Home Featured Fincantieri CEO on Trump, defense spending and consolidation – POLITICO
Fincantieri CEO on Trump, defense spending and consolidation – POLITICO

Fincantieri CEO on Trump, defense spending and consolidation – POLITICO

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Fincantieri boss Pierroberto Folgiero is looking to the Middle East and Southeast Asia for growth, he told Jacopo.

The U.K.’s new government is under pressure to halt arms sales to Israel.

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FINCANTIERI CEO TALKS DEFENSE INDUSTRY: To become stronger and more competitive, European defense firms must engage more in platform sharing, Pierroberto Folgiero, CEO of Italy’s Fincantieri, one of the world’s largest shipbuilders, told Jacopo.

“Platform sharing is an industrial, commercial and geopolitical must for European defense companies” because it would help them spend their money more efficiently. It would also reduce market fragmentation — which he also described as “a must.”

Driven by defense: About 40 percent of Fincantieri’s revenues come from defense. Unsurprisingly, given the current geopolitical situation, the Italian company is betting on growth.

The company’s 2023-2027 industrial plan sets a goal of growing revenues “by a couple of billion [euros],” from €8 billion to €10 billion. Of that €2 billion in growth, “we expect two thirds [to come from] the military” sector, Folgiero said. “Unlike what was expected a few years ago, we are in a geopolitical cycle driven by defense.”

Southeast Asia and Middle East in sight: This growth will be driven by exports “in the two quadrants that are overheated from a geopolitical point of view, which are Southeast Asia and the Middle East,” the Fincantieri boss said, noting the group had signed major deals with the Emirates and Indonesia in the first quarter of 2024.

Saudi Arabia: Among the countries in the Middle East he flagged as having potential for growth was “Saudi Arabia, which will become one of the main global spenders … [as] it has two large seas to control, the Arabian Gulf and the Red Sea.” The Gulf monarchy has “a vision of creating military capacity and a military industrial base not only for internal demand, but also for the geopolitical bloc of the Middle East.”

Outside China’s orbit: The company is also seeing “programmatic growth” in naval and military sales to Southeast Asian countries outside China’s geopolitical orbit, including Malaysia, Indonesia, Thailand, the Philippines and Vietnam, he said. 

European tie-up: According to Handelsblatt, Folgiero recently pitched to members of the German government in Berlin a tie-up with Thyssenkrupp’s defense division, which is currently up for sale. He confirmed the trip: “We have made ourselves available to increase the levels of collaboration, considering a business relationship that has already lasted for 25 years.”

Trump or no Trump: Global defense investments will continue to grow regardless of the results of U.S. elections in November. “There are a series of things that have to happen that are independent of the political root, there are some issues at stake that are non-political,” he argued. “We have to go into this geopolitical cycle.” 

Read the full interview here.

FARNBOROUGH: It’s the final day of the air show.

MARK YOUR CALENDAR: Our weekly defense calendar landed in your inbox Thursday. Spoiler alert: There’s not much there.

You can also go online to export and plan your week or suggest your own event.

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PRESSURE ON ISRAELI ARMS SALES: While in opposition, Labour MPs hounded the former Conservative U.K. government over its decision to continue arms exports to Israel. Now, the country’s new Labour government is under increasing pressure from its own backbenches to do the same. More than 39,000 people have been killed in Gaza since Hamas attacks killed 1,200 people in southern Israel on Oct. 7, according to the territory’s health ministry.

Call for immediate suspension: This week, in a sign of mounting concern over the U.K.’s position, a group of MPs led by Zarah Sultana proposed an amendment to the king’s speech urging the government to “immediately suspend export licenses for arms transfers to Israel.” The MPs also wanted mention of “the widespread recognition of serious violations of international law in the conflict.” Pro-Palestine protestors blockaded the entrance to the foreign ministry to press the point and support Sultana’s efforts.

‘Serious violations’: “There is a clear risk that British-made weapons might be used to commit or facilitate serious violations of international humanitarian law, [which is] why, in February, U.N. experts called [for] these sales to end immediately,” Sultana said, noting that other countries such as Spain and Canada had suspended sales. “But British-made arms are still being licensed to Israel and used to kill innocent people.”

Manifesto commitment: In its election manifesto, Labour promised to “continue to push for an immediate ceasefire, the release of all hostages, the upholding of international law, and a rapid increase of aid into Gaza.” Labour politicians, including current Foreign Secretary David Lammy, repeatedly pressed the previous government to publish its legal advice regarding continued arms exports to Israel.

Quasi-judicial process: When pressed on arms exports to Israel during a parliamentary debate last week, Lammy said: “Israel is surrounded by people who would see its annihilation … For those reasons, it would not be right to have a blanket ban between our countries.”

Make of that what you will: Lammy added the issue would be considered “in the normal way” following a quasi-judicial process, and said he would make his decisions in an accountable and transparent way — but did not commit to publishing any legal advice.

Keep your promises: “Labour promised in its manifesto to uphold international law,” Emily Apple, a media coordinator at the Campaign Against Arms Trade, told our U.K. colleagues. “If Labour MPs are serious about this commitment then they need to impose an arms embargo on Israel. Israel is committing horrific war crimes, amounting to a genocide against Palestinian people in Gaza, facilitated by U.K. military equipment.”

‘Appalling Tory legacy’: By failing to adopt this week’s amendment — which was not put to a vote — Apple said the U.K. remains “complicit in the atrocities Israel is perpetrating” and is sending a “clear and alarming message that they plan to continue prioritizing arms dealers’ profits over civilian lives.”

What the government says: “It is vital that we uphold both our domestic and international legal obligations when it comes to arms exports. We are reviewing the advice available and will come to a considered decision.”

GREECE MOVES FORWARD WITH F-35s: Athens on Thursday signed a Letter of Offer and Acceptance (LOA) through a U.S. government Foreign Military Sale to purchase 20 F-35s, with an option for 20 more. More here.

BRIGHT FUTURE FOR EUROFIGHTERS: “We are living a true Renaissance of the Eurofighter Typhoon programme,” Eurofighter CEO Giancarlo Mezzanatto reportedly said. Spain is in talks to buy 25 new fighter jets; Germany said it would get 20 by the first half of 2025; and Italy is slated to replace 24 of its older models with new ones.

LEONARDO CEO CONFIDENT ON GCAP: The Global Combat Air Programme — a next-generation fighter jet developed by the U.K., Italy and Japan — will survive the U.K. defense review, Leonardo CEO Roberto Cingolani told Defense News.

Joint venture soon: The Italian defense giant’s co-general manager, Lorenzo Mariani, told Breaking Defense that a new joint venture between his company, BAE Systems and Mitsubishi Heavy Industries will be finalized in the next two to three months to act as an interface for the three governments involved in GCAP. He also said the new fighter will be ready in 2035 as planned.

GREEN LIGHT FOR NAVAL GROUP IN THE NETHERLANDS: A Dutch court has rejected a legal challenge to the Dutch government’s decision to award a contract to France’s Naval Group for Orka-class submarines. The challenge was filed by German shipbuilder Thyssenkrupp Marine Systems, which also bid on the deal.

LITHUANIA, POLAND WILL JOINTLY BUY POLISH MOBILE AIR DEFENSE SYSTEMS: The two countries will together purchase PIORUN short-range mobile air defense systems through the EU’s EDIRPA.

LATVIAN DEFENSE MINISTER DEFENDS AMMO FACTORY PLAN: A planned €12 million artillery ammunition plant in southern Latvia’s Lecava, scheduled for completion in 2026, will “benefit everyone,” Andris Spruds said in an attempt to assuage local safety concerns.

IRIS2 BACK TO DRAWING BOARD: We’ve reported throughout the week on troubled plans to build an EU secure-communications satellite network. After canvassing executives and those involved in the project through Thursday, it’s clear everyone’s in a glum mood. 

A reset for a smaller, government-only system might be the only way to save IRIS2 this fall.

Josh has the story here.

RUSSIAN DRONES IN ROMANIA: Russia launched 38 Shahed kamikaze drones at Ukraine overnight, three of which strayed into Romania’s airspace. More from Veronika here.

DUTCH, DANES MAKE TANK PLEDGE: A further 14 Leopard 2A4 tanks will be dispatched to Ukraine by the end of August, part of a promise to get 100 of the German-made units to the country by the end of next year.

Story here.

Costing up: Last year, in announcing the deal with Denmark to purchase and refit the tanks for Ukraine, the Dutch said the total cost would be €165 million. The plan was to deliver them in the first few months of this year, so it’s clear there’s been a delay.

HOUTHI DRONES KEEP COMING: Western navies and warplanes haven’t managed to deter Houthi rebels from attacking ships in the Red Sea, Le Monde writes.

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