Artist impression of the European Patrol Corvette. Photo: hum

Artist impression of the European Patrol Corvette. Photo: hum

EuroNaval: Consortium agreement signed for European multi-purpose corvette

The managing directors of the four companies involved in the development of the European Patrol Corvette signed a preliminary consortium agreement on the opening day of EuroNaval, 18 October 2022. According to Naviris, the agreement is intended to regulate the implementation of the tender. The agreement will allow the consortium consisting of Fincantieri, Naval Group and Navantia, led by Naviris, to continue work on the development of the first design of a 'European' ship.

At the European Patrol Corvette are involved:

- 4 countries as part of the PESCO (Permanent Structured Cooperation) project (Italy, France, Spain and Greece)
- 6 countries participate in the co-financing (Italy, France, Spain, Greece, Denmark and Norway)
- 3 large European shipbuilding companies (Fincantieri, Naval Group and Navantia)
- 40 companies for maritime systems and equipment from 12 EU countries.

Today's signing was preceded by a discussion within the EU Commission. Berlaymont decided in July 2022 on the course of action now taken.

With the European Patrol Corvette is a unit approximately 110 metres long and displacing 3,000 tonnes. The programme is synonymous with the 'Modular Multipurpose Patrol Corvette (MMPC)', an industrial proposal submitted in Brussels in 2021 by Fincantieri, Naval Group and Navantia. The project, which will receive around 60 million euros from the European Defence Fund (EDF), is a development programme from concept to first design. The MMPC is intended to serve as a reference ship for a corvette class that will fulfil a variety of missions in future operations.

NAVIRIS is a 50:50 joint venture between the French Naval Group and the Italian Fincantieri. The two shipbuilders entered into a cooperation in summer 2019 that aims to "provide high-quality expertise for international projects in a solid partnership", according to the press release.

Signing of the agreement by the four managing directors. Photo: Naviris

Naviris: Background

On 14 June 2019, a cooperation agreement was signed, which was no doubt given the name "Poseidon" (the powerful and belligerent god of the sea, who was not afraid to clash with Zeus, the father of the gods) with ulterior motives. Fincantieri and Naval Group are on the way to a 50/50 joint venture, which should be finalised by the end of the year. Perhaps it is the difficult ownership structure behind both companies and their subsidiaries that is delaying the merger. Naval Group is 35 per cent owned by Thales and 62.5 per cent by the French state. Fincantieri, already the largest shipbuilder in Europe, is endeavouring to acquire a 50 percent stake in Chantiers de l'Atlantique (ex STX France), which is, however, a pain in the neck for Paris and has therefore initiated an EU antitrust investigation - much to the displeasure of Rome. But perhaps it is just the ongoing competition between the two, despite their joint developments, which has lost none of its fierceness despite the rapprochement.

On the basis of the agreement at the time, the company has its headquarters in Genoa with an engineering centre in Ollioules as a subsidiary in the Var region in the south of France. The management of the joint company, which is governed by a shareholders' agreement, provides for a Board of Directors consisting of six members, half of whom are appointed from each of the two companies.

Naval Group announced that the joint venture aims to build 10-15 warships over the next decade, with synergies estimated at 10-15 per cent. Orders worth up to five billion euros are to be realised over the next ten years. The then CEO of Naval Group, Hervé Guillou, told media representatives that the market for medium to large frigates was growing by five to seven per cent annually. "This is where the emerging competition is attacking us the hardest," he added. By contrast, market observers predict growth of 3.5 per cent, with the strongest growth rates in the Asia-Pacific region.

The fact is that the military shipbuilding market is highly fragmented. Co-operations and partnerships are seen as the solution to securing and dominating the market. Another key problem is the limited geographical presence of the companies. Both Fincantieri and Naval Group have already taken this into account with branches in the USA and Australia respectively. In this respect, the path taken via "Poseidon", now Naviris, certainly points the way forward. Especially in the European context. An attempt to also promote maritime armaments programmes via the EU's Permanent Structured Cooperation in the area of security and defence policy (PESCO) has been launched: the European multi-purpose patrol unit the size of a frigate.

Despite the cool political relations between Rome and Paris at the time and after the (temporary) failure of the Renault-Fiat-Chrysler deal, consolidation has manifested itself here. Forging the alliance has taken time - and it has not yet finally crossed the finishing line. Today's agreement is a further, possibly small step. Critics may concede that Airbus also started out small and had to overcome several crises to reach its current market position. Perhaps this marriage is the nucleus for an "Airbus Naval", an "Airbus of the seas". From a German perspective, the prospects for a solution under Berlin's aegis, which was once sought years ago, seem less favourable. Paris and Rome have created facts and are continuing to work on shaping their idea. Germany cannot simply ignore this. Despite the Aachen Treaty and the French-German defence cooperation pledges it contains. But they seem to have had only a limited horizon anyway...

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