BMI's Executive Summary

[TOP]

In Q407 the government of President Nicholas Sarkozy began to play a more active role in global politics. Closer relations with major powers such as China and the US are likely and an expanded peace-keeping role is possible. France has been trying to mediate in the Lebanese political crisis, and supports a tough line on Iran's nuclear programme. On the domestic front, Sarkozy has faced unrest in the poor suburbs (banlieues) for the first time since his election and his rapid response is likely to be a model for future riots. We unfortunately view the conditions creating the riots as intractable in the short term and forecast sporadic outbursts of violence in the years to come.

France's defence industry represents a significant part of the French economy: 2004 figures show it is worth EUR15bn in terms of orders per annum, EUR3-4bn in terms of exports per annum, and approximately 180,000 people are employed directly by the industry. The industry has been undergoing significant restructuring and consolidation. In 2005 the government privatised the largest French maritime defence organisation, Direction des Constructions Navales (DCN), since renamed DCNS, which is now part-owned by Thales. This was part of a policy through which the state hopes to exercise greater influence over the defence industry by assuming the role of customer, rather than a stakeholder with no voting power. Further consolidation of Europe's 'big four' – Thales, EADS, Finmeccanica and BAE Systems – may be necessary in the future. In the third quarter, the government reached a deal with Germany to streamline the cumbersome 'double key' management of EADS and Airbus, but it remains to be seen whether political tensions between the two major stakeholders will now take a back seat.

France ranks among the world's top five arms exporters. The country was the third largest supplier in the 1999-2005 period, with 7% of global deliveries. However, the sustainability of this position is not assured in the face of renewed competition by manufacturers from the US and Russia. France has signed strategic co-operative accords with three Arab countries, including Libya, which could open up the door to future major arms deals.

France is one of Western Europe's most stable and secure countries. Centuries of democratic experience allow it to steer a safe course through any political unrest. Its foreign policies – especially its propensity to take distance from those of the US – dictate that it is far from being the most threatened of states amongst the region. Furthermore, its well-established defence industry works effectively, both independently and in partnership with France's allies, to ensure that the Republic's armed forces are more than capable of defending France's national interests, with surplus equipment available to propel a thriving arms trade across the world.

Contents

[TOP]

Chapter 1 - Executive Summary

SWOT Analysis

France Political SWOT

France Security SWOT

France Defence Industry SWOT

France Economic SWOT

Chapter 2 - Political Overview

Domestic Political Outlook

A Sense of Drift

External Political Outlook

Chapter 3 - Security Risk Analysis

BMI’s Security Ratings

Risk Ratings

Table: France Regional Risk Ratings

Table: France Regional Risk Ratings

Regional Security: Europe

Overview

Internal Terrorism

International Terrorism

Criminal Activities

France Security Risk Ratings

France Conflict Risk

France Terrorism Risk

France Physical Safety Risk

Chapter 4 - Security Overview

Internal Security Situation

External Security Situation

International Terrorism

Trafficking

Chapter 5 - Military Structure & Defence Industry

Armed Forces

Table: Regional Armed Forces (including conscripted) 2006

Current Strength

International Deployments

Table: Principal Deployments of the French Armed Forces:

Co-ordination And Joint Operations

Table: Selected Training Events/Exercises In Which France Took Part In 2004

Weapons Of Mass Destruction

Market Structure

Recent Changes

Arms Trade Overview

Exports

Imports

Industry Trends & Developments

Table: France Key Players

Procurement Trends & Developments

Table: Recent Big Contracts Won

Table: Other Major Purchases and Procurement Plans

Chapter 6 - Industry Forecast Scenario

Army Enlargements

Table: Army Enlargements

Government Expenditure On Defence Industry

Table: - Government Expenditure On Defence Industry

Chapter 7 - Macroeconomic Forecast

First-Quarter Recovery?

Table: France - Macroeconomic Forecasts

Chapter 8 - Company Profiles

Dassault Aviation

DCN

EADS

Thales

Chapter 9 - BMI Forecast Modelling

How we generate our industry forecasts

Defence Industry

Sources

Chapter 10 - Appendix A: Risk Ratings Methodology

Conflict Risk Methodology

Terrorism Risk Methodology

Physical Safety Risk Methodology

Overall Risk Rating

State Vulnerability Index Methodology

Competitive Landscape for European Defence & Security: Sample of  
Companies Ranked

[TOP]

Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Defence & Security Sources

[TOP]

BMI's European Defence & Security Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: