On the Record with MARWAN LAHOUD, CEO, MBDA MISSILE SYSTEMS
"We have to move towards more transnational integration,"
says MBDA's Marwan Lahoud. "Today we are a two-layer organization.
We have national entities with a national customer face and an
overlying group for strategy and multinational program management.
What we need is stronger integration on the production and technical
side. We need to go further than we are today with things like
common production."
Marwan Lahoud is the new top man at MBDA Missile Systems. He took
over as the European missile group's CEO in January 2003, replacing
Fabrice Brégier, who has become CEO at Eurocopter. Appointed
in October 2002 by the EADS Board of Directors, Lahoud was previously
senior VP for mergers and acquisitions at EADS. Before joining
the industry he worked with the French military procurement agency
and the Ministry of Defense. He came on board Aerospatiale in
1998-just in time for the Aerospatiale Matra merger. Later, he
was closely involved in the negotiations between EADS and BAE
Systems that resulted in the 'new' integrated Airbus company and
also the multinational MBDA merger process itself.
Having been so intimately involved with the work that built today's
MBDA, Lahoud is clear that things have to keep moving. "We
have created a company, now we have to make it deliver-deliver
the level of profits our shareholders expect and the products
that our customers expect," he says.
The integration of Germany's LFK into MBDA remains a thorny question.
For a long time now it has been expected "soon but not yet."
When it happens, the new business unit would become MBDA (Deutschland).
"The issue is simple," says Lahoud, in what is something
of an understatement. "It comes down to the acquisition of
those LFK shares-about two-thirds of the company-that are owned
by EADS. EADS is a shareholder in both MBDA and LFK. The other
two partners are giving even more scrutiny to values, guarantees
and the terms for a fair acquisition. The management wants to
know what kind of business, and business improvement, LFK will
deliver. But all three shareholders agree that it has to happen."
Beyond LFK there is still the issue of BGT, owned by the Diehl
Group, and its possible union with LFK under the aegis of MBDA,
to form a notional 'German Missile Company' (GMC). Says Lahoud,
"We have pursued the idea of a simultaneous GMC integration
for a while and it's proved to be quite complex. We've have agreed
to do LFK first, then BGT later. A GMC would be shared by the
Diehl family and MBDA (D) as a separate joint-venture company."
However, Raytheon is also known to be showing an interest in buying
BGT, and Lahoud admits that this is a concern for MBDA.
The other major European missile house still outside MBDA is Sweden's
Saab Bofors Dynamics. Some believe that in the medium term the
appearance of MBDA (Sweden) is a dead cert. There are already
important links between the two companies on the Meteor program.
However, Lahoud says, "It is not inevitable that there will
be a single European 'thing'. Don't focus too much on company
ownership-we are a 'program owner.' There is room for partnership
and cooperation with Saab." In particular Lahoud cites Saab's
expertise in anti-armor weapons as something that from which MBDA
could benefit.
The biggest challenge for MBDA is breaking into the U.S., a market
that is, frankly, hostile. The U.S. represents "50% of the
world" according to Lahoud, who also recognizes that right
now it is "closed." He is convinced that the key to
success lies with industrial sensibilities. "For 30 years
we have been concentrating on political transatlantic co-operation,
working from the top down. Instead what we need to do is just
look at the technologies where Europe is in the lead and modestly
offer them to the U.S., saying 'we have things here that work
and you might be interested in them.'"
Boeing has been seen as MBDA's key U.S. partner, with links established
through the Meteor. While stating clearly that Boeing is still
a high value contact, Lahoud says there is actually more ongoing
co-operation with Lockheed Martin, thanks to MEADS. Above all,
he says, MBDA is not suffering any direct adverse effect from
the difficult transatlantic political climate. "The important
thing is that our U.S. industrial partners have not said a single
different word or changed their relationship with us in any way
over the last 12 or 18 months. Things have stayed the same."
Or in other words things are as hard as they ever were.
