Military Aviation MRO and the concept of « war economy » (II of II)

Par Murielle Delaporte

This is part II of our article entitled “Military Aviation MRO and the concept of 'war economy'”

The Specific Challenges of Military Aviation MRO

If we take up the five challenges mentioned in the first part of this article, it is useful to compare the evolution of the Military Aviation maintenance sector in regards with different historical contexts and with the benefit of hindsight:

- Visibility for manufacturers: this sine qua non condition enables manufacturers to set up an investment strategy that limits risks over the long term. It began to be successfully implemented when the French government set in motion a process called « general revision of public policies » (RGPP) aimed at streamlining public expenses from 2007 onwards. Such a reform encouraged public authorities to seek “win-win” solutions by developing public-private partnerships (PPP). The SIMMAD (« Structure Intégrée du Maintien en Condition opérationnelle des Matériels Aéronautiques du Ministère la Défense »), then in charge of the ministry of Defense's aeronautical maintenance and created in 2000 (1), sought at the time to associate the military aviation industry more closely with operations. The aim was not only to cope with shrinking human resources, but also to transform the industry from a simple service provider to a first-rate capability player.

The « Direction de la maintenance aéronautique » (DMAé), which succeeded SIMMAD in 2008, amplified such an approach and systematized vertical contracts, giving industry even greater responsibility over an average ten-year period - sometimes longer for certain fleets, such as the Mirage 2000 (14 years) (2) and some older generation fleets.

- Streamlining of procurement procedures: current initiatives - such as the DMAé's notification, on April 8th, 2024 of a “contract for the supply of UAVs and associated support services for intelligence purposes” to Survey Copter, EOS Technologie, Delair and Thales consortium (3) - echo existing mechanisms, known as Urgent Capability Acquisition or Urgent Operational Needs, that have been prevailing until now when a specific need was urgently felt on the theater of operations.

What's different today in France, however, is the introduction of more structural measures designed to encourage manufacturers to accelerate their pace of production and deliver ahead of schedule (e.g. early delivery bonuses (4)). It will be interesting to see how this type of deal, which requires greater risk-taking on the part of the manufacturers (see for instance the thorny issue of who must fund sufficient stocks), will eventually develop in other sectors of the aeronautical industry, and what direct impact this will have on military aeronautical MRO.

- Securing the supply chain: this question is intertwinned with the more global theme of sovereignty, and comes up against the difficulty of reversing an economic policy that has operated for over thirty years on the basis of a “happy globalization”. Although the Covid-19 pandemic did serve as a wake-up call and contributed to greater caution in controlling suppliers, the race for strategic materials can only intensify as geopolitical tensions increase. This is in stark contrast to the Cold War era, when the post-World War II Allied nations had a relatively greater control over their industrial apparatus, including in terms of inventories and requisitions.

In fact, the measures recently announced in this area include an adaptation of the 1959 legislation in order to include today’s new threats (5), as well as enabling “the implementation of the nation’s international commitments in defense” (6) (especially regarding Ukraine). As far as military aviation MRO is concerned, the challenge is to secure the supply of spare parts and associated elementary components. This requires a complete mapping of resources, to avoid a situation identical to that of the United States with the F-35 and its dependence on certain Chinese components (7).

Last year, a French government analysis identified two hundred bottlenecks, or 4% of the companies making up the Defense Industrial Base (DIB). Alexandre Lahousse described the situation in an interview published in issue 7 of “Esprit Défense” in May 2023 as follows: “These companies are not failing links. They're doing their part. It's just that some of them may not be able to accelerate at the same pace as the others (...) These bottlenecks are currently being identified. The reasons may be diverse. Sometimes, production machines are already 100% utilized. Sometimes, the necessary human resources are insufficient. These difficulties can also be cumulative. We are putting in place appropriate solutions and partnerships. For example, we are working with the Ministry of the Economy, Finance and Industrial and Digital Sovereignty to enable these companies to benefit from plans like France 2030.” (8)

It is with that in mind that the “BPi defense booster” (9) has been launched. Twenty-eight SMEs producing or maintaining military equipment have been selected and “are now getting ready to implement a twelve-month support program combining personalized advice (…) designed to offer managers all the tools they need to meet the challenges of the war economy”. (10)

- Recruitment: producing more requires not only supplies, but also adequately trained personnel in sufficient numbers. For years, the aviation MRO sector in general has been particularly hard hit by a shortage of engineers and mechanics, both civilian and military. After years of benign neglect, the current policy of the French government is aimed at raising the profile of this sector among the younger generations, while the investments currently underway could make it more attractive. Only a surge in MRO manpower can give some credibility to the logic embedded in the concept of war economy. The creation of a strategic operational reserve and the development of partnership agreements with manufacturers (11) (such as those recently announced between Renault and the French National Guard) (12) could indeed partillay address this issue.

- Funding: even if the Covid ripple effects and current inflation have been complicating the economic recovery in a demand-driven aeronautics sector, such an increase in investments is certainly the major “disruptive factor” in France compared with previous decades. Not only have these investments improved the readiness of many aircraft, they have also encouraged an exponential innovation in some of today's key sectors, such as artificial intelligence, 3D printing and quantum supercomputers (13). However, the real transition to a war economy - or defense economy readiness - suggests funding capacities far beyond the existing ones, and therefore a revision of the level of military expenditures. While it may not be possible to wait for the 2030 deadline of the LPM (French Military Program Law) launched this year, one may wonder if the French government will be able to meet such a requirement at a time when it is already severely constrained by a fast-increasing national debt, unless other public policies are reviewed.

Among the measures recently announced, however, one must highlight the following novelty, i.e. the implementation of measures to encourage the private banking sector to participate in such a so-called “war effort” (14). This means in actual fact enhancing a defense economy, which every society must prioritize as much in times of peace as in times of tension, just like any insurance policy designed to protect the values we care about, and which many Western nations have for too long taken for granted.

Footnotes

(1) See for example the background to the creation of SIMMAD >>> https://www.ccomptes.fr/sites/default/files/EzPublish/McoRapport.pdf
https://www.senat.fr/rap/r07-352/r07-352_mono.html

(2) See for example: https://www.latribune.fr/entreprises-finance/industrie/aeronautique-defense/soutien-les-contrats-verticalises-font-lentement-decoller-la-disponibilite-des-aeronefs-des-armees-901949.html

(3) https://www.defense.gouv.fr/dmae/actualites/nouveau-marche-fourniture-fins-renseignement-drones-prestations-soutien

(4) “(…) a clause authorizing the client to request an increase in production rate of up to 50% without modifying the contract (…) is an incentive to build up stocks as soon as the contract is awarded, because the client is ensured he can sell them since we buy them”. (Nathan Gain, March 4, 2024 >>> https://www.forcesoperations.com/quelles-avancees-apres-18-mois-d-economie-de-guerre)

(5) https://www.vie-publique.fr/questions-reponses/293533-defense-la-requisition-des-entreprises-privees-en-3-questions ; voir sur le décret de 1959 : https://www.legifrance.gouv.fr/loda/id/JORFTEXT000000517516/1959-01-08/

(6) « Economie de guerre » : en quoi consistent les « réquisitions » pour accélérer l’aide à l’Ukraine ?, L’Express, 26 mars 2024 (https://www.lexpress.fr/economie/economie-de-guerre-en-quoi-consistent-les-requisitions-pour-accelerer-laide-a-lukraine-)

(7) https://www.legifrance.gouv.fr/loda/id/JORFTEXT000000517516/1959-01-08/

(8) “Industries must anticipate and invest in their production facilities now”, interview published as part of a more comprehensive feature (pages 34 to 42) in: https://www.defense.gouv.fr/sites/default/files/ministere-armees/esprit-defense-numero-7-printemps-2023.pdf
(9) https://evenements.bpifrance.fr/ami-accelerateur-defense-
(10) https://www.defense.gouv.fr/dga/actualites/lancement-laccelerateur-defense-partenariat-bpifrance
(11) https://www.archives.defense.gouv.fr/reserve/reserve-et-entreprises/partenariat-reserve-entreprise-defense/partenariat-reserve-entreprise-defense.html
(12) https://www.defense.gouv.fr/actualites/convention-muscler-reserve-operationnelle ; see also on this subject: https://ihedn.fr/2023/11/27/la-reserve-des-armees-pivot-des-forces-morales-de-la-nation/
(13) See for example >>> https://www.lemonde.fr/sciences/article/2024/04/22/l-ordinateur-quantique-sort-des-limbes_6229246_1650684.html
(14) See: https://www.vie-publique.fr/loi/293270-financement-de-lindustrie-de-la-defense-livret-proposition-de-loi ; https://www.senat.fr/dossier-legislatif/ppl23-191.html