1 00:00:00,120 --> 00:00:03,400 Speaker 1: Now. Shares and defense companies rallied on Monday, and European 2 00:00:03,480 --> 00:00:07,360 Speaker 1: bonds slipped on the growing expectation of more military spending 3 00:00:07,360 --> 00:00:10,480 Speaker 1: in Europe and potentially more government borrowing to fund it. 4 00:00:10,840 --> 00:00:14,840 Speaker 1: Joining US now is ASD Secretary General Jan P. The 5 00:00:15,040 --> 00:00:18,959 Speaker 1: ASD is the voice of the European aerospace, security and 6 00:00:19,040 --> 00:00:22,720 Speaker 1: defense industries based in Brussels. Yeah, thank you so much 7 00:00:22,760 --> 00:00:26,440 Speaker 1: for joining us this morning. Your members must be gearing 8 00:00:26,520 --> 00:00:29,400 Speaker 1: up for more defense spending. Do you have any idea 9 00:00:29,560 --> 00:00:31,760 Speaker 1: of how much defense spending we could be seeing? 10 00:00:31,920 --> 00:00:33,840 Speaker 2: Well, it's difficult for me, so first of all, thank 11 00:00:33,840 --> 00:00:36,559 Speaker 2: you for inviting me. It's difficult for me to actually 12 00:00:36,760 --> 00:00:39,280 Speaker 2: point the numbers on how much we would be seeing. 13 00:00:39,280 --> 00:00:42,240 Speaker 2: But we expect the major race in the defense spending 14 00:00:42,600 --> 00:00:45,239 Speaker 2: on the European side. I think what we're looking at 15 00:00:45,360 --> 00:00:49,080 Speaker 2: is to pay the price for the underinvestments indicates if 16 00:00:49,120 --> 00:00:52,400 Speaker 2: the US is pulling out, and obviously this is going 17 00:00:52,440 --> 00:00:55,280 Speaker 2: to be for European industry to ramp up and to 18 00:00:55,360 --> 00:00:58,040 Speaker 2: deliver towards what would be expected from member states to 19 00:00:58,080 --> 00:01:00,200 Speaker 2: be able to continue first of all the support to 20 00:01:00,240 --> 00:01:03,760 Speaker 2: themselves and to continue to support their support to Ukraine. 21 00:01:04,200 --> 00:01:06,440 Speaker 2: I think we are in for a very tough situation. 22 00:01:06,600 --> 00:01:09,160 Speaker 2: But the further you would push that down the line, 23 00:01:09,240 --> 00:01:11,440 Speaker 2: the tougher it would be. And I think at the 24 00:01:11,480 --> 00:01:16,039 Speaker 2: same time, it's evident that we have extremely good examples 25 00:01:16,080 --> 00:01:19,120 Speaker 2: of how quickly European industry can ramp up when we're 26 00:01:19,160 --> 00:01:22,200 Speaker 2: given the orders. We see that on the ammunition side, 27 00:01:22,360 --> 00:01:25,640 Speaker 2: with the Iran metall as an example, gearing up from 28 00:01:25,680 --> 00:01:28,880 Speaker 2: seventy thousand rounds of one fifty five millimeter ammunition to 29 00:01:29,000 --> 00:01:31,760 Speaker 2: one point one million in five years. We see sab 30 00:01:32,040 --> 00:01:36,120 Speaker 2: Net recruiting six three hundred employees in only two years, 31 00:01:36,959 --> 00:01:39,320 Speaker 2: and we see MBDA, and the list could be made long. 32 00:01:39,440 --> 00:01:42,640 Speaker 2: MBDA is making a lot of own investments. So when 33 00:01:42,680 --> 00:01:45,440 Speaker 2: we're getting the orders, the industry is ramping up quickly. 34 00:01:45,440 --> 00:01:48,760 Speaker 2: The problem today is that for the bigger systems, for 35 00:01:48,800 --> 00:01:50,960 Speaker 2: the bigger platforms, we don't get the orders. There's a 36 00:01:50,960 --> 00:01:53,520 Speaker 2: lot of policy making, a very little action on the 37 00:01:53,520 --> 00:01:54,480 Speaker 2: European side. 38 00:01:54,840 --> 00:01:57,800 Speaker 3: President Trump, though, who suggested that you can buy US 39 00:01:57,840 --> 00:02:00,960 Speaker 3: made weapons to give to Ukraine to use for themselves 40 00:02:01,040 --> 00:02:03,640 Speaker 3: as well, are you concerned that there will be pressure 41 00:02:04,280 --> 00:02:08,639 Speaker 3: on Europe to buy American Are you concerned that domestic 42 00:02:08,680 --> 00:02:11,960 Speaker 3: European manufacturers will be bypassed. 43 00:02:11,840 --> 00:02:14,399 Speaker 2: And that's absolutely a major concern. I think there will 44 00:02:14,400 --> 00:02:18,080 Speaker 2: be a huge political pressure for European leaders to place 45 00:02:18,120 --> 00:02:20,600 Speaker 2: the orders there on the US market, and I think 46 00:02:20,600 --> 00:02:23,680 Speaker 2: this is one of the biggest mistakes and failures Europe 47 00:02:23,760 --> 00:02:27,080 Speaker 2: can do. If you want to have a sustainable and 48 00:02:27,200 --> 00:02:33,720 Speaker 2: strong and non dependent European defense industrial base, the only solution, 49 00:02:33,840 --> 00:02:35,440 Speaker 2: the only way to get there is to place the 50 00:02:35,480 --> 00:02:38,480 Speaker 2: investments on the European side. So I think what our 51 00:02:38,680 --> 00:02:41,160 Speaker 2: leaders need to do is to stay firm against that 52 00:02:41,200 --> 00:02:43,360 Speaker 2: and actually invest in the European defense industry. 53 00:02:44,040 --> 00:02:47,760 Speaker 1: When we're looking at investments in the defense industry, are 54 00:02:47,800 --> 00:02:50,920 Speaker 1: you having your eye on whether Europe will agree to 55 00:02:51,080 --> 00:02:54,919 Speaker 1: joint financing for this debt? Is that something as something 56 00:02:55,160 --> 00:02:58,400 Speaker 1: in your view, can make the amount of defense spending 57 00:02:58,440 --> 00:02:59,160 Speaker 1: even larger. 58 00:03:00,040 --> 00:03:03,040 Speaker 2: It's one of those things where it's a bit difficult 59 00:03:03,080 --> 00:03:06,560 Speaker 2: for us to have a view on exactly how things 60 00:03:06,560 --> 00:03:09,600 Speaker 2: should be done when it comes to the scope or 61 00:03:09,600 --> 00:03:11,799 Speaker 2: the size of the spendings that needs to be done. 62 00:03:11,800 --> 00:03:15,519 Speaker 2: It's really a political issue. We try to deliver when 63 00:03:15,520 --> 00:03:17,480 Speaker 2: we get the orders. What we see right now is 64 00:03:17,480 --> 00:03:20,440 Speaker 2: that it seems to be blocking in the system where 65 00:03:20,440 --> 00:03:24,120 Speaker 2: the need is very well identified and the orders are 66 00:03:24,160 --> 00:03:27,280 Speaker 2: still not coming. So indeed there's a huge challenge to 67 00:03:27,360 --> 00:03:34,640 Speaker 2: find the money. What I personally is very concerned about 68 00:03:34,720 --> 00:03:38,280 Speaker 2: is every time I hear that Europe cannot afford to 69 00:03:40,000 --> 00:03:42,200 Speaker 2: build up or ramp up its own defense industrial base 70 00:03:42,360 --> 00:03:46,120 Speaker 2: or defense capabilities in general. I think this is simply, 71 00:03:47,400 --> 00:03:54,880 Speaker 2: if you excuse my language, economy, it's only about priorities. 72 00:03:55,000 --> 00:03:57,920 Speaker 2: Europe has the GDP, it has the economy, it has 73 00:03:58,280 --> 00:04:00,800 Speaker 2: financial strength, but it needs to get it's act together. 74 00:04:01,640 --> 00:04:03,720 Speaker 3: Okay, all right, so it's a strong language on that. 75 00:04:04,160 --> 00:04:07,880 Speaker 3: What do you make then, as you say, Europe knows 76 00:04:08,000 --> 00:04:10,320 Speaker 3: the difficulty. It's a German defense minnester only a few 77 00:04:10,400 --> 00:04:14,160 Speaker 3: months ago talked about Russia's military producing in three months 78 00:04:14,160 --> 00:04:17,599 Speaker 3: what Europe produces in a whole year. How do you 79 00:04:17,640 --> 00:04:21,280 Speaker 3: assess Europe's defense production capacity? Now you've talked about when 80 00:04:21,360 --> 00:04:24,040 Speaker 3: you get the orders you can ramp up. How quickly 81 00:04:24,080 --> 00:04:26,240 Speaker 3: do you think you can really ramp up to a 82 00:04:26,360 --> 00:04:29,560 Speaker 3: level that we you know, potentially needs to deter Russia. 83 00:04:30,800 --> 00:04:33,400 Speaker 2: Well, I think, as said in the beginning, I think, 84 00:04:33,440 --> 00:04:35,960 Speaker 2: first of all, to be very blant and very honest 85 00:04:36,040 --> 00:04:38,200 Speaker 2: this is going to be tough, but I think at 86 00:04:38,200 --> 00:04:41,480 Speaker 2: the same time, European defense industry today as we speak, 87 00:04:41,640 --> 00:04:45,080 Speaker 2: is not challenged at is maximum capacity. Even now. What 88 00:04:45,160 --> 00:04:47,560 Speaker 2: we see is a number of companies that are challenged 89 00:04:47,560 --> 00:04:51,640 Speaker 2: to a hard capacity or high capacity level on certain products, 90 00:04:51,640 --> 00:04:54,839 Speaker 2: but we do have major European players that are not 91 00:04:54,960 --> 00:04:58,520 Speaker 2: even challenged at all. Even the contrary, they could be 92 00:04:58,600 --> 00:05:02,000 Speaker 2: challenged to keep production going at a low rate for 93 00:05:02,120 --> 00:05:05,160 Speaker 2: as long as possible, And an excellent example of that 94 00:05:05,279 --> 00:05:08,320 Speaker 2: is the A four hundred M where we see I 95 00:05:08,360 --> 00:05:11,080 Speaker 2: don't recall the exact numbers, but if I take it 96 00:05:11,160 --> 00:05:14,280 Speaker 2: from my back of my head, roughly some hundred and 97 00:05:14,360 --> 00:05:17,000 Speaker 2: sixty or some one hundred and sixty to one hundred 98 00:05:17,040 --> 00:05:20,920 Speaker 2: and seventy aircraft or something like that has been ordered. 99 00:05:21,520 --> 00:05:24,760 Speaker 2: Three quarters of that has been actually delivered. And now 100 00:05:25,240 --> 00:05:28,599 Speaker 2: maybe with a ten or twelve deliveries per year, there's 101 00:05:28,760 --> 00:05:30,560 Speaker 2: a few more years to go, three or four more 102 00:05:30,600 --> 00:05:33,760 Speaker 2: years to go before before the quarter is filled and 103 00:05:33,800 --> 00:05:37,240 Speaker 2: we don't get new orders. And when the last aircraft 104 00:05:37,320 --> 00:05:41,160 Speaker 2: has been delivered, if Europe then realizes we need more 105 00:05:41,440 --> 00:05:43,880 Speaker 2: four one hundred a four hundred M and the last 106 00:05:43,880 --> 00:05:46,880 Speaker 2: aircraft has already been delivered. The supply chain has been dissolved, 107 00:05:47,120 --> 00:05:51,200 Speaker 2: you lose the capability, so we won't be able to 108 00:05:51,440 --> 00:05:55,279 Speaker 2: ramp up correctly. So my point being that as we speak, 109 00:05:55,600 --> 00:05:58,040 Speaker 2: there are so many companies that are not being challenged 110 00:05:58,080 --> 00:06:01,240 Speaker 2: to their maximum capacity, so it's simple important to have 111 00:06:01,320 --> 00:06:02,640 Speaker 2: that part of the picture as well. 112 00:06:03,760 --> 00:06:07,760 Speaker 1: Are your members focused on making more interoperable weapons across 113 00:06:07,839 --> 00:06:11,360 Speaker 1: Europe or is manufacturing for these products still siloed? 114 00:06:12,120 --> 00:06:16,279 Speaker 2: It is unfortunately siloed to a very large extent. It 115 00:06:16,400 --> 00:06:19,120 Speaker 2: is not what our members want. What we ask for 116 00:06:19,240 --> 00:06:23,280 Speaker 2: on the industry side is harmonization of the military requirements. 117 00:06:23,400 --> 00:06:26,719 Speaker 2: We ask for consolidation. On the demand side, we ask 118 00:06:26,839 --> 00:06:32,559 Speaker 2: for much large, larger procurements. But the consolidation really needs 119 00:06:32,600 --> 00:06:34,880 Speaker 2: to come on the demand side. As long as every 120 00:06:35,160 --> 00:06:38,120 Speaker 2: nation is playing on their own ground, if I may 121 00:06:38,160 --> 00:06:44,120 Speaker 2: say so, dealing with the detailed requirements that the other 122 00:06:44,240 --> 00:06:47,359 Speaker 2: the neighboring nation didn't have, what they don't align budgetary processes, 123 00:06:47,360 --> 00:06:50,120 Speaker 2: et cetera, et cetera. As long as that is the situation, 124 00:06:50,279 --> 00:06:53,760 Speaker 2: we will have a fragmented industry as well. Industry wants 125 00:06:53,920 --> 00:06:57,840 Speaker 2: the consolidation, so get that right, because if we don't 126 00:06:57,839 --> 00:06:59,960 Speaker 2: get it. We believe that we will have a very 127 00:07:00,279 --> 00:07:02,360 Speaker 2: tough being a competitive in the long run. 128 00:07:03,320 --> 00:07:05,960 Speaker 3: Yeah, I mean, and potentially Europe looks to be fragmenting 129 00:07:06,000 --> 00:07:09,080 Speaker 3: already in terms of a core number of countries gathering 130 00:07:09,120 --> 00:07:12,760 Speaker 3: in Paris, and the proposals may be put to a 131 00:07:12,800 --> 00:07:16,120 Speaker 3: wider group in March. But you know, it's that core 132 00:07:16,280 --> 00:07:21,040 Speaker 3: kind of capability that gathered with Immanuel Macon yesterday, including 133 00:07:21,120 --> 00:07:24,640 Speaker 3: I should say the UK. Britain has had a really 134 00:07:25,000 --> 00:07:30,080 Speaker 3: disastrous run in terms of large purchases and in terms 135 00:07:30,120 --> 00:07:34,760 Speaker 3: of acquisition of military hardware. The Public Accounts Committee and 136 00:07:34,800 --> 00:07:38,560 Speaker 3: Defense Committee have called defense procurement in the UK broken 137 00:07:38,960 --> 00:07:41,200 Speaker 3: in twenty twenty three. They call for root and branch 138 00:07:41,280 --> 00:07:44,960 Speaker 3: reform to break a cycle of costly delay and failure. 139 00:07:45,360 --> 00:07:48,760 Speaker 3: Britain supposedly wants to be sort of at the forefront 140 00:07:48,800 --> 00:07:53,160 Speaker 3: of a defense in Europe, maybe even sending troops to Ukraine. 141 00:07:53,280 --> 00:07:56,240 Speaker 3: Is that credible. As far as the industry that you 142 00:07:56,400 --> 00:07:59,640 Speaker 3: lead as concerned that the UK could ramp up enough. 143 00:08:00,400 --> 00:08:03,480 Speaker 2: Well, you know, from our perspective, a UK is a 144 00:08:03,600 --> 00:08:07,360 Speaker 2: very appreciated member of AD and I think roughly the 145 00:08:07,440 --> 00:08:11,320 Speaker 2: UK industry is behind some one third of the middle 146 00:08:11,720 --> 00:08:17,480 Speaker 2: of the industrial defense industry capabilities in Europe as a whole. 147 00:08:17,520 --> 00:08:20,640 Speaker 2: So to us, the UK is an extremely important component. 148 00:08:20,800 --> 00:08:24,200 Speaker 2: It has knowledges, it has skills, it has competency, it 149 00:08:24,280 --> 00:08:28,920 Speaker 2: has technologies that we desperately need on the EU side. 150 00:08:28,920 --> 00:08:32,800 Speaker 2: If iMac so then and vice versa. So the interlinqual 151 00:08:33,360 --> 00:08:36,199 Speaker 2: we think, I know Brexit was a fact and it 152 00:08:36,240 --> 00:08:37,520 Speaker 2: is what it is. We have to live with it. 153 00:08:37,559 --> 00:08:40,120 Speaker 2: We think Brexit was wrong from the very first day 154 00:08:40,600 --> 00:08:44,760 Speaker 2: day and also the our UK members had that feeling 155 00:08:44,800 --> 00:08:47,120 Speaker 2: and our a SD members in the rest of the 156 00:08:47,200 --> 00:08:49,679 Speaker 2: organization had the same feeling. It is what it is. 157 00:08:49,720 --> 00:08:52,199 Speaker 2: We have to live with it. But it doesn't change 158 00:08:52,240 --> 00:08:55,280 Speaker 2: the fact that that UK is part of Europe and 159 00:08:55,480 --> 00:08:58,960 Speaker 2: the industrial corporation across the channel is very strong. 160 00:09:00,080 --> 00:09:04,440 Speaker 3: Terms of a timeline, you know, some parts of Europe 161 00:09:04,520 --> 00:09:07,120 Speaker 3: are it would seem perhaps more on a war footing. 162 00:09:07,640 --> 00:09:14,280 Speaker 3: Obviously Ukraine deeply in conflict for three years. How quickly 163 00:09:14,320 --> 00:09:16,600 Speaker 3: do you think things are going to move in terms 164 00:09:16,600 --> 00:09:20,240 Speaker 3: of the industry expectations now for actual spending. This is 165 00:09:20,240 --> 00:09:22,959 Speaker 3: what the Trump administration is talking about all the time. Action, 166 00:09:23,120 --> 00:09:25,480 Speaker 3: less talk, more action. When do you think the action 167 00:09:25,640 --> 00:09:28,199 Speaker 3: or more spending might actually come through to your mind. 168 00:09:28,440 --> 00:09:31,000 Speaker 2: Well, that is again it's it's a very tricky question 169 00:09:31,040 --> 00:09:33,920 Speaker 2: because it's a political decision making that we're looking for. 170 00:09:34,120 --> 00:09:35,959 Speaker 2: If you, if you, if I take it from my 171 00:09:36,040 --> 00:09:38,160 Speaker 2: perspective and say what would we want to see, we'd 172 00:09:38,200 --> 00:09:41,120 Speaker 2: say that we're already too late, too slow, too little. 173 00:09:42,040 --> 00:09:45,160 Speaker 2: All the orders that would be placed in order to 174 00:09:45,160 --> 00:09:48,000 Speaker 2: have a European defense industrial base that is ready to 175 00:09:48,040 --> 00:09:52,560 Speaker 2: sustain are the members military capabilities if Europe would be 176 00:09:52,600 --> 00:09:55,720 Speaker 2: in a large scale conflict with Russia. Those orders should 177 00:09:55,720 --> 00:09:59,040 Speaker 2: have been placed five years ago, not tomorrow, and still 178 00:09:59,200 --> 00:10:01,199 Speaker 2: we don't see them in place as we speak. We 179 00:10:01,520 --> 00:10:04,040 Speaker 2: see it Frome's we see ammunition, but we see a 180 00:10:04,040 --> 00:10:07,760 Speaker 2: lot of For example, on battle tanks, we only see 181 00:10:07,840 --> 00:10:10,440 Speaker 2: orders to replace those battle tanks that has been sent 182 00:10:10,480 --> 00:10:13,000 Speaker 2: to Ukraine. We don't see orders to increase the stocks 183 00:10:13,000 --> 00:10:15,760 Speaker 2: of battle tanks in Europe. So, from from my perspective, 184 00:10:16,640 --> 00:10:20,360 Speaker 2: what we see is far too slow. The political leadership 185 00:10:20,480 --> 00:10:22,880 Speaker 2: seems to know what to do, but do not dare 186 00:10:23,040 --> 00:10:25,520 Speaker 2: to do it or do not find the finances to 187 00:10:25,559 --> 00:10:29,679 Speaker 2: do it. So it is extremely will it change expectations 188 00:10:29,720 --> 00:10:32,360 Speaker 2: on our side? Is hopefully yes. Of course. This is 189 00:10:32,440 --> 00:10:35,160 Speaker 2: really what we want to see, is that there would 190 00:10:35,200 --> 00:10:39,160 Speaker 2: be a major shift in going from policy making to action, 191 00:10:39,960 --> 00:10:42,920 Speaker 2: and in that perspective, I think mister Trump is absolutely right. 192 00:10:43,720 --> 00:10:46,160 Speaker 3: Okay, yeah, and Pet, thank you so much for your 193 00:10:46,160 --> 00:10:49,880 Speaker 3: time with us this morning. We really appreciate the front conversation.