An exclusive look at Naval Group’s market ambitions (and potential challenges)
While in Paris during Eurosatory, MONCh had a chance to sit down with François Dupont, Naval Group’s new International Business Director, for an exclusive discussion on the company’s next steps in the international naval market.
Mr. Dupont kicked off the discussion by indicating that: “Today, exports represent approximately 30% of Naval Group’s orders; our aim is to bring this up to 50 per cent without, however, seeing the share of business in France decrease.” To this end, Naval Group will secure its existing international customer base as well as seek new customers. “Increasing the share of our exports will contribute to our objective to raise our turnover from €3.5billion to 4.5/5billion in the next few years,” Mr. Dupont added.
Perhaps one of the most important moves the company is making toward reaching this goal is the alliance it is working to build with Fincantieri, the Italian shipbuilder Naval Group has developed the multi-purpose frigate FREMM (FREgate Multi Mission) with. Discussions between the two groups have been officially ongoing since September 2017, and the plan has often been referred to in the media as a ‘merger’ or a ‘Naval Airbus;’ however, during the interview Naval Group was quick to dismiss talks of either: “This will not be a ‘Naval Airbus;’ it will be an alliance, for which we are seeking inspiration in the Renault-Nissan-Mitsubishi model.”
The roadmap for this project was submitted at the end of June, which means at present and for the coming first few years, the two companies might still compete against each other on a few projects. “The first thing we will have to do commercially will be aligning our products in order to work together on bids we will have jointly selected,” said Mr. Dupont; “It might even include the common development of new products, which we will then offer to new customers.”
The future alliance has already been testing its ability to conquer new markets with the joint bid submitted by Naval Group/Fincantieri to Canada for its Canadian Surface Combatant (CSC) requirement. “The offer is based on the FREMM, with the hull and the propulsion based on the Italian FREMM and the combat management system based on Naval Group’s SETIS,” specified Mr. Dupont.
This first step was however off to a shaky start, as the two companies chose to submit their bid directly to Canada’s Ministry of Defence rather than through the Public Services and Procurement Canada (PSPC). A risky move, as the PSPC showed its discontent, but Mr Dupont is adamant this did not decrease the bid’s likelihood of success: “We chose this option because the Canadian government requested we give our intellectual property rights even before selection, something we would be prepared to discuss if we are selected, but not before; however, since then we have been engaging in various discussions with the relevant Canadian authorities and we are confident they have heard the strengths of our bid,” noted Mr Dupont. According to him, the key strength is that the ship already exists thus facilitating the start of construction for the selected Canadian shipyard.
While this may have been seen as a distinctive advantage until recently, especially from a political standpoint with so many shipbuilding jobs at stake, the recent win of BAE Systems in the Australian Future Frigates programme with the Type 26 (story here), a ship so many have dismissed as a ‘paper ship’, might shed a new light on the competition out there. But Mr Dupont remains confident: “We always welcome competition, it is an excellent drive for development and innovation.”
Perhaps Fincantieri’s loss against BAE Systems in Australia, which might also raise questions as to whether such scenario might play out similarly in Canada given the added interoperability the choice of the Type 26 as CSC might give to Australia and Canada, will give the future alliance the boost it needs for the joint development of new products?
In the meantime, Naval Group keeps its eyes on the objective of increasing exports in various markets. In Europe, it is considering offering its successful ‘Scorpene’ submarine for the option of two additional submarines for the Italian Navy (Marina Militare – MM). “This might be difficult though, considering that the MM currently operates Type 212 submarines; acquiring a new class of submarines would likely bring considerable additional operational, training and maintenance costs,” noted Mr. Dupont. Potentially more positive outcomes are expected for the ORKA project in Poland, where Naval Group is also offering its ‘Scorpene’ armed with the cruise missile. High level discussions were taking place in Poland during the Eurosatory week.
Naval Group is also looking to expand its reach in the Latin American and African market with its ‘Adroit’ offshore patrol vessel (OPV), which was just selected by the Argentinian Navy. “This ship was developed with our own resources [rather than customers’] and is very advanced, compared to other offers within the same category,” noted Mr Dupont; “This ship was designed with these navies in mind.” The company has also just recently submitted its bid for Brazil’s ‘Tamandaré’ corvettes.
Dr. Alix Valenti