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The chief executive of MBDA, Europe’s largest missile maker, has urged EU policymakers to ensure that the UK plays a role in the bloc’s new strategy to build up its defence industry as the region seeks to respond to increased geopolitical tensions.
Éric Béranger said that the UK, despite having left the EU in January 2020, was part of “the geographical Europe”.
“When we are talking defence, geography matters,” he told the Financial Times in an interview.
As such, added Béranger, the European Commission’s proposed defence industrial strategy “could yet be another opportunity to widen the framework of defence co-operation, and an opportunity to consider a specific regime with the UK”.
Created in 2001 by the merger of sensitive UK, French and Italian defence assets, MBDA is owned by BAE Systems and Airbus, which hold 37.5 per cent respectively, with the balance held by Leonardo of Italy.
Hailed as one of the few successes among Europe’s cross-border defence alliances, MBDA builds advanced missiles and missile systems for each of the three branches of the armed forces. It produces long-range cruise missiles such as the Franco-British Scalp/Storm Shadow as well as Meteor, the next-generation air-to-air missile. Its German arm, together with Sweden’s Saab, makes the Taurus missile for Germany, Spain and South Korea.
Béranger’s comments come after Brussels last week published a proposal for the EU’s first strategy for the bloc’s sector. Encouraging everything from joint procurement to prioritising EU-based defence companies over non-EU suppliers, it has set a target to procure at least 50 per cent of its budget from European defence suppliers by 2030.
The EU initiative is now subject to suggestions from member states that must give their final approval, and defence companies are increasing their lobbying over the rules and targets and how they will work in practice.
French President Emmanuel Macron in particular has pushed for the EU’s spending to favour weapons bought in the bloc to help reduce its long-standing practice of buying US-manufactured equipment.
UK officials have also held preliminary discussions with senior Brussels officials to make the case for British companies not to be excluded, according to people briefed on the conversations. The commission is not opposed to a broad definition of what would constitute “European” products, the people added.
Béranger said it was also important for the new strategy to provide a clear definition of what was meant by “European made”. One way of defining “procured in Europe” would be to make sure that the so-called “design authority” — the company or organisation able to modify and evolve the design of a product — is in the region.
Like other defence companies, MBDA has had an uptick in orders from governments since Russia’s invasion of Ukraine in 2022, and has been racing to increase production in response.
Revenues rose to €4.5bn last year from €4.2bn in 2022, according to financial results published on Wednesday. Its order intake was €9.9bn, up from €9bn in 2022, helped in part by a large order from Poland for cruise missiles to build up its air defences. A big investment push is under way of €2.4bn from 2023 to 2028.
But after years of lean military budgets, Béranger admitted that it has taken time for MBDA to increase the pace and quantity of material it can produce.
The group has managed to speed up production of its Mistral short-range missile from 10 per month to 20 now and aims to reach 40 eventually, although progress on other products has been slower.
Retooling the supply chain and building up more stock has proven particularly challenging because its missiles can include about 10,000 components from an array of smaller companies.
The industry, said Béranger, needed to readjust after 35 years of “so-called peace dividends” during which it had managed to maintain its technological capabilities despite budgets shrinking, but at the expense of “extending the delivery times”. The Ukraine conflict had been a “wake-up call” with time no longer being available.
“If you’ve spent 10 or 30 years of not working your muscles and losing them, then you can go to the gym tomorrow morning . . . but it [does not mean] you will immediately rebuild your muscles.
“MBDA is adapting to all these changes to get battle ready,” he said.
Additional reporting by Henry Foy in Brussels