The European industry should develop future fighter capabilities cooperatively

You joined Leonardo in May 2017, as a ‘newcomer’ to the defence sector. What was your first impression of the general condition of Europe’s defence industry? What are its biggest challenges?

  My first impression was that of a sector in constant evolution, aware that to face challenges we must move forward together, share strategic choices and pool financial resources. Today, in the face of increasing global competition, it is necessary to approach defence and security at a European level. We can achieve our objectives through mechanisms that encourage collaboration between Member States and the European industry, both in terms of research and development and in procurement decisions. As a dynamic company, Leonardo wants to actively contribute to the future of the defence and security industry by building on the skills and expertise we have developed over the years working on major national and European programmes.

On a European level, financial instruments that can support the competitiveness of companies in the defence and security sector offer a significant opportunity. This funding should be considered as additional to national budgets rather than as a substitute for national spending. Another fundamental challenge is the necessary rationalisation of demand that will follow common requirements.

A strong, innovative and competitive defence industry is a prerequisite for strengthening European defence and for achieving ‘strategic autonomy’. What is needed to bring Europe’s defence industry to that level?

To day, most of the major European programmes are at an advanced stage of maturity, for example the Eurofighter, the NH90, METEOR and the A400M. But where are the new ones? This is one of the fundamental points. Aside from this, I have already stressed the need for dedicated financial instruments paired with a longterm vision of European defence. Another, equally important issue is technological innovation, a key factor across our sector and one to which Leonardo pays particular attention, allocating around 12% of our revenue to research and development to look forward to the challenges of the future in a sustainable way. Keeping Europe at the cutting edge of technological innovation will maintain our leadership and provide a great competitive advantage.

As the head of one of Europe’s biggest defence prime contractors, how do you assess recent EU initiatives such as the CARD, PESCO and the European Defence Fund? What difference can they make to EU defence cooperation and to the defence industry’s competitiveness?

Europe has its foot on the accelerator in terms of a common defence project. All the initiatives mentioned point in this direction, which will help limit the fragmented nature of individual national spending in the sector and help us define investment priorities. The difference these initiatives make is obvious because nothing similar existed before: no financing, no incentives, no disincentives. Therefore, a structured process can only encourage a positive response from the market, making all players more competitive. This will also help us make better investment decisions in line with the European Capability Development Plan.

I believe that the expertise of the European Defence Agency, with its in-depth knowledge of the sector, will be extremely important at all stages of this process.

Are you satisfied with the planned set-up of the European defence industrial development programme (EDIDP)? Can the €500 million foreseen for 2019 and 2020 be an incentive for new collaborative programmes?

As far as EDIDP is concerned, Leonardo, in-line with other companies from the sector, strongly supports the €500 million allocated for the scheme. We hope that the proposed annual €1 billion for EDIDP 2 will be confirmed, as part of the development window, in addition to the 500 million dedicated annually to research activities under the European Defence Research Programme (EDRP). It is also important to define which costs can be covered by European funding as part of military programmes, taking into account the unique situation of the defence sector where both research and procurement are handled differently than in the civil sector.

Some argue the consolidation process could be boosted by a genuine single market for defence with fair and open competition among producers and cross-border access of smaller industries to defence supply chains. What is your view on this?

A single market in defence does not currently exist. Armed Forces and defence remain national prerogatives. This does not mean however that there is no competition at an international level. It is not by chance that Leonardo generates 15% of its revenue in Italy and 12% in the UK.

As far as the supply chain is concerned, we are in favour of involving the best SMEs whose contributions are strategic for creating products that are cost-effective and of high quality.

One of the biggest PADR projects, dealing with unmanned naval systems (OCEAN 2020), is run by a consortium led by Leonardo. What are your vision and plans on autonomous systems (air, sea, land) beyond this specific project?

The success of the OCEAN 2020 project will allow Leonardo and its partners to further develop a wide range of skills and areas of expertise. In addition to our fundamental C4I and space capabilities, we are active in all domains related to autonomous systems: underwater, surface, air and space, including both fixed and rotary-wing autonomous systems. Looking at aerial capabilities specifically, Leonardo will be deploying innovative unmanned rotorcraft for advanced naval missions. These systems will be used alongside manned systems in line with the MUM-T (unmanned/manned teaming) concept.

Overall, we are committed to technological innovation across the entirety of autonomous systems, from the platforms themselves to their sensor payloads and mission systems. We envisage systems that support the remote piloting of unmanned aircraft, significantly reducing the workload of the human operator and allowing them to perform advanced missions.

The Ocean 2020 consortium is made up of a stunning 42 entities coming from 15 countries. Could this type of project involving an unusually high number of industry stakeholders and Member States become a model for collaborative defence research in Europe?

We believe that OCEAN 2020 perfectly represents the spirit of a collaborative European project, in which Leonardo, thanks to its dynamism and its proactivity, found a correct way to proceed. This is an inclusive project involving many countries and bringing large, medium and small companies together with research institutes and end-users. It is a complex ecosystem and one of Leonardo’s strengths is managing complexity. This was the winning card.

OCEAN 2020 is an excellent model because it exemplifies the spirit of European projects which must unite industry in the context of a healthy competition. Leonardo has actually entered not just as project co-ordinator of OCEAN 2020 but also as an active participant, in the case of the Generic Open Soldier Systems Reference Architecture (GOSSRA) project.

Leonardo is part of the consortium developing a European MALE RPAS, currently in the second phase of the definition study. What are the biggest remaining stumbling blocks for this project which is scheduled to see the delivery of the first system in 2025?

The two-year definition study started in September 2016 and is being carried out jointly by Airbus Defence and Space, Dassault Aviation and Leonardo. Full development should start in 2019 with a prototype flying for the first time at the beginning of 2023 and the first delivery of the system in 2025.

I believe that the project will continue to proceed with speed and efficiency. It is an excellent example of European collaboration that will help us overcome our dependence on foreign systems. The real challenge, once the development is complete, will be to export the system to third countries, both inside and outside the EU. Indeed, the export policy for cooperative programmes is a priority issue for future collaborations.

France and Germany last year relaunched plans to jointly develop a European fighter jet which could overhaul the European fighter industry and its three competitors: Eurofighter, Rafale, Gripen. As a key member of the Eurofighter consortium, what is Leonardo’s take on this? Could this become one of Europe’s flagship collaborative programmes?

We are convinced that the European fighter industr y could better release its potential from the development of a cooperative-based programme. But it is up to governments to move in this direction. We, the industry, stand ready to contribute. In this context, the precedent of the Eurofighter Typhoon, which has recently seen great success in Kuwait, Qatar and Saudi Arabia, is an excellent example of what European collaboration can produce.

I believe that Leonardo has the necessary skills to contribute to the development of any future manned or unmanned system, thanks to our experience in providing platforms, avionics, mission systems, integration and armaments. 

Leonardo is a leading company in the space sector and is involved in defence and navigation programmes such as EGNOS and Galileo. What is your assessment of the EU’s space strategy and of its defence implications?

The European space strategy is laying the groundwork for solid future growth in European space activity. The European industry has been called upon to contribute to the definition of the strategy, fully recognising its role as an impor tant stakeholder. We expect this to continue in the implementation phase of the strategy itself. Leonardo, which carries out a wide range of activities in the space sector, is a key player in Europe and we will be able to effectively grasp the opportunities offered by the development of the space economy and by new technological trends. We are also primed to take advantage of new business models that are emerging in private spaceflight, an industry called ‘NewSpace’.

The protection of space assets, from satellites to orbital space stations, is also a priority issue, one where we as industry can make a very important contribution.

Leonardo, as an international group, has a leading role in the European Commission’s Galileo and Copernicus Space programmes. Through Spaceopal , a joint venture between Telespazio and the German Space Agency, Leonardo is responsible for managing the entire Galileo system and its performance, including providing some of the constellation’s cutting-edge technologies. We also provide essential support for Copernicus in the development of satellites, on-board systems and operations and also in the various applications of the programme.

Considering that space is one of the sectors in which military capabilities play a major role, it is clear that Europe must develop, maintain and improve its capabilities in both space-based and dual-use systems built specifically for defence. We should consider sectors such as communication, earth-observation, protection for space-based infrastructure and terrestrial counterparts, intelligence gathering and early-warning. In this framework, some capabilities will be developed at national level and then shared, while others will be developed at European level.