European aerospace industry needs urgent restructuring
The European Commission adopted a communication on the European aerospace industry on 24 September 1997, on the initiative of Martin Bangemann, Commissioner responsible for industry. The communication compares the structure of the European industry with that of the American industry, and concludes that the European industry must consolidate - and consolidate more rapidly than up until now. The American aerospace industry, by far the world market leader with 58% of world sales compared to Europe's 29%, has undergone a radical consolidation process, while the European industry remains fragmented. The Commission does not want to propose, let alone prescribe, the eventual shape of the European aerospace industry. However the communication sets out the pros and cons of possible scenarios for the future structure of the industry. Firstly, consolidation at national level - merging companies within Member States - might bring about some improvements. However, even in this scenario, the biggest European firms would still be only one quarter the size of their American competitors. Secondly, partial integration - of national companies along the lines of Airbus (currently) - cannot be a long-term solution because of the small size of European companies. Also, it risks isolating some companies and does not guarantee sufficient synergies, between military and civil production for example. The best solution is likely to be European clusters. These might be sector specific or multi-sectoral, or consolidate all European aerospace companies. This latter possibility is, however, unrealistic in the short term so the most promising solution would be European clusters covering several sectors. In order to assist in the restructuring process, the Commission is proposing a number of measures, including: - Aerospace should be a focal point for research within the Fifth Framework Programme; - European public procurement rules should be applied to defence products; - The adoption of the European Company Statute could provide the industry with the legal framework for integration; - A European Civil Aviation Authority could ensure a uniform certification process and reduce costs significantly; - Europe should intensify its standardization activities in the aerospace sector, so as to avoid a de facto US monopoly.