“War economy” is a long-term project
PARIS: The transition to a “war economy” announced by Emmanuel Macron in the spring should allow the defense industry to ramp up in the face of the specter of a major conflict, but the project is struggling to materialize.
In return for an increase of more than a third of the budget of the future military programming law (LPM) announced on Friday – 400 billion euros between 2024 and 2030 – the President of the Republic called on armies and manufacturers to “do more”. faster, better, and sometimes less expensive” in the supply of military equipment.
The conflict in Ukraine has highlighted the weaknesses of France, which wants to have a “full army model” but calculated as precisely as possible, especially in terms of ammunition stocks or surface air defense.
Despite having 200,000 workers, the arms industry, whose production capacity has been cut to the limited needs of the last 30 years, according to the president, “must do things differently, dramatically shorten production cycles, not succumb to complexity.”
“Ammunition consumption and equipment failure in combat require rapid production and delivery,” we emphasize at the Ministry of Armed Forces, where meetings are held with manufacturers to determine levers.
The goal, for example, is to reduce the production time of the Caesar cannons supplied to the Ukrainian army from 24 months to 12 months, and the production time of the projectiles it fires to 9 months.
For militaries, it is a matter of reducing the paperwork required by 20%, especially in armaments programs that need to be more standardized to contain costs. The state is also considering a mechanism that prioritizes protection orders over those from the civilian world.
Manufacturers need to be able to increase their production quickly. According to Eric Beranger, CEO of rocket maker MBDA, this will “take some time”.
“The best solution would be to stockpile rockets to wait for the moment when we get to the right stage. That’s expensive. The alternative is to stockpile raw materials, components to produce faster,” he explained during an IFRI conference this fall.
“Relatively limited” margins
Who “pays” for these shares? asks another industrialist.
Cédric Perrin, LR vice president of the Senate Foreign Relations and Defense Committee, laments: “Manufacturers need orders to speed up, but we haven’t talked to them about budgets, financing of strategic reserves,” which condemns the “com revolution.”
Before investing, manufacturers require visibility. To respond to this, the government plans to establish a pre-order system and guarantees to the manufacturer to ensure that future orders are more sensitive.
It is also necessary to identify potential “bottlenecks” that could slow down production. According to the Ministry of the Armed Forces, about 200 of the 4,000 companies in the French defense industry, mostly SMEs, “will not be able to get up to speed”.
“We should know that the reason for this is the lack of equipment, limited human resources, insufficient resources,” the ministry said.
With many manufacturers reporting difficulty hiring, one way to increase the workforce, if necessary, would be to bring back recent leavers or create a pool of personnel with indispensable skills for the job. defense industry.
To speed up tariffs, “rooms for maneuver have been identified in the short term, but it must be taken into account that they are relatively limited,” agrees Guillaume Faury, president of the French aviation and space industries (Gifas) and Airbus Group, but “There are many longer-term opportunities.”
The wording of the war economy is extreme, judge some, such as international consultant Marc Chassillan.
“In terms of industry, if today we are at level 1 on the scale, level 2 is the industrial base capable of meeting the needs imposed in the 1960s and 70s, level 3 is the rearmament plan of 1936, and level 4 is actual war. would be economy, 1915-1918”.
According to him, “With the prepared LPM, we will be much lower than the 2nd level”.