09 Mar 14. In a bid to scramble back into profit, Italy’s Finmeccanica group wants to emulate its European neighbor Airbus and hand more power to its headquarters, cutting back the autonomy of its units. The plan, announced March 6, could one day lead to Finmeccanica-controlled companies becoming mere divisions, a source close to the company said.
Created by CEO Alessandro Pansa, the so-called New Group Organizational and Operating Model will grant Finmeccanica’s head office here greater control over the finance, personnel, external relations, commercial, strategy, legal and audit operations, part of a savings and efficiency campaign that Pansa has waged since arriving at the group’s helm in February 2013. A process that might prove easy at other companies is tougher at Finmeccanica, where units such as Alenia Aermacchi, AgustaWestland, Oto Melara and Selex ES were born as private firms — later incorporated into state-controlled Finmeccanica — and still have tight links to unions and local politics in their home regions of Italy. “I am positive about this initiative,” an Italian financial analyst said. “Pansa has previously said he was unable to cut capital investment at the firm. It took him two years to shave €100 million [US $138 million] from €1bn in capital investment, whereas [Italian car company] Fiat did a similar thing in a month.” The source close to the company said that despite the “verticalization” set to occur, Finmeccanica’s units would still be able to form joint ventures and partnerships, along the lines of Finmeccanica’s space partnership with France’s Thales. Pansa cited the likelihood of pending European industry consolidation in an address to the Italian Senate last year. The plan does not include Finmeccanica’s US company, DRS Technologies, nor its railway unit, Ansaldo Breda, which lost €300m in the first nine months of 2013. Pansa is urging the Italian government to let him sell the railway unit. In its statement announcing the new plan, Finmeccanica referred to the “expected deconsolidation” of its civil transport activity. That will depend on the new Italian government formed last month by center-left leader Matteo Renzi, which must decide in May whether to renew Pansa’s mandate. The influence of Italian politics on Finmeccanica’s management was illustrated March 4 at the trial here of former CEO Giuseppe Orsi. He is accused of overseeing the offering of bribes to Indian officials for the €560m sale by AgustaWestland of 12 AW101 helicopters in 2010. Orsi denies wrongdoing. Lorenzo Borgogni, the former Finmeccanica official who first told investigators about the alleged bribes, told the court how Orsi’s appointment as CEO of Finmeccanica had been backed by the Northern League political party and the Catholic group Communione e Liberazione, which is influential in business circles in Italy. The trial, which has prompted India to halt the delivery of the helicopters and launch its own probe, is expected to end in May. But a second, civil trial is underway in Milan concerning the €306 million payment that Finmeccanica made to a group of banks at the outset of the AW101 contract, as a form of returnable guarantee to the Indian government. (Source: Defense News)
06 Mar 14. Cobham expects worst to be over next year. The worst of the US defence downturn will be over next year, said one of the industry’s most pessimistic executives. However, Robert Murphy, chief executive of UK-based defence company Cobham, which derives a quarter of its revenue from the US market, believes that by the end of the decade Washington’s spending on military procurement will be half what it was at its most recent peak in 2008. “The kind of dramatic declines we saw in 2013 and expect to see in 2014, I think we are going to come out beyond the steepest part of those declines,” he said, adding: “The headwinds are going to be far less significant than we have experienced for the past two years.”
Mr Murphy, who is American and previ