EADS Revamps Cassidian Division
MUNICH — Facing declining budget prospects in its home markets, EADS is once again overhauling its defense and security operations to find a more sustainable business model.
The defense and security division, now called Cassidian, has undergone several iterations, in part because its financial performance early on was lagging. Although several years of efforts have managed to reverse that situation, concerns are rising that bleak spending plans from the German and French defense ministries could put the brakes on the unit’s progress.
To head off such a turn of events, the operation will be fundamentally restructured to more effectively target growth markets where defense spending remains robust. “Growth no longer comes from Europe,” unit CEO Stefan Zoller says.
Offset requirements and new development funding mechanisms are forcing the company to adapt to a “completely different business model.” The pace of change is much greater than Zoller initially expected.
Zoller has big ambitions for the unit, hoping to put the operation on track to double revenue from the current €6 billion ($8.5 billion) to around €12 billion within the next 10 years.
As part of the Cassidian makeover, which company officials indicate will take several months to fully roll out, the three existing business units — Systems, Air Systems and Electronics — will be disbanded and replaced with two organizations to manage existing relations with customers and help identify emergent business opportunities. One of the big focus areas is to tap business in emerging markets, in particular India, Brazil and the Middle East.
Bernhard Gerwert, previously CEO of Cassidian Air Systems based in Manching near Munich, has been named chief operating officer for the entire company. He will be in charge of the existing nine technology units — Detection, Avionics, Security and Communication Solutions, Integrated Systems, Air Systems Services, Mission Air Systems, Combat Air Systems, Test and Service and Atlas/Signalis — where products are developed and built. Additionally, Cassidian Cyber Company is being set up as a separate unit.
What is notably being played down in future plans for the business is military aircraft activities, although EADS’s involvement in the Eurofighter Typhoon runs through that division. But Zoller believes that once sales to core customers and potential export buyers have run their course, that segment will drop off. Zoller holds out little hope for a follow-on program emerging anytime soon.
EADS still has some activities going to try to keep its military aircraft business afloat, including some low-level demonstrations of unmanned combat air vehicle technology and a proposal to several European governments for the Talarion medium-altitude, long-endurance (MALE) system, but so far neither have gotten much traction. Furthermore, the emerging Franco-British tie-up on developing a MALE system and, potentially, a joint unmanned combat air vehicle creates ample headwind for a broader program where EADS’s German-based military aircraft operation could find a major role.
As part of the restructuring, Cassidian will cut around 600 jobs in indirect functions and administration. The entire program is planned to reduce annual expenses by around €400 million. Zoller says that target can be reached within the next 2-3 years. It will be implemented by midyear once negotiations with the various workers’ councils have been completed.
Photo: Eurofighter
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