The French civil aerospace industry experienced a record year in 2007, which is the latest year for which any official figures are available.
Reported (non-consolidated) revenue for the French civilian aerospace industry in 2007 increased approximately 12.3 percent over 2006 to €24.5 billion (GIFAS annual report 2008), a result of the dynamic air transport market that year. The market continued to enjoy a modest increase in 2008 due to full order books but 2009 should register a sharp decrease as expected postponements or cancellations of aircraft by the airlines begin to be really felt. Estimates vary and may well change, but currently are running at a decrease of about 15% for France.
France’s aerospace industry manufacturers derive two thirds of their revenues from civilian sector programs, the majority of which are destined for export. This large export market is due to the sustained interest in Dassault Falcon Jet, Eurocopter and Airbus aircraft, all of which have products that now successfully have captured global market share. Well over70% of French civil aerospace production was exported.
Despite EADS’ widely publicized delivery and ensuing financial problems surrounding the Airbus A380 and the A400M military transport planes, both Airbus and Dassault Falcon Jet again raised production rates in response to record increased orders for aircraft, especially the new Airbus A350. Six manufacturers account for the majority of the French market: Airbus (large commercial aircraft), Eurocopter (light-to-heavy helicopters), Dassault Falcon Jet (high-end business jets), ATR (passenger and cargo turboprop aircraft for regional transport), Socata (light aircraft and business turboprops), and Reims Aviation Industries (light aircraft). With the exception of Reims Aviation, these manufacturers are owned in part or entirely by the same parent company, EADS (European Aerospace Defense & Space). Created in 2000, this consortium dominates the civil aviation market.
For the fourteenth consecutive year, the value of orders for aircraft outweighed industry revenues (deliveries) in 2007. While this should help cushion the industry somewhat from the impact of the worldwide global crisis, manufacturers are preparing for significant cancellations which will impact the total supply chain. Unlike the automotive industry, the aviation and aeronautics industries were hit hard after 9/11, forcing them into a period of cost savings, mergers and planning which is now paying off by helping them to better weather the recession. The continued weakness of the dollar against the euro, and willingness on the part of procurement executives to purchase in dollars nevertheless offer opportunities for US firms selling to the OEM’s supply chains.
The overall health of the industry will suffer in 2009, slowing opportunities. Nevertheless, the best prospects for American aerospace firms in this market continue to be associated with the manufacturing of new aircraft, notably, the Airbus A350 XWB, the A380 and Airbus Military Company’s A400M (to a lesser degree as it is a European military program). Many OEM and equipment manufacturers have adopted a “U.S. dollar” strategy on existing and new programs to take advantage of the cost savings offered by the exchange rate. In addition, it is important to note that with the cost reducing strategy called Power 8, Airbus reduced the number of its direct suppliers by increasing the sourcing of whole assemblies and work packages. Exceptions to this trend may be made in cases where a potential supplier is able to propose technical innovations, or where delivery or quality problems exist.
French aerospace manufacturers are seeking to subcontract more and more in order to manage costs. With new projects in various stages of development and the value of the Euro vis-à-vis the U.S. Dollar, the French market provides substantial opportunity to the most competitive and innovative U.S. aerospace firms.