Ageing workforce and spending decline 'ticking timebomb' says European Defence Agency

The European Defence Agency has warned of a ticking timebomb of an ageing workforce, a decline in spending and paucity of new major programmes.  The Brussels-based agency says the sector will have to "diversify" its activities to adapt to a "changing environment" or risk a "divorce" between Europe and its defence industry.  The pessimistic scenario comes in an in-depth analysis by the EDA of current trends affecting Europe's defence technological and industrial base (EDTIB). 

The findings coincide with what the agency warns of "new threats" on the international stage, including Islamic terrorism, and at a time when European armed forces are increasingly being called upon to contribute to the defence of European borders, such as with the current migrant crisis.

The European Defence Agency (EDA) says Europe's defence industry faces a ticking timebomb -  Fabio Liberti, a project officer with the EDA who is in charge of defence and industry analysis, said the agency's assessment shows that "dedicated actions must be taken" to strengthen the EDTIB.  The agency says Europe's defence sector is extremely competent and competitive but that "not everything can be read and analysed through rose-coloured glasses".

Liberti cautions that "several negative trends" are affecting the industry, forcing European defence industries to operate in a "very difficult environment".  The EDA, which is an agency of the European Union with an annual budget of €30.5 million, states that defence investment spending is constantly decreasing.  In real terms, total defence expenditure has fallen by 15% since 2006 while increasing elsewhere in the world such as the so-called BRIC countries - Brazil, Russia, India and China, it says.

"Secondly, there are no new major defence programmes in the pipeline, a situation that will potentially affect Europe's ability to design and manufacture complex weapon systems in the future," added Liberti.  In its analysis, the agency cautions that without new programmes, it will be "increasingly complicated" to retain in Europe the "key skills and industrial capacities" needed to manufacture and maintain defence systems.

"Also," it goes on, "around one third of the European defence industrial workforce is aged over 50, with the industry facing the risk for a substantial loss of expertise when these individuals reach retirement age."  The agency, established in 2004 and which reports to EU member states, also says that without new programmes, "there is a very serious risk" that the defence industry will lose most of its attractiveness for young engineers, "who might want to choose a career in the commercial sector.

"Meanwhile," it adds, "American companies are becoming more and more competitive on the global stage."  The defence industry develops equipment tailored to the needs of Europe's armed forces but the agency says that "without a strong defence industrial sector, the freedom of action of EU countries can be seriously compromised".

Liberti said: "There also seems to be a growing tendency to see military activities as a problem for a company rather than an opportunity."  The EDA says that in order to adapt to a "changing environment", European defence firms will have to "diversify their activities", increasing the share of their turnover generated from the civilian market.  Eventually, in a sector historically characterized by strong ties between governments and defence contractors, a "loosening" of these ties is happening.  EU countries affected by the economic downturn have tried to preserve 'jobs at home' and European defence industries are getting "more national and more international, but not more European".

The risk, says Liberti, is a 'divorce' between Europe and its defence industry, with a consequent serious impact in terms of security of supply."  Reaction to the analysis was swift with senior UK Conservative MEP Geoffrey Van Orden, a member of the European Parliament's Security and Defence Committee and a former brigadier in the British Army, saying: "Many of our defence industries have been under pressure since the so-called 'peace dividend' after the collapse of communism."

He added: "While the demand for major weapons platforms has reduced, new technologies to deal with cyber conflict and the need for precision and remote targeting have enabled some sectors to prosper. I would like to see British-based defence industries being well supported by the British government and be more ambitious in seizing overseas market opportunities, not least in countries of traditional British influence."

Further comment came from MEP Mike Hookem, defence spokesman for the UK Independence Party, who said: “The risk of a divorce between the EU and it’s defence industry is now a major threat, and both the UK and Europe must be very careful not to allow a ‘brain drain’ of defence manufacturers, designers, engineers, and defence manufacturing job to nations like the US and China, who are still investing in the research and development of new defence technologies.

“Looking at the current state of British and European defence spending in general, it is obvious there is a concerted run down of national defence spending and long term defence projects, as part of a push toward a European Army.”

Share this article: