E - Finmeccanica

More documents

Recommendations

Info

H I G H L I G H T S 9/2010 FINMECCANICA MAGAZINE and, the government believes, a magnet for inward investment. There are extra tax breaks for small businesses, entrepreneurs, and for companies setting up outside the UK’s three most prosperous regions. Tax credits for research and development, rather than being swept away as feared, are likely to be re-targeted towards high-tech, high-growth companies. Business leaders welcomed the tax changes, but are awaiting further details of Britain’s industrial direction. These may come later this year, with publication of the Treasury’s Comprehensive Spending Review (CSR), a major document that will set out three-year spending priorities for everything from education to defence. The Treasury, holder of the nation’s purse-strings, is currently engaged in negotiations with each government department about their spending needs. However, a good guide to the government’s thinking about the future of Britain’s manufacturing and technology industries is a report by the entrepreneur Sir James Dyson. His Ingenious Britain report was commissioned by the Conservative Party, and has won many plaudits, not least from Prime Minister David Cameron, who called it a “blueprint for creating a generation of innovation and enterprise”. At the heart of the report is a call for a cultural change in attitudes to engineering and science in order to provide industry with a higher skilled workforce. The report is music to the ears of many business leaders, who believe that any revival in engineering and technology must start with the basics – that is, with education. Company bosses and employers’ groups hope that Sir James’ recommendations will help form a fullyfledged industrial strategy; not one that merely reacts to day-to-day events, but a detailed roadmap for the next two decades. Mr Cameron, through various speeches in past months, has demonstrated sympathy for such views, as have other political heavyweights in the Cabinet, such as Vince Cable, Business Secretary, and Ken Clarke, a former Chancellor of the Exchequer. The trouble is, any strategy that involves spending money has to be done against the backdrop of straightened economic times. The point is illustrated by a new government attitude towards Foreign Direct Investment (FDI). Since the early 1980s, when Britain began attracting Japanese carmakers to its shores, billions of pounds have been spent encouraging FDI. But Britain can no longer afford to be so generous, says Mr Cable. “Having very substantial amounts of money which we are splaying out in grants and subsidies: we cannot do that. There is a budgetary problem which we inherited. The second reason (against big subsidies) is that it is actually very bad policy,” he said. According to UK Trade and Investment, part of Mr Cable’s department, FDI generated 94,000 jobs in 2009, 20% up on 2008. Although the number of inward investment projects fell from 1,744 to 1,619, the importance of FDI for job creation cannot be underestimated. So, the government certainly will not be closing its doors to FDI. All the indications are that the government will re-double its efforts. As well as the work already done by UKTI, Mr Cameron told UK diplomats and ambassadors in a speech in July that he wants to “inject a new commercialism” into the Foreign Office. “If you want to keep Britain’s great ambassadorial residences, then I want you to show me that every day you are using them relentlessly to open new trade links and to generate new business for Britain,” Mr Cameron said. The message is that Britain – despite budget cuts, despite a growing protectionism elsewhere in developed economies – is still open for business. In fact, Britain has no choice but to be open if it is to restructure its economy. Take the energy sector. The multi-billion-pound expansion of wind and nuclear power generation is dependent on investments, skills and technology from abroad. Any company involved in alternative energy could find the UK a thriving market over the next decade and beyond. Except that there is now a question mark over the state subsidies that were intended to kick-start the expansion of nuclear generation. A review of the funding process is underway, and could take 6-12 months. But most observers believe that without an injection first of public money, private money will not be forthcoming. The defence industry is in a similar position. Britain’s single largest manufacturing sector, employing directly or indirectly 300,000 people, is bracing itself for cuts in the Ministry of Defence’s (MoD) annual £36bn-a-year budget, perhaps by up to 20%. In July the Audit Commission, an official body that monitors government spending, said that the MoD was “living beyond its means”. The Defence Secretary, Dr Liam Fox, clearly agrees. Manufacturers will have to offer “better value for money,” Dr Fox said recently. The quid pro quo, Dr Fox promises, is a clearer vision about what the MoD needs from equipment suppliers. He intends to update the 2005 Defence Industrial Strategy by setting out more clearly the ‘sovereign capabilities’ that should remain in the UK. That extra visibility will certainly be welcomed by the industry. But these are uncertain times. And the UK’s business-friendly government may have to take some very unfriendly measures once its various policy reviews are completed. If there is a single message running through what the Government has said so far, it is this: short-term pain for long-term gain. Above: Bank of England, London 18 19
H I G H L I G H T S 9/2010 FINMECCANICA MAGAZINE US DEFENSE: FUTURE EXPENDITURE David J. Berteau Senior Adviser and Director, Defense Industrial Initiatives Group’ Center for Strategic and International Studies DESPITE THE BUDGETARY PRESSURES ON THE ACCOUNTS OF THE US DEPARTMENT OF DEFENSE, THE NEED TO TACKLE AND OVERCOME CURRENT CHALLENGES WILL REQUIRE THE US AD- MINISTRATION TO TAKE DECISIONS AIMED AT MAKING CON- TRACTS MORE EFFICIENT AND OPTIMISING COMPETITIVENESS For the past decade, European defense firms such as <strong>Finmeccanica</strong> have seen growth in their revenue. The US independent think tank, the Center for Strategic and International Studies (CSIS), tracks the financial performance of European firms in a separate European Defense Index. That Index shows overall revenue growth of nearly 100 per cent since 2001, but it also shows that most of that growth has not been in Europe. European defense spending has declined steadily in the past 10 years, as CSIS will report in a new study to be released later this summer in Washington, DC. Our study shows that most of the growth has been in Asia, the Middle East, and the United States. This makes it important to understand what is likely to happen as increasing budget pressures impact spending by the US Department of Defense (DoD) over the next five to ten years. In late July, President Obama signed the Fiscal Year 2010 Supplemental Appropriations Act, adding USD 33 billion and bringing FY2010 DoD spending to more than USD 700 billion. FY2011 projections call for a similar number, although the final congressional figure may be slightly down. Of that total, roughly USD 400 billion is spent on contracts for systems, research, and services. This total has doubled in the past ten years and has been the source of revenue growth for defense contractors, including those from Europe. DoD is dependent on the private sector for needed equipment, technology, services, and personnel support, and those needs are not going away. But will that growth trend continue? Almost certainly, it will not. Last January, US Defense Secretary Robert Gates announced an Obama Administration commitment for one per cent annual growth in DoD spending. This seems promising, until we realize that there are three big challenges for future US defense spending and that none of these challenges will be solved by that one per cent growth in the defense budget. The first challenge for US defense spending is how to move away from the dependency on supplemental appropriations. Since 2001, Congress has provided DoD up to USD 200 billion per year in unbudgeted spending through supplemental appropriations for Overseas Contingency Operations (or OCO). In FY2010, total OCO funding will be more than USD 160 billion, designed to pay for the added costs of operations in Iraq and Afghanistan as well as support costs back home. A detailed look at what the money is spent for will show 20 21
Page 1: Finmeccanica magazine n.17 - 9/2010
Page 4 and 5: 9/2010 FINMECCANICA MAGAZINE The 20
Page 6 and 7: H I G H L I G H T S 9/2010 FINMECCA
Page 10 and 11: PH RI GI MH O L I GP HI AT NS O 9/2
Page 16 and 17: H I G H L I G H T S ©NASA 9/2010 F
Page 18 and 19: F O C U S 9/2010 FINMECCANICA MAGAZ
Page 28 and 29: H I S T O R Y 9/2010 FINMECCANICA M
Page 30 and 31: A E R O N A U T I C S 9/2010 FINMEC
Page 32 and 33: H E L I C O P T E R S 9/2010 FINMEC
Page 34 and 35: D E F E N C E A N D S E C U R I T Y
Page 36 and 37: D E F E N C E A N D S E C U R I T Y
Page 38 and 39: S P A C E 9/2010 FINMECCANICA MAGAZ
Page 40 and 41: E N E R G Y 9/2010 FINMECCANICA MAG
Page 42 and 43: T R A N S P O R T A T I O N 9/2010
Page 44 and 45: T R A N S P O R T A T I O N 9/2010
Page 46 and 47: P E O P L E 9/2010 FINMECCANICA MAG
Page 48 and 49: P E O P L E 9/2010 FINMECCANICA MAG
Page 50 and 51: E V E N T S 9/2010 FINMECCANICA MAG
Page 52 and 53: E V E N T S 9/2010 FINMECCANICA MAG
Page 54 and 55: C H A R I T Y 9/2010 FINMECCANICA M
Page 56 and 57: AMERICANNews CYBER SECURITY: A CHAL
Page 58 and 59: AMERICANNews ASSESSING DEFENSE MARK
Page 60 and 61: AMERICANNews VISITING ELSAG: BEHIND
Page 62 and 63:
AMERICANNews WHEN COMPLIANCE MEANS
show all

E - Finmeccanica

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?