December 2004/January 2005 
Volume 03, Issue 8 
Industry Wrap

Subsidies debate continuesSubsidies debate continues

In the latest step in the ongoing dispute over subsidies to large civil aircraft manufacturers, members of the U.S. Trade Representative's office and other government agencies exchanged information with their European Union counterparts in Geneva on Nov. 4 and 5.

Since the Geneva meetings were an opportunity for each side to seek answers to questions about competing claims, neither government characterized the outcome Both sides also have publicly stated their preference for continuing the consultations. It is clear, however, that significant divisions remain between the governments—and the media.



Lockheed's new head aims to reinvent

With defense procurement spending likely to slow, Lockheed Martin's new chief executive, Robert J. Stevens, is looking beyond the company's traditional arsenal to propel growth, The Wall Street Journal reported.

According to the Journal, the strategy to pursue software and systems engineering is central to Lockheed's recent string of contract wins that has boosted the United States' biggest military contractor, which had lagged behind rivals Boeing and Northrop Grumman in financial and stock performance.



Boeing, Northrop Grumman team for spacecraft bid

Boeing and Northrop Grumman have partnered to bid on building the successor to the space shuttle. The new spacecraft would take explorers to the moon and Mars, the Houston Chronicle reported.

Though Congress hasn't yet approved funding, NASA plans to award design contracts to a pair of competitors for the new Crew Exploration Vehicle by late 2005 and wants a single spacecraft-development team in 2008. The U.S. Congressional Budget Office recently projected spending of nearly $25 billion by 2020 on the new exploration vehicle.

EADS-Thales merger in the works?

The French government is pushing for European Aeronautic Defence & Space Co. to acquire defense-electronics company Thales SA of France to create a global defense and aerospace giant, according to The Wall Street Journal.

A possible combination of EADS and Thales would mark a new step in the consolidation of Europe's defense industry, which began four years ago when the governments and aerospace companies in France, Germany and Spain created EADS. According to the Journal, a source close to the talks described the combination of EADS and Thales as "a European Boeing."

Before such a transaction could take place, cross-border complexities must be resolved. According to the Financial Times, outgoing French finance minister Nicolas Sarkozy sought to smooth over a rift with his German counterparts by ruling out any transaction that would upset the balance of national power in the Franco-German aerospace company.

Finmeccanica expands U.S. campaign

Elements of Finmeccanica's U.S. strategy are falling into place, and company executives signal that additional steps to bolster its position lie ahead next year, Aviation Week magazine said.

Finmeccanica is following its European competitor EADS in trying to gain market share in the United States. EADS recently completed its first U.S. acquisition, buying Racal Instruments in October.

Finmeccanica may make its move late next year with some sort of small acquisition, Finmeccanica Chairman and CEO Pier Francesco Guarguaglini told Aviation Week. He didn't elaborate on what specific type of business Finmeccanica was considering, saying only it could be anything from an electronics supplier to an aerostructures manufacturer.

In October, Finmeccanica subsidiary Agusta Westland formally completed a nearly $7 million expansion of its Philadelphia production site. The enlarged facility provides final assembly of the single-engine A119 Koala helicopter—work that previously was performed in Italy.


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