{"id":67139,"date":"2024-06-18T15:42:29","date_gmt":"2024-06-18T15:42:29","guid":{"rendered":"https:\/\/one.sightlinemg.com\/defensenews\/uncategorized\/2024\/06\/18\/europes-armor-industry-must-merge-arquus-boss-says\/"},"modified":"2026-08-20T12:30:10","modified_gmt":"2026-08-20T12:30:10","slug":"europes-armor-industry-must-merge-arquus-boss-says","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/defensenews\/global\/europe\/2024\/06\/18\/europes-armor-industry-must-merge-arquus-boss-says\/","title":{"rendered":"Europe\u2019s armor industry must merge, Arquus boss says"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">PARIS \u2014 The European market for light and medium armored vehicles has too many players and needs to consolidate, as some companies currently lack the size necessary to push research and development, according to Emmanuel Levacher, the CEO of French armored-vehicle maker Arquus.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Joint European purchasing of armored vehicles is also needed to bring the industry together, with various national programs too small to result in high production volumes and economies of scale, compared to U.S. acquisition programs that can be a factor 10 or 20 bigger, Levacher said in a briefing with reporters at the Eurosatory defense show in Paris on Tuesday.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Belgium\u2019s John Cockerill <a href=\"https:\/\/www.defensenews.com\/industry\/2024\/01\/15\/belgiums-cockerill-to-buy-french-armored-vehicle-maker-arquus\/\"><u>in January agreed to buy Arquus<\/u><\/a>, and that deal is expected to go ahead next month, Levacher told Defense News. The combined company targets defense revenue of \u20ac1 billion ($1.1 billion) by 2026, an amount that the Arquus CEO says is enough to invest around \u20ac50 million to \u20ac100 million a year in \u201cnew capacities, new technologies and so on.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Arquus posted 2023 sales of \u20ac600 million, and the company invested \u20ac20 million of its own money in R&amp;D as well as \u20ac30 million of French government funds, according to Levacher.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cWe can still do lot of things, we are also quite agile, but I think there is a limit to also being able to finance new development, innovation and R&amp;D,\u201d Levacher said, \u201cIt\u2019s not an exact science, but I think if we would be the double our size it would be better. There is an issue of reaching a critical size.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Consolidation of European armored-vehicle programs will be key to bringing the industry together, according to the Arquus CEO. He said just joining up the industrial players wouldn\u2019t be enough, as that would still leave European orders fragmented. \u201cThen you will not reach what we want to achieve, which is economies of scale and reaching higher volumes, which is really the key.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Levacher said the French-German Main Ground Combat System program to develop a future main battle tank is a demonstration of \u201chow difficult it is to align the needs of different European countries.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Europe can help by synchronizing and aligning R&amp;D programs, which allows firms \u201cto learn to work with each other and build some trust between the different companies,\u201d Levacher said. \u201cAnd then little by little, we may go together on some programs.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The executive said an example of cooperation is the Famous program financed by the European Defence Fund, which is providing the basic building blocks for the French-Belgium program for the VBAE small reconnaissance vehicle. Finland\u2019s Patria presented an all-terrain vehicle developed within the Famous program at Eurosatory on Monday.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Europe\u2019s fragmented armored-vehicle industry faces competition in export markets, with firms from Turkey, South Korea, Israel and South Africa competing for international orders. Turkish firms are also increasingly a competitive threat in Europe, where they are \u201cquite aggressive\u201d in vying for orders for armor, according to Levacher.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">With Turkey a NATO member, its companies offer products that are \u201cvery close\u201d in terms of concept and regulation to those offered by European Union firms. Turkish defense armored-vehicle makers are competitive on cost, if not necessarily cheap due to the cost of technology that needs to be included.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cThey have very good players in Turkey, and they have invested a lot in product and technologies,\u201d the Arquus CEO said. \u201cWe respect them very much, because they have made a lot of progress. It\u2019s nothing surprising that labor cost is a bit lower in Turkey, so that makes a bit of the difference.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Governments increasingly demand localization as a condition for contract awards, including European clients such as Belgium, which is \u201cnot a very exotic country for us.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cThis is the way the world is,\u201d Levacher said. \u201cWe cannot just export the hardware as we used to do 30 years ago. So now it really comes together with service and with localization, and this is true in many, many countries, even smaller countries which do not have a local industry, but they would like to develop some capacities.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Arquus has sold 11 Bastion four-wheeled armored personal carriers to Ukraine, with another batch of 100 units to come, Levacher told Defense News. The VAB Mk3 6-wheeled APC \u201cwould be relevant\u201d for Ukraine as long as it can protect itself from drones, according to the CEO. \u201cIn the Ukraine war, all the armored vehicles are under huge threats, but as long as it maybe can protect itself, especially from UAVs, that would make sense.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The company is also seeing more demand for the Caesar 155mm howitzer, for which Arquus makes the six-wheel chassis, not only from France and Ukraine but also other markets.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Many middling companies are unable to muster the research-and-development oomph needed to push the market forward, according to Emmanuel 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