It is an understatement to say that the French defense industry has recently received the draft update of the 2024-2030 military programming law. Budgetary and coherence efforts are highlighted, but many questions remain regarding the capacity segments left in the background, sometimes limited visibility and the appearance of more restrictive standards.
One room, one subject, but two atmospheres. On April 15, the atmosphere cooled somewhat in the space of a few hours within the Commission on National Defense and the Armed Forces. This welcomed in quick succession the general delegate for armaments then the representatives of the main French defense industrial groups as part of the study of the LPM updating project. The opportunity for the three major sectoral groups of the national BITD – GICAT, GICAN and GIFAS – to list the potential stumbling blocks of a text currently being adopted.
Regardless of the sector, everyone emphasizes “a significant budgetary effort which we can all the more welcome when we consider the economic and budgetary situation of France currently », said the president of the GICAT and boss of Arquus, Emmanuel Levacher to the deputies of the Defense Committee. «ÂEverything necessary and possible is done“but… the adjustment is obviously not sufficient. From 2% today, the share of national GDP devoted to defense would increase to 2.28% in 2030, “a figure well below what is expected by a number of major players“, observed Emmanuel Levacher. Ditto for acceleration, it too “well in deçà » that observed in certain European countries. Once all the steps and additional steps established for a long time have been excluded, only the additional steps of €1.5 billion and €1 billion agreed for 2028 and 2029 are added. Nothing surprising, ultimately, given the rigidity to which French public spending is subject.
Ammunition, anti-drone warfare, drones and deep strikes benefit from additional resources, but other segments remain behind. Certain public announcements were disappointed, continues the head of GIFAS, in particular those relating to the number of Rafales or additional frigates. Behind the difficulties in reading the different calendars, GICAT questions the status quo in terms of maneuvering helicopters or the absence of mention of maintaining operational condition among priority investments.
Above all, it lacks “an increased ambition for terrestrial robotics“. The only subject mentioned in the text, the Pendragon program must demonstrate a first robotic unit in the summer of 2027 at the Mailly camp, concomitantly with the fourth edition of the CoHoMa challenge. In terms of equipment, only the ROBIN program announces the delivery of a maximum of 34 investigation robots to the engineering regiments. Despite this, the Droid PTD and a Robotic PEM expected by 2030, “we are not quite keeping pace with the technological and entrepreneurial proliferation that exists around these subjects. (…) This objective is shared. Everyone is convinced, now we have to take action », estimated Emmanuel Levacher.
The questioning is not only financial. The normative aspect also gives rise to “ de réelles interrogations“. In focus: the expansion of cost control, as well as articles 5 and 7 relating to the constitution of stocks payable by companies and export royalties. The standoff continues in fact over the question of the margins made by the industry with a French client whose resources, it should be remembered, are nevertheless limited. “We still need to have marginsEmmanuel Levacher points out. «ÂMargin rates in the land defense industry are relatively low, less than 10%, (…) and very lower than those of our international competitors“. In the United States, demonstrating its robustness requires establishing a minimum margin of 15%, while this reaches up to 18% in Germany. The big names in the sector have certainly “financial muscle“to cope with it, fewer SMEs and VSEs which “for many are already in cash flow difficulties ”.
Behind article 7 of the LPM hide new provisions relating to export royalties. These royalties are these mechanisms by which the State recovers part of the investments made for the benefit of the development or production of equipment when it is sold or is the subject of a technology transfer. The challenge will be to accelerate. Until now due to delivery, sometimes after several years of waiting, this fee will now be “upon payment of the first deposit“. Not only is administrative complexity increasing, it is estimated in the industrial ranks, but the text also introduces a penalty “for people who procrastinate» which can go up to 2% of the contract amount. More difficult to negotiate for small businesses, this fee could also be modulated to strengthen competitiveness. This would a priori no longer be the case, the article favoring a uniform implementation “probably problematic“, observed a sector wishing “être associée à la rédaction du décret »
On the DGA side, it is time for clarifications. “The money is coming“, assured a few hours earlier and from the same seat its general delegate, Patrick Pailloux. The one who “measure frustration» recalled in passing that “never since the Second World War have we put so much money into the economy“. After last year’s €38 billion in orders, the DGA plans to commit €47.2 billion in 2026, including €6 billion in advance to boost ammunition stocks. Some €23 billion in credits will be disbursed this year. Around 90% will stay in France, a ratio that is actually rather rare in Europe. Added to this is a provision included in the update, amounting to €320 million, to finance the ramp-up industrialwhere it is deemed necessary and useful ». Bref, « there is a lot of money coming in ”, relativized a DGA selon qui «Âour defense companies are doing quite well, they have quite a few orders ”.
A first wave of parliamentary amendments has since attempted to bring a little more visibility. Some have transformed the budgetary milestone reached in 2030 into a minimum base. Another made it possible to include the objective of achieving 3.5% of GDP invested in defense by 2035, in accordance with the requests now expressed by NATO. Annual spending would then double in less than 10 years to reach more than €120 billion, almost double the level reached this year. No one, on the other hand, risks proposing credible ways to achieve this, a silence which is not surprising given the state of public finances and the lack of room for maneuver that it implies.
« We express the hope that the new stage which is opening will also be that of a closer, more fluid and more operational dialogue between the State and the industry ”, said GICAN General Secretary Philippe Missoffe. The same sounds the bell of the city of GIFAS, which asks « the development of a new relationship between the Ministry of the Armed Forces and the BITD». «ÂBasically, the subject is that of reciprocal trust. To produce quickly and better, we naturally need demands from the state, but industrialists also need stability, readability and simplicity.“, summarized the GICAN representative. To see how the needs, wishes and limits of each person will come together to avoid diverting from the primary objective, which is to equip and support the French armies. A consultation seems all the more essential and urgent as it is supplemented by an unknown factor: presidential elections likely to lead to a new LPM. Enough to generate a new latency time that everyone would do without at a time when the geopolitical context tends to contract temporalities.
