Dassault aviation flying low from competition, sluggish exports. France's chief aviation firm hurt by its go-it-alone approach
Dassault is running into turbulence. French defense officials are concerned about the sluggish performance of Marcel Dassault-Breguet Aviation in export markets and about the increasingly high costs of developing a new generation of combat fighters.
What happens to Dassault is of vital interest to the French government, as the company is the monopoly supplier of combat aircraft to the French armed forces. Dassault employs 16,000 people, but a total of 80,000 workers in related industries depend on Dassault. Some of France's largest companies, including Aerospatiale, stand to suffer if Dassault does poorly.
Dassault sidestepped nationalization in 1981 by giving the government 26 percent of the company's shares on top of its original 20 percent. With special double shares, the government holds 55 percent of the stockholders' voting rights. But the Dassault family, which owns 49 percent of the company's shares, wants to regain control.
The French minister of defense, Andr'e Giraud, has let it be known that he thought it was time for the aircraft company, run by an aging leadership, to bring in new blood. Those who know him say he felt that newly chosen company president Serge Dassault, son of company founder Marcel Dassault and head of an electronics firm, was not the right person to give the company a new sense of direction.
For too long, analysts say, Dassault tried to go it alone while other French arms and aerospace companies sought cooperative agreements with other European firms to cut their research and development costs.
``They were technically overconfident and commercially complacent,'' an industry source says of Dassault. ``They thought they built the most beautiful planes in the world and they didn't need other people.... This sort of effort is not on the scale of a medium-sized power.''
Exports of Dassault's famed Mirage fighters have helped to make France, after the United States and the Soviet Union, one of the world's biggest arms sellers. But recently, Dassault has experienced difficulties: So far this year, they have managed to sell only nine Mirage 2000 fighters abroad. For the first time in its history, because of the lack of new orders, the company recently announced plans to lay off 700 workers.
Last year, France became the odd-man-out after years of negotiations to build a European combat aircraft with Great Britain, Italy, West Germany, and Spain. Those four countries went ahead and built the Eurofighter, while Dassault developed the new Rafale - the prototype of a lighter, more maneuverable plane - on its own. Dassault is now casting about for partners to help share the high costs of developing the Rafale, and the French Ministry of Defense has as yet made no commitment on the number of Rafales it is prepared to purchase.
Dassault is also facing increasingly difficult export markets and increased competition from the US and Great Britain for sales. Seventy percent of Dassault's income stems from its sales abroad, but only 299 of the Mirage 2000 - the major sales item - have been sold since production began.
For some time now, Dassault has been flirting with the American aerospace firm Northrop Corporation, with the goal of gaining the key to the magic kingdom of the vast American market. Northrop, which is having problems selling its F-20 aircraft, might be interested in cooperating, but the outcome is still far from certain.
At corporate headquarters in a villa called The Mirage, in the chic Paris suburb of St. Cloud, Dassault executives put up a brave front. But they admit their sales strategy will have to change.
Hugues de l'Estoile, Dassault's senior vice-president for international affairs, says the US, not Europe, is the company's real rival.
``The F-16 is my competitor, not the Eurofighter,'' he says. ``I respect it, I fear it, I fight it.''