Italy Wants Its Aerospace Industry To Improve

By Amy Butler
Source: Aviation Week & Space Technology

Guiseppe Giordo, CEO of Alenia Aeronautica, acknowledges the changed relationship between industry and the Italian defense ministry. “We don't want to impose requirements” on the Italian military, he says.

Alenia launched a restructuring in January 2012 that cut roughly 1,500 jobs through voluntary separation packages; about 500 younger, less expensive employees were added back.One of four facilities in Naples was closed and the company's headquarters was moved to Turin to reduce operating costs. Alenia Aermacchi also consolidated its once separate operations with the former Alenia Aeronautica, streamlining some business functions.

“I understand they want us to be more efficient, but I don't know how,” Giordo says, noting the changes already implemented.

Against this backdrop, Alenia has also reduced its strategy in the U.S. substantially. Once a virtually independent operating unit, Alenia North America is now fully integrated with headquarters in Turin and operates more like a satellite office. This is due in part to the company's lackluster success in contracting with the Pentagon.

Only a few years ago, Alenia's C-27J and G222 contracts were promising signs of the company's ability to be an effective prime contractor for the Pentagon, as well. But the U.S. Air Force has opted to shelve its new Alenia C-27J tactical transports because of budget pressure, and this spring it did not renew Alenia's contract to upgrade old transports into G222s for the Afghan air force, citing inadequate performance.

So now Alenia is shifting its strategy toward cooperating with U.S. primes, such as General Dynamics, with which it is offering the M-346 to replace the U.S. Air Force's T-38Cs. “The last years have shown [us] that we must have a reliable and solid U.S. prime,” Giordo says. “We need to team instead of competing, [and] we are lucky to have products that aren't directly competing with U.S. products.”

The U.S. Air Force's so-called T-X program is the next big opportunity for which three foreign allies are bidding: Italy with the General Dynamics/Alenia M-346, the U.K. with a Northrop Grumman/BAE Systems Hawk-based proposal and Lockheed Martin/Korean Aerospace Industries with the T-50, currently built in South Korea. Boeing says it will design a platform to the service's specifications, but USAF officials have pushed for an off-the-shelf option. The T-X program is not expected to get underway until at least 2014.

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