance and the Prime Minister. The

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CIEEMG defines the export policy for these sensitive materials. Therefore, the proposed exportation project must not contradict French policies or international commitments. In this regard, there is useful advice we can give to SMEs. For example, an essential practice is communicating with the DGA in order to guarantee success at the Commission level.

We have long assisted companies in their exportation to the United States, helping them to better understand the US legal system.

The Commission then chooses whether to authorize the project and may impose certain technical constraints or verify that the product still corresponds to the initial application, regardless of any obsolescence that might be treated in the meantime. Finally, the authorization for export of war material (AEMG) is accompanied by customs documents that validate the departure of the material from France.

Do these contracts imply a certain level of risk?

A typical risk involves the French policy vis-à-vis foreign states which are subject to change over time.

I can speak from experience in the sale of a number of materials in Libya. Companies which obtained prior authorization were no longer allowed to sell DEFENSE LEADERS • FRANCE 2013

SERVICES materials when it came time to pass through the CIEEMG, due to the French policy change regarding Libya.

In this way, there are some hazards involved in these contracts. A company may have launched the production of material for a certain country, incurred costs and found it impossible to export. It is thus important for the contract to be cleverly constructed so that the financial risk is covered prior to export and profit is achieved once the contract is delivered.

Some countries in Africa, Asia and the Middle East represent areas in which French policy may change regularly.

Why is it important to be accompanied by a legal advisor?

An important factor remains ensuring that the discussions with the country or the buying government remain consistent with French constraints. We need to have the full cooperation of these parties in order for the sale to be successful.

When the client is the Ministry of Defense of a large country who buys frequently and is accustomed to the process, the negotiation goes through the traditional channels, often involving the embassies.

However, when it comes through the division of a foreign ministry, it is necessary to restore these pathways. For example, one must prove that the state in question has declared itself the end-user of the product and agrees not to re-export the equipment without the permission of the French state. This is part of the French policy and the whole of the European Union policy to ensure that the products are sold to the end-user. Obtaining an end-user certificate is one of the requirements of the CIEEMG. The embassies and the defense attachés are also quite effective. In many contracts, we have had a very positive reception from the French military which can even participate in negotiation meetings.

This shows that the exporting SMEs have the support of French authorities for the exportation in process.

Its support is necessary because if the state does not want a sale to take place, it will not happen.

Is prior experience an essential asset in the legal services profession?

I assisted several business leaders in their discussions with governments or states. The language utilized by the Ministers of Defense is not necessarily adapted to the business world.

Therefore, through my former parliamentary duties, I can serve as a bridge between the entrepreneurial and administrative languages. One of the other facets of our business is to participate actively in the negotiation and contract drafting phases so that there is a good level of understanding by all parties. This is also one of the added-value services we provide the client.

Furthermore, we have long assisted companies in their exportation to the United States, helping them to better understand the US legal system which is actually an accessible market, in addition to being the world’s largest market. The market of the National Guard, meaning the market of the states that comprise the United States, is unknown to European companies. Nonetheless, the National Guard buys an amount of material that is roughly equivalent to the French defense budget. There is no

doubt that the Buy American Act makes it difficult to sell locally, but the size of the sector facilitates the process of finding local partners or opening local establishments.

Do other striking rules exist in France?

There are also legal protection tools for innovative SMEs in the defense sector. If a country or a foreign company wants to buy the company, without holding any shares, the state may oppose the investment of foreign capital. Similarly, AFCI may be withdrawn at any time by the Ministry of Defense. This is a very restrictive measure because without the authorization to trade war material, the very purpose of the company is removed. With regard to the defense sector, one cannot be naïve or dispossessed of know-how.

The markets for military equipment are not inaccessible to SMEs, although it may seem complicated in the beginning. We also noticed that within the capital of innovative SMEs, there are many technology-focused venture capitalists. These groups are not used to being identified and playing by the rules. This sector is one in which the French administration and the DGA really help SMEs export, all in a rigorous framework. The best advice is thus to seek the assistance of a lawyer.

The embassies and the defense attachés are also quite effective. In many contracts, we have had a very positive reception from the French military which can participate in negotiation meetings.

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Business Accommodation Palace

Le Bristol Le Bristol Paris’ exemplary service and unrivalled elegance make it the hotel of choice in the French capital.

The hotel is located on the prestigious rue du Faubourg Saint-Honoré at the heart of the fashion and arts district in Paris, where it has been welcoming its esteemed guests since 1925. Its 188 rooms and suites have undergone extensive refurbishment, and are spacious and bright, decorated in classic 18th-century style.

92 suites: Junior Suites l Deluxe Junior Suites l Deluxe Suites l Saint-Honoré Suites l Prestige Elysée Suites Terrace Suite l Penthouse Suite l Panoramic Suite l Paris Suite l Princières Suites l Royal Suites l Honeymoon Suite l Imperial Suite Spa Le Bristol by La Prairie Swimming pool and Fitness Center 4 bars & restaurant: Epicure l 114 Faubourg l Le Jardin Français l The Bar at le Bristol

Le Bristol Paris 112, rue de Faubourg SaintHonoré, 75008 Paris France Tel: +33 1 53 43 43 00 reservation@lebristolparis.com

6 conference rooms: Castellane room l Rambouillet room l Marly and Malmaison rooms l Elysée room l Marigny room l Matignon room

www.lebristolparis.com

Palace

Four Seasons Hotel Located just steps from the Champs-Elysées, with private terraces that command all of Paris, lovingly restored 18th-century tapestries, and a defining spirit of elegance and charm, Four Seasons Hotel George V, redefines luxury in the City of Light.

244 Paris luxury hotel guest rooms and suites 105 Deluxe rooms 3 Premier suites 2 Royal one-bedroom suites Whirlpool l Sauna l Steam room l Weight training l Certified trainers Business Services And Amenities: 24-hour business services l Audiovisual equipment l Complimentary high speed internet l Computers l Private working stations l Secretarial service l Translation and interpretation service Restaurant: Le Cinq (two Michelin stars) 9 Meetings & Events Room

Four Seasons Hotel George V, 31, avenue George V 75008 Paris Tel: +33 1 49 52 70 00 Fax: +33 1 49 52 70 10

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www.fourseasons.com/paris

DEFENSE LEADERS • FRANCE 2013

Business Accommodation Palace

Le Meurice At Le Meurice, opulence and comfort are not confined to the hotel’s public areas alone. Every room and suite is a spacious, peaceful oasis of calm, providing guests with the ultimate in luxury. Each of the seven floors has a distinct style, with 160 beautifully appointed rooms decorated in a style redolent of Louis XVI. All rooms feature exquisite marble bathrooms with shower and bath, with complimentary bathrobes and slippers. Each room is soundproofed and has air conditioning, highspeed Internet access, multiple telephone lines and cable television.

42 suites: Prestige Suite l Presidential Apartment l Belle Etoile Royal Suite l Superior Suite l Deluxe Suite l Executive Suite 2 restaurants: Le Dali & Le Meurice 5 banqueting rooms: three of which are connecting, including the ceremonial Salon Pompadour. These rooms can accommodate receptions from 5 to 450 people (Salon Pompadour | Salon Tuileries l Salon Jeu de Paume | Le Grand Castiglione & Le Petit Castiglione

Hotel Le Meurice 228 Rue de Rivoli 75001 Paris, France Tel: +33 1 44 58 10 10 Fax: +33 1 44 58 10 15 reservations@lemeurice.com

Spa Valmont: designed by Charles Jouffre

www.meuricehotel.com

Palace

Park HYATT Experience the City of Lights from its central heart at Park Hyatt ParisVendôme – one of the most luxurious 5-star hotels in Paris. Our coveted location brings the city to your doorstep, overlooking the fashionable Rue de la Paix and within walking distance of Place Vendôme and Opéra Garnier. Enjoy evening strolls along the Avenue des Champs-Élysées, browse exhibits at the Louvre and Musée d’Orsay, or spend an afternoon on the Rue du Faubourg Saint Honoré, renowned for its haute couture and trendy shops.

156 rooms and 43 suites: Park Suite Twin l Park Executive Suite l Prestige Suite l Diplomatic Suite l Residence Suite l Ambassador Suite l Vendôme Suite l Presidential Suite l Imperial Suite 4 restaurants: Le Pur’ (two Michelin stars) l The Chef’s Table l Les Orchidées l La Terrasse 8 versatile reception rooms

PARK HYATT PARISVENDÔME 5 rue de la Paix Paris, France, 75002 Tel: +33 1 58 71 12 34 Fax: +33 1 58 71 12 35 paris.vendome@hyatt.com

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Whirlpool bath, a steam room, a sauna, a gym fitted with the latest high-tech equipment

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Business Accommodation Shangri-La

***** 81 rooms including 27 suites 2 restaurants: L’Abeille,(2 stars in the Michelin Guide 2012) & Shang Palace (1 star in the Michelin Guide 2012)

Situated in the heart of Paris, Shangri-La Hotel Paris is within walking distance of Guimet Museum and Palais de Chaillot. Also nearby are Eiffel Tower and Champ de Mars.

5 Reception Rooms

Mandarin Oriental

99 luxurious rooms and 39 suites

Situated on rue Saint-Honoré, one of the most fashionable streets in the world, Mandarin Oriental, lies in the heart of this wonderful city.

Plaza Athénée This truly Parisian luxury property filled with elegance and charm is ideally located between the Avenue des Champs Elysées and the Eiffel Tower.

Spa Camelia Resturant (Culinary Director Thierry Marx) 8 bars

188 guest rooms 43 suites Bar (decorated by interior designer Patrick Jouin) La Terrasse Montaigne Spa Dior Institute

81 luxurious rooms 31 beautifully suites 5 restaurants & 3 bars

Le Royal Monceau 149 elegant rooms and luxury suites 2 restaurants (One Michelin stars) Contemporary 1,500 m2 spa

Champs Elysees Plaza

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***** Plaza Athénée 25 avenue Montaigne, 75008 Paris, France Tel: +33 1 53 67 66 65 reservations.hpa@dorchestercollection. com

Fouquet’s Barrière 46, avenue George V, 75008 Paris Fance Tel: +33 1 40 69 60 00 Réservation Service: +33 1 97 08 09 111

*****

Katara Cinema room

Just step through the porch of this sevenstory Luxury Haussman-style Hotel with its intimate, hushed lobby in the Champs Elysées quarter.

Mandarin Oriental 251 rue Saint-Honoré, 75001 Paris, France Tel: +33 1 70 98 78 88 www.mandarinoriental.com/paris

*****

Le U Spa Barrière, 750m²

Delicately poised where the rue Duphot meets the rue Saint-Honoré, in the wings of the Champs-Elysées-Madeleine-Opéra.

*****

Close to Place Vendôme

Fouquet’s Barrière Hôtel Fouquet’s Barrière is ideally located where the Champs-Elysées meet Avenue George V in the heart of Paris.

Shangri-La Avenue d’Iéna, Paris, 75116, France Tel: +33 1 53 67 19 98 Fax: +33 1 53 67 19 19 www.shangri-la.com

35 Rooms and Suites with Jacuzzi 1 restaurant and 1 bar Fitness Room & Hammam

Le Royal Monceau 37 avenue Hoche, 75008 Paris, Tel: +33 1 42 99 88 00 Email: paris@raffles.com www.leroyalmonceau.com

***** Champs Elysees Plaza 35 Rue de Berri, 75008 Paris, France Tel: +33 1 53 53 20 20 Fax: +33 1 53 53 20 21 Reservation: reservation@champselyseesplaza.com DEFENSE LEADERS • FRANCE 2013

INDEX AND CREDITS Acoem............................................. 127

Eurenco........................................ 66, 71

Orolia Group.................................58, 59

Adetel Group..................................... 98

Eurocopter.....21, 30, 54, 57, 61, 70, 99, 106

Ouvry.............................................. 109

AgustaWestland.................................57

Eurofighter.............. 34, 49, 50, 68, 70, 104

Paul Boyé Technologies.....................108

Airbus.... (and Airbus Military)9, 52, 53, 56, 61, 70, 84, 88, 106, 145

Eurogiciel................................... 98, 145

PGM Precision.................................130

Akka Technologies..................... 148, 149

Fokker.............................................. 54

Piriou............................................... 72

Gallice............................................ 142

Proengin.........................................108

General Atomics...............................100

Protecop..........................................130

General Dynamics............................. 88

Raidco Marine.................................. 75

Geos...............................................143

RDS Industries.................................130

GICAN......................................... 42, 43

Reliance Group................................. 48

GICAT........................................... 40, 41

Renault Trucks Defense... 28, 34, 78, 79, 86, 87, 106

Alcea..............................................133 Alkan................................................51 Alyotech..........................................126 Amarante International...............140, 141 Amphenol Socapex...........................126 Asteelflash..........................88, 89, 98, 99 Ausy..........................................146, 147 Boeing.................................... 49, 52, 57 Boustead.......................................... 42 Bull.......................................... 112, 113 Cabinet Arcole................................. 152 CDSE..............................................118 Cilas...............................................126 Civi.Pol................................70, 136, 137 CMN Naval....................................... 74 CNIM-Bertin Technologies................. 107 Crédit Agricole CIB...........................150 CS Group......................................96, 97 Dassault Aviation. 29, 34, 48, 49, 50, 51, 61, 70, 71, 90, 100, 106, 146, 148 DCNS.... 18, 28, 29, 34, 36, 42, 47, 66, 71, 72, 73, 74, 85, 98, 107, 145, 148 DGA................19, 21, 22, 23, 25, 28, 51, 52, 54, 65, 72, 83, 86, 87, 90, 91, 93, 98, 99, 126, 146, 149, 152, 153

GIE Defense NBC.............................. 109 GIFAS...........................................21, 44 Groupe Marck.............................75, 130 Herakles.................................. 64, 65, 71 Hindustan Aeronautics Limited.......51, 57 Hispano-Suiza.............................. 61, 71 IHEDN.............................................120 Inpixal...............................................87 Israel Aerospace Industries................ 50 iStrat...............................................116 Kamov.............................................. 54 Krauss-Maffei Wegmann.....................71 L-3 Communications......................... 88 LH Aviation...................................... 152 Lockheed Martin................................ 88 Losberger RDS.......................... 124, 125 MBDA.... 18, 21, 28, 29, 34, 41, 65, 66, 67, 68, 69, 70, 104, 148 Mirion Technologies.......................... 109

Dirickx Group................................... 131

Nautiraid.......................................... 75

EADS..... 18, 19, 20, 21, 28, 29, 34, 36, 50, 54, 68, 71, 84, 101, 104, 105, 107, 126, 148

NBC-Sys..................................... 70, 108

EADS Astrium............................ 107, 126

Nexter... 18, 29, 34, 47, 66, 70, 71, 76, 77, 80, 85, 90, 108, 148, 149

EDEN Cluster Federation.................... 86

NHIndustrie.......................................57

Elno............................................ 82, 83

Northrop Grumman........................58, 87

Erys Group....................................... 139

Odas.................................................91

Etienne Lacroix Group........................ 85

Optsys.............................................. 80

Rheinmetall.............................66, 71, 88 Roxel.................................65, 67, 68, 70 Safran... 21, 29, 34, 56, 57, 61, 65, 71, 85, 88, 98, 99, 102, 130, 138 Sagem... 71, 85, 94, 102, 103, 127, 130, 138 SEMA World.....................................128 Sikorsky............................................57 Sillinger.....................................75, 130 Singapore Technologies Marine.......... 42 Snecma......................... 21, 56, 61, 64, 71 Sofema........................................70, 81 Sofradir...................................71, 94, 95 Sorhea............................................ 132 Strerela............................................ 84 STX France....................................... 74 Sukhoi................................... 49, 56, 106 Survey Copter..................................105 Sysdream........................................114 Texelis.............................................. 79 Thales...... 29, 34, 71, 87, 88, 94, 98, 99, 106, 123, 126, 127, 145, 147, 148 ThyssenKrupp.....................................71 Titan Aviation............................... 62, 63 Turbomeca............................... 56, 57, 71 Zodiac Aerospace.............................. 88

Photo credits: Dirickx Group • Acoem • Adetel Group • Airbus Military • Akka Technologie • Alcea • Alkan • Amarante International • Asteelflash • Ausy • Bull • CA CIB • Cabinet Arcole • CDSE • Civi.Pol • CNES • CNIM-Bertin Technologies • CS Group • Daniel Steger • Dassault Aviation • David Monniaux • DCNS • Défense Conseil International (DCI) • Defense.gouv • DGA • EADS • EDEN Cluster Federation • Elno • Elysée • Erys Group • Eurenco • Eurocopter • Eurogiciel • Four Seasons Hotel • Photomontage by Fredéric Bourges (p.31) • Gallice • Geos • GICAN • GIFAS • Herakles • Hispano-Suiza • IHEDN • iStrat • Le Bristol • Le Meurice • Losberger RDS • MBDA • MEDEF • Morpho • Nexter • Odas • Optsys • Orolia Group • Park HYATT • Renault Trucks Defense • Roxel • Sagem • SEMA World • Senate • Snecma • Sofema • Sofradir • Sorhea • Stéphane Rabut • Sterela • Survey Copter • Sysdream • Texelis • Thales • Titan Aviation • Turbomeca

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