April 22, 2013
The legal and ethical troubles that have enveloped Finmeccanica have, so far, left its electronics businesses largely untouched. That has allowed the company to continue with a major restructuring, formally completed in January, that has fused together three Selex-branded units into Selex Electronic Systems—Selex ES—that with 17,500 people and €3.5 billion ($4.6 billion) in sales is the single biggest unit in the €17 billion Italian company.
Now, Selex ES CEO Fabrizio Giulianini, in an interview at the LAAD defense show in Rio de Janeiro, says that the new unit can be a “world champion” in both its new and traditional markets, citing both existing businesses, such as fighter radars, along with new ventures like homeland security and cybersecurity, as places where it can expand.
While the former Selex companies were product-centric—Selex Galileo on sensors, Elsag on communications and Systemi Integrati on large-scale systems—Selex ES is divided into “customer-facing” divisions: airborne and space; land and naval; and a third unit, security and smart systems, that is primarily aimed at commercial, institutional and government non-military customers. “We needed to eliminate one of the issues that we had in the past, which was competition at the divisional level,” Giulianini says. Too often, Selex companies would find themselves on opposing teams. The new company will develop stronger central organizations for engineering and manufacturing, he says.
Giulianini expects that Selex ES will shut down some product lines “that may not be attractive to the market. We don't plan to exit any specific business sector, but we have some duplication, and we need the resources to launch new products, such as cyber.”
The biggest single group of Selex employees is in Italy, but the company has 5,000 people in the U.K. and intends to become “more and more global” as traditional markets stagnate, Giulianini says. In a move reminiscent of BAE Systems' multi-domicile strategy, Selex ES is targeting key markets with joint ventures and subsidiaries.
Brazil is one of these, Giulianini says, and the company just launched Selex ES do Brasil. Its initial task is to support radars on Brazilian systems such as the F-5BR (with Grifo) and the KC-390, which will be outfitted with a Gabbiano radar. “One of the biggest opportunities we are pursuing here is the F-X2 fighter,” Giulianini says. Saab's JAS 39E contender includes Selex's Raven ES-05 radar as well as the company's Skyward-G infrared search-and-track (IRST) and identification friend-or-foe systems. Selex already has an agreement with AEL Sistemas—Brazil's largest avionics supplier and an Elbit subsidiary—to support the Raven in-country if Gripen is selected.
Selex wants to bring its experience to bear on Brazil's potentially huge SisGAAz (Blue Amazon Management System), a project to establish surveillance and security in Brazil's littoral waters. “We understand the strategy, that these big projects will be awarded to local primes,” Giulianini states, “but what we have said to the Brazilian armed forces and industry is that Brazil is buying a lot of large programs”—not just SisGAAz, but the SisFron border security project and Prosuper warship program—“and that these need to be addressed in a coherent way.” Selex was the lead integrator for Italy's ForzaNec digital army program, and “we have put our experience on the table,” Giulianini says. “We learned something from our mistakes.”