Royal Aeronautical Society, London - 29 September 2006
Minister for Defence Procurement, Lord Drayson, addresses the Royal Aeronautical Society
Lord Drayson, Minister for Defence Procurement
Speech to the Thales seminar ‘Doing Business in France’
I am very pleased to be here today. And I would like to welcome, in particular, our guests from France who have come over to share their knowledge and business experience. This seminar is an excellent and timely idea. I am very grateful to the Defence Manufacturers Association for organising it and to Thales for sponsoring it.
A strong defence industry is crucial to strong defence. This is one of the key tenets of the Defence Industrial Strategy. Exports play a big part in the success of firms such as Thales and others represented here. That is why we encourage defence exports and support them directly through DESO. It is why we encourage firms to do business in France.
It is fitting that Thales should have made this seminar happen. It is a very practical initiative from a firm that is particularly good at setting up and developing long term business relationships. These have certainly helped its success in winning contracts from the MOD – it is involved in some 70 projects up to and including the future carrier. And I know that such contacts are a key part of doing business in France.
There is of course a fine tradition of co-operation and collaboration between the UK and France in the defence field – from aircraft and aero-engine manufacture during the First World War by the likes of Nieuport, Gnome-Rhone and Sopwith, through to the Future Carrier. But I am not here today to be nostalgic or to speculate about the politics of collaboration. Today is about business. And I want to emphasise the importance of business. By that I mean the very concrete business of delivering equipment to meet the challenges our Armed Forces face today in Iraq, Afghanistan and elsewhere, and those they will face in the future. As close Allies, we and France will often face these challenges together.
In the past many big collaborative projects – Concorde, Eurofighter – have had a strong political dimension. It would of course be wrong of me to suggest that this no longer exists. But it can no longer be overriding. I will make sure we put defence requirements, timescales and budgetary limits first. Under DIS, work will go to those who best meet our future defence needs, not because of any European, US or other bias.
So our approach to collaboration will be pragmatic not dogmatic. Practical not political. My consistent aim will be to deliver the capability our forces require, at the best value to the taxpayer. In achieving that, of course, collaborative projects have not always had the best track record. They have a reputation of being over-budget, over-time and underperforming. But this is not inevitable or always true. Look at what has been achieved with Storm Shadow, developed through a collaboration of European companies to produce an unrivalled missile system for the RAF and the French Air Force.
So we must learn from both the successes and mistakes of past years. Wherever new collaborations are formed, we must be practical and realistic in our approach to give them the best chance of delivering what we need when we need it. The Future Carrier is a good example of creating the right structures to do this. We are proceeding on the basis that collaboration, while very welcome, must not delay the project.
Opportunity
Let me say a few words about doing business in France. I am a great admirer of the country and of French business. It has a well earned reputation for scientific, engineering and managerial excellence.
But let’s be frank. France has also had a reputation as a difficult business environment for foreign firms. A “ Chasse Garde”. It is perceived as a market that is protected and can be difficult to break into.
In my experience it is a hard market. But by no means an impossible one. British firms have done well in France and are doing so now.
To give a few current examples:
- The Paris transport body, RATP, has purchased £8m worth of particulate reduction systems for its buses from Eminox in Lincolnshire – indeed 35% of Eminox’s export turnover is made in the French market.
- The French railway operator, SNCF, has bought its laser track-cleaning equipment from Laserthor in Hampshire.
- And over the past six months small UK companies have won contracts in France worth £1.4m for de-mining equipment; military packing containers; specialist diving gear and water purification equipment.
And there are clear signs of a will to go further:
- France’s equivalent to the CBI – Medef – has said it will lobby French presidential candidates to “open a window to globalization”.
- The French Defence Ministry has created the Ixarm website to improve connections with industry, and it has notified companies of a “new relationship” with the international financing sector.
I welcome this. Opening to flexible international partnerships is the only way to provide first-rate value for money in an ever more complex and challenging environment – and recognise the reality of a global defence marketplace.
All this means that there are particular opportunities for UK firms today. The French Armed Forces, like our own, are readjusting to meet the expeditionary requirements of a post-Cold War world. That is a path down which we have gone a long way. They share our desire to achieve value for money and to find innovative business solutions.
The bottom line is that, to win in France, British firms, need to be able to show that we can bring added value. And there are many areas where we undoubtedly can. Our expertise in financing, for example. Or our experiences of Private Finance Initiative projects – indeed I am delighted that we have a French secondee working in our Private Finance Unit.
And, technically, there are specific sectors where the UK is considered by France – rightly − to be a centre of excellence. Infra-red equipment and observation cameras for example.
I am sure you will benefit from hearing from our French guests and picking up some tips on how to do business in France.
In my own experience, doing business in France − as in any other export market, requires patience. Your potential customers will want to feel comfortable that you are really committed to the long term before trusting you with their business. Taking the trouble to properly research the market as you develop your contacts and build relationships is obviously important and often the best way is to enter into a collaborative partnership with a local business. Apart from that, doing business in France is pretty much the same as anywhere else, except the food is better.
To sum up, my message this morning is one of encouragement. Defence Ministries need a thriving and competitive defence sector, particularly among small and medium-sized suppliers. The more effectively you can access the British and the French markets the better. You can count on the support and encouragement of my Ministry to build new business in France. But we all know that there can be no substitute for your own business drive, energy, imagination and effort in building the relationships you will need.
I wish you well and I hope that today's discussions will help you forward.
