Paris Air Show

Outgoing GIFAS chair still wary of weak dollar

 - December 12, 2006, 8:37 AM

In his swan song as the outgoing chairman of French aerospace industry association GIFAS last month, Philippe Camus called 2004 a “satisfactory year in a difficult environment.” He said prospects for the country’s aerospace and defense firms are brighter for 2005 with greater volumes of new orders flowing in–especially from commercial airliner and business aircraft programs–and exports achieving record levels.

But the greatest concern for the industry, Camus said, is the continuing low value of the U.S. dollar against the euro which is undermining the competitiveness of French and other European aerospace companies, and especially small- and medium-sized enterprises (SMEs). “You have to plan long term and, unless it is temporary, the current exchange rate of around $1.30 is unacceptable,” he told Aviation International News. “We have crossed the red line and as long as the currency gap remains a major headache we have to take important steps to maintain and strengthen our industrial potential while at the same time updating the know-how of our workforces.”

Camus stepped down as co-CEO of Europe’s giant EADS aerospace and defense conglomerate in April after a bitter and protracted power struggle. He has now joined EADS’ French shareholder Lagardère as co-managing partner. His departure from his role as GIFAS chairman came as he completed the usual pair of 24-month terms and his slot has been filled by Dassault Aviation chairman and CEO Charles Edelstenne.

In 2004, the combined revenues for GIFAS members grew by 3.2 percent to €26.3 billion ($32.3 billion), which was comparable to levels prior to the Sept. 11, 2001 terrorist attacks. Orders won by GIFAS’ aerospace member companies last year reached an estimated €35.8 billion ($44 billion), the third highest total ever, but a 14.2-percent fall on the previous year. Camus stressed that this decline in orders was exceptional as 2003 had included a single order for 180 Airbus A400M military transport airlifters enabling GIFAS companies together to notch up €40 billion ($49.2 billion) in orders.

Camus predicted that revenues for GIFAS members this year would be a “few percentage points higher than in 2004, but probably not in double figures.” The association’s companies now sit on an order backlog amounting to four years of output.

Cost reduction is still the order of the day among GIFAS firms, with managements under pressure to be increasingly inventive in restructuring their business. At the same time, explained Camus, it is essential that they pay close attention to export markets and maintain the integrity of supply chains between contractors and vendors.

According to the seasoned French aerospace executive, shifts in production–especially among aerospace equipment makers– from western Europe to countries with lower economies is “inevitable if the dollar remains at present levels.” He called for government financial assistance for SMEs to offset some of the impact of the weak dollar, and also to support research-and-development programs.