MBDA, a European Company at
the Heart of Major European Projects
a European company aiming to be at the heart of major European projects as well
as Europe’s technological driving force in the guided weapons sector".
Interview with Marwan Lahoud, Chief Executive Officer of MBDA, certainly the
largest but also the most successful of integrated European companies within
aeronautics and defense sector. "MBDA
is above all a defence company, therefore its prime value is collective security
and world security."
This article, first published in "Défense"
is reproduced here with its author's permission (© Défense.
Marwan Lahoud, CEO of MBDA : « we
need to remain very vigilant to maintain a technological lead »
MBDA inherited a very
rich history when it was created through the merger of Europe’s leading
companies in the missile industry, these included Aerospatiale Missiles of
France, Matra BAe Dynamics of France and the United Kingdom, LFK of Germany and
the missiles part of Finmeccanica in Italy. As a result, MBDA now possesses
state-of-the-art technologies, first-class know-how and products known
throughout the world. These attributes make it the world leader in its sector,
ahead of American manufacturers. MBDA was the first and is now the most
successful of integrated European companies in the aeronautics and defence
Although the year is not
yet finished, I can announce that MBDA's sales will be comparable to last
year’s, which were about € 3.5 billion. No doubt the figure this year will be
slightly lower, but not nearly as low as expected only two years ago. This is
thanks to the commendable efforts made by our production and export teams to
help us to deliver on time and prepare for future contracts.
I wouldn’t talk about a
turnaround because the results obtained this year do nothing to change the
structural reasons for the shrinkage in the world market for missiles and
missile systems. I think the conclusion is rather that the contraction phase in
our sector will happen slightly later than we expected, and I am delighted with
this development. Our sales have kept strong as the result of work that we have
been carrying out on several fronts at the same time; supporting the French
government and respecting commitments are two key elements, and the domestic
market also played its role. Export successes are another point that I would
like to emphasize.
In terms of results,
sales have increased strongly from €1.8 to 3.2 billion between the end of 2002
and the end of 2005 (before the integration of the German subsidiary LFK).
Operating profits have increased by a factor of more than five, from slightly
more than 1% to more than 7% of sales over the same period. The order book
dropped slightly from €13.2 to 12.4 billion, but still represents four years’
activity so that MBDA can face the future with optimism.
I don't want to talk
about the financial results any more, I am more concerned with the Group’s
industrial and human achievements. Industrially, MBDA has carried out a great
deal of work and therefore has made a lot of progress on the four fronts that I
earmarked on becoming CEO of the company. These were to improve product quality,
to set up a sound cost basis, to create a genuine business development
structure, and finally to meet deadlines.
Marwan Lahoud with Werner Kaltenegger (LFK now MBDA
This approach was
initiated four years ago and is now bearing fruit. In human terms, MBDA has
succeeded in genuinely integrating the three founding entities, Matra Bae
Dynamics, the missiles part of Finmeccanica and Aerospatiale Missiles, including
their executives and personnel to become a well integrated company. This
experience will help us to integrate LFK, now MBDA Deutschland, with equal
success. I am sure that we will achieve this. MBDA is now organized around a
genuine international management team leading all the Group's employees,
regardless of their nationality. In my opinion, this is one of MBDA's greatest
successes and one that will enable us to face tomorrow's challenges with the
best means at our disposal.
My personal case is
not very important, my Company's success is much more important than my own.
My duty is to serve MBDA,always keeping the future of the Company in mind,
particularly because managers come and go while companies remain.
Having said this, I have
learnt a great deal, and will mention two things. Firstly, I am more convinced
than ever that we will never succeed alone and that the prime responsibility of
a company manager is to build up a team around him, not only accepting but
taking advantage of all the differences and the range of skills. Secondly, when
change is necessary, it is always possible for the company to adapt and even
reorganize itself, and success will be assured if we remain open to dialogue and
show respect to others.
Successful launch of
an Aster-30 SAMP/T Missile on November 14, 2006 
Due to its inherent
nature MBDA is a European company, therefore its aim is to be at the heart of
major European projects in the missile and missile system domain and as a
consequence in the equipment of future European platforms. The Company’s aim
is also to be a driving force in the technological independence of Europe in
the guided weapons sector.
Armament for future
platforms has already begun with the FREMM multi-mission frigate project in
which France and Italy are now cooperating. This involves 27 ships and as thus
is the biggest cooperative naval programme ever carried out. MBDA is the
military core of the FREMM because all the ship’s weapons are being developed
and produced by MBDA. MBDA has been participating in the design of the ship in
terms of weapon systems since the very beginning.
MBDA at Euronaval 2006
Defense Industrial Strategy (DIS) in the United Kingdom offers the best
example of the role that MBDA can and must play towards achieving the
technological independence of Europe, and guaranteeing that the European Defense
Technological and Industrial Base (DTIB) remains strong in the long term.
objective in Europe is to be clearly at the center of defence issues starting
at the early study stages and to be perceived as an essential player in the
system, in the same way as the major carrier manufacturers are perceived. We
should never forget that missiles are the tip of the iceberg that delivers the
required military impact, no system, no matter how complex, is fully efficient
if it is not accompanied by "effectors".
MBDA is now finalizing
the acquisition of Bayern Chemie, a propulsion company equally owned by EADS and
Thales, to reinforce its position in the propulsion field and particularly in
very high technology ramjet propulsion. MBDA already has expertise in this
field sharing a 50/50 stake with
which is another important player in the propulsion field. After the
integration of Bayern Chemie,
MBDA will have a competitive propulsion cluster.
MBDA cooperates in
partnerships with European and non-European countries, and considers them to
be an essential element of its development strategy. This is the prerequisite
for long-term success in a high technology field .
I started a new company
organization last year with the support of the management team. We believe that
this organization that is being steadily implemented will improve MBDA’s ability
to compensate for cyclical movements and maintain its performance in the long
term. It would be pretentious to think that our present organization is final. I
would say that it is adapted to our present needs and to future requirements as
they are seen today. This does not mean that we should not consider possible
improvements, particularly in terms of rationalization of production and the
number of sites. For example, starting in January 2007, we will combine the
three sites in the Paris region into a single site, after having started an
industrial reorganization of the Région Centre (Orléans Region) last year
to become even more competitive. We are carrying out similar operations with our
sites in the United Kingdom and in Germany.
Défense: The question of your share holding was raised a few months ago, with
the possible withdrawal of some shareholders. Declarations made by BAE
managers now show a clear wish to remain, how do you
Guy Griffiths and Marwan Lahoud presenting
MBDA results for 2006
I did hear that my
shareholders wanted to keep their holdings in MBDA's capital, no doubt because
it is a good business and it is not so badly managed after all. Mike Turner,
CEO of BAE Systems and Pierfrancesco Guarguaglini, CEO of Finmeccanica, have
stressed the importance to their two groups of remaining in missile systems
which is seen as a strategic sector for their defense activities. This is
consistent with the analysis already made by EADS. This is why I think that
MBDA's position, supported by Europe’s three large aeronautical and defence
groups, is secure for the foreseeable future.
We have very good
relations, undoubtedly because MBDA is one of their most profitable and stable
subsidiaries. Their desire to keep their share in MBDA's capital is a sign of
these good relations and MBDA’s solidarity with its three shareholders. I would
like to add that the equity situation that I have mentioned is a guarantee to
each company that its interests will be protected. Furthermore, these three
shareholders have seats on the MBDA Board of Directors, giving their
representatives a good opportunity to play an active role in an activity that is
a world leader in its sector, rather than simply defending the specific
interests of particular groups. In this sense, they are genuinely associated
with MBDA's strategic management and share the highest levels of responsibility
With a number of
suppliers their status has in many cases evolved from that of supplier to one of
partner, here I am thinking of
Selex (Finmeccanica group), and even BAE Systems and
EADS. In addition, we also benefit from putting them into competition with each
other occassionally which further helps to improve our own competitiveness. In
any case, the idea is to make our suppliers more responsible towards the overall
effort made by MBDA to deliver on time; our suppliers also have to be motivated
to assure our final customer's satisfaction.
There are many
opportunities with Russia, but we could also talk about other countries, India
for example. MBDA's aim is to build up sustainable relations with reliable
manufacturers, and their nationality is not the main criterion. Beyond its
customer - supplier relations, MBDA has the necessary skills and means to
advance a truly effective strategy, and one of the elements of this strategy is
to set up European and international partnerships.
Above all, MBDA is a
defence company, therefore collective security and world security are its main
values. If each MBDA employee is convinced of this, as I am, then motivation and
conscientiousness in their work will be strengthened.
Working in defence also means being at the service of a higher cause, therefore
we need to cooperate with and be at the service of others including MBDA
employees, MBDA shareholders, and also the countries with which MBDA is working.
Another value is our
multicultural approach; we do not have any dominant national culture, I try to
listen to everyone and take advantage of our diversity, which is how MBDA has
become an integrated European company.
We also need to remember
that MBDA is a very high-tech industrial company. Therefore, it is important to
remain close to engineering problems that are the basis of the company's
success. Without technical excellence, the company would never be able to
respect its contractual commitments, either in terms of deadlines or cost, and
therefore would no longer be efficient or sustainable. As an engineer by
education, I value pragmatism for programmes and ambition for the
company. Therefore I try to emphasize programme management through organization,
to make it the basis on which we can build performance to guarantee MBDA's
capacity to have a strategy and to implement it.
Finally, I am
convinced that we can never succeed alone and that team work is essential to
assure information transparency and fluidity. Unlike others, the MBDA model is
a collective game.
is too frequently perceived as being nothing more than respecting the
environment. In my opinion, sustainable development
forms part of the logic that already encompasses ethics, particularly in terms
of international trading of weapons, and the social responsibilities of
companies concerning equality of opportunity, equality between men and women,
the right to education and training or any other subject related to social
Regardless of their
field of activity, responsible industrialists must consider these three
requirements more so now than ever before. These three
requirements include respecting in -force regulations, and also the voluntary
and personal actions taken by all, regardless of their position, within the
company. Consequently, they form an integral part of the group of values that
contribute to the forging of MBDA's identity.
The industrial world
must accept this desire to protect the environment. This concern must be
particularly strong in the mechanical, electronic and chemical industries that
are very important within MBDA. The specific nature and character of our
weapons business do not release us from this responsibility in any way.
environmental approach adopted by MBDA relates primarily to our industrial sites
and particularly work conditions offered to our employees. My first thought is
the energy diagnostics and treatment of our buildings.
This global approach also needs to be related to our production life cycle, from
conceptual design to dismantling, including the choice of materials and
components used in the manufacturing process. The new element is dismantling. At
the moment, the industrial life cycle stops at maintaining in operational
condition. What about the "end of life" of our equipment? I would like MBDA to
be a center of excellence in demilitarization, firstly because we have the
knowledge and skills to do it, but also to demonstrate that we accept our
I don't think so. The
technological superiority of European defence products is an element that still
protects this industry. However, some countries have now reached a high-tech
level in some segments and they often have a price advantage that can make all
Therefore, we need to
remain very vigilant to maintain a technological lead and to continuously work
towards keeping European products competitive. This is why we need to maintain
a high investment level in R&D and continuously improve our processes to
It is no doubt the only
solution. European companies are the only way forward.
They must also be accompanied by an even more global
industrial approach. The economy is now completely international, therefore we
need to find the means of globalizing companies, while maintaining our bases
without denying our culture, origins and ties, otherwise we would tend towards
concentration, then shrinking, and finally disappearance.
Above all, it is
important not to draw any hasty conclusions after each war. The concept of
Network Centric Warfare became a panacea after the 1990-1991 Gulf War. More
recent operations in Iraq and in Lebanon illustrated the limits of this
I think that the major
intelligence to be drawn is the ever-increasing need for forces on the ground to
have multi-purpose weapons, very flexible in use. The capacity to use a system
for very different missions is a genuine advantage. This is the case
particularly for ground combat, with the need for portable weapons capable of
destroying hot targets (combat tanks or armored or unarmored vehicles), cold
targets (bunkers, buildings), fixed or moving targets with the same
efficiency. Experience in the field clearly shows that wire-guided missiles are
better adapted to this type of need than missiles fitted with infrared homing
Firstly, I would like to
say that defence expenditure in France has not reduced for several years and I
am very pleased about this, but it is true that elsewhere defence expenditures
are being reduced, particularly in the United Kingdom and in Italy. MBDA has
anticipated this type of risk by setting up a rational industrial organization,
a policy to reduce costs in the four European countries in which it is located
to be able to face a shrinkage of the market.
Beyond the organization
and industrial processes, MBDA's objective in recent years has been to make its
industrial facilities as flexible as possible, for example to be able to adapt a
previously developed product for a new mission. This possibility limits the
customer’s costs and development times, while producing an end product that
satisfies requirements at lower cost. Finally, faced with the prospect of a
shrinkage in MBDA’s domestic market, export has always been a key element of
MBDA's commercial policy, and in this respect I am very pleased about the
remarkable report made
by Yves Fromion, Member of Parliament, on the subject that should contribute
to the development of exports in the future.
Both demand and supply
are necessary to develop a market. My field is supply, and this has now been
rationalized and consolidated in Europe with MBDA; it would be wonderful if
demand could be rationalized as well. We have already created a European
domestic market and provided independent capabilities within Europe, but a
genuine European defence policy is still missing. I am very delighted to
observe the build-up in power of the
European Defense Agency that is an "embryo" of demand rationalization. We
need to monitor how its activity grows in the future through budgets allocated
to it and the programmes that it is asked to perform.
This depends on the
sector, but in the special case of aeronautics and defence, the answer is
clearly yes, there is no "technology gap".
Europe might even have
a higher technological level than the United States in some fields.
I think that choices
made in Research and Development have been good and will enable Europe to
maintain this level. Moreover, the educational standard of our engineers is
high, and we will be able to maintain our level if graduating engineers continue
to believe that starting their working life as an engineer in industry is an
excellent way of advancing their careers.
 Défense, issue
n°125 is dated January – February 2007.
is the bimonthly
review of the Union of IHEDN (Institute for Higher National Defence Studies)
Auditors Associations. Subscriptions: BP 41-00445 Armées).
01.44.42 31 47
& Fax: (331) 45 51 54 65.
Boucheron, French Member of Parliament (MP of Ille-et-Vilaine, SP). Former
President of the Defense Commission of the French National Assembly (1988-1993). Member
of the Defense Commission.
locations of the group..
Lahoud's Profile :
Graduate of the École Polytechnique, as
an engineer educated at the École Nationale
Supérieure de l'Aéronautique et de l'Espace (Higher National School of
Aeronautics and Space).
Aeronautics, Defence and Armament
For the French
government: He began his career at the DGA (General Directorate of
Armament) in 1989, where his most notable responsibilities were acting as
Computer Center Manager at the Landes Test Center and then heading test facility
renovation projects and investment coordination. ..
Project Leader within
the tactical missile systems engineering department in 1994 going on to become
Assistant Director for Missiles and Space. He participated in the writing of
the 1995 - 2000 military programming law, organising several political -
military or industrial work groups, including a work group dealing with the
policy for the prevention of the proliferation of weapons of mass destruction,
Franco-German cooperation within space programmes and broader air defence
Appointed Chargé de
Mission within the Ministry of Defence in May 1995. At the end of 1995 he
became adviser for industrial affairs, research and armament within this
department at a time when the sector was changing dramatically in terms of the
armed force structure and also the consolidation of industrial facilities. In
this respect, he was placed in charge of industrial consolidation operations
initiated in February 1996. In June 1997 he became Chargé de Mission of the DGA
Human Resources directorate.
In May 1998, he joined Aerospatiale as Director of Development, his functions
including the setting up of agreements with the Lagardère Group for the merger
between Aerospatiale and Matra Hautes Technologies. He then acted as General
Secretary for the Aerospatiale - Matra Hautes Technologies board.
Delegate Director responsible for strategic coordination of the Matra
Aerospatiale Company, and Assistant Delegate Director for military affairs, in
With the creation of
EADS in July 2000, he was appointed Senior Vice President Mergers and
Acquisitions with responsibility for EADS mergers and acquisitions. These
included the creation of the Airbus Company, MBDA, Astrium and EDSN.
CEO of MBDA
since 1st January 2003.
President of the Association of the Friends of Saint Cyr, Vice President of the
CEPS, Director of the Aspen Institute and Director of the French American
Honours: Chevalier dans
l’Ordre de la Légion d’Honneur.
Lahoud is married with one child.
Member of the French National Assembly (MP of Cher Department, UMP), Member of
of the Defense Commission.
Final qualification firing successfully completed for MBDA'ASTER SAMP/T Air