 Source: Finmeccanica |
NEWTOWN, Conn. - Once a lumbering state-owned behemoth, Finmeccanica has successfully transformed itself into one of the world's premier aerospace and defense companies. Key to the company's transformation has been its ongoing campaign of targeted aerospace and defense acquisitions - a strategy that shows no sign of letting up.
The biggest move in the past year was the purchase of 100 percent of AgustaWestland. The move gives Finmeccanica total ownership of the U.K.'s only helicopter maker, and a major presence it that country's market. This expansion into more global markets is the foundation of the company's aerospace and defense growth strategy. This point is also illustrated by Finmeccanica's control of a joint avionics venture with BAE Systems, formed under the auspices of the new EuroSystems. Furthermore, the company has also lined up its space operations into a new Space Alliance collaboration with Alcatel.
All told, these efforts are aimed at boosting aerospace and defense sales from EUR6.3 billion to EUR10 billion by 2006. Finmeccanica officials feel that this level of sales is necessary in order to maintain competitiveness against rivals such as EADS.
With its footholds strengthening in the U.K. and Europe, the next target for the company is the shores of the USA. According to reports, Finmeccanica has a war chest of roughly EUR1 billion to spend on small to medium-size acquisitions in the U.S. market. No large-scale acquisitions are anticipated, and the company is likely going to focus its efforts on complementary defense electronic firms.
A big win for Finmeccanica was the early 2005 selection of Team US101, led by Lockheed Martin, to build the Marine One helicopter for the U.S. president. Such a win will likely build confidence in the company in regard to future competitions - something that has been lacking in Finmeccanica's earlier forays into U.S. markets. As part of an effort to build trust in the U.S., the company opened an office in Washington, Finmeccanica Inc, in 2002. The effort appears to be paying off, as those inside the Beltway and in the U.S. defense community now recognize the name.
The next big prize in the U.S. market is the U.S. Army's Future Cargo Aircraft (FCA) program. Under the Global Military Aircraft Systems (GMAS), which is a partnership with L-3 Communications and Alenia, the firm is entering the C-27J aircraft, which is based on the highly successful C-27A airframe.
In order to keep this refocusing and refinement momentum rolling, Finmeccanica has stated that it will leave non-core businesses behind as it concentrates its efforts on aerospace and defense. Over the next few years, expect the company to divest its operations in energy, transportation, and information technology. Such moves will help the company pay down the debt of its acquisitions, and also fund future purchases.
Finmeccanica's willingness to deal, as exemplified in its protean agreements with BAE Systems and Alcatel, along with its newly bulked-up operations, is expected to make it an attractive partner in the current defense environment. As companies seek to reduce costs and make inroads into new markets, teaming and alliances are expected to become even more important in the years ahead. Thanks to management's strong vision for the company, coupled with its aggressive acquisition policy, Finmeccanica is expected to be well-positioned to capitalize on this current market reality.
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