Memorandum from Eurocopter
INTRODUCTION
1. Eurocopter Group (ECG), a wholly owned
subsidiary of European Aeronautics, Defence and Space Company
(EADS), is the world's largest manufacturer of helicopters. It
was formed in 1992 by the merger of Aerospatiale Helicoptres
of France and MBB of Germany: in 2006 a third "home"
country, Eurocopter España, joined the Group. On a historical
note, in 1965 the United Kingdom and France signed a MOU,
jointly to develop between Westland and Aerospatiale, the Puma,
Lynx and Gazelle family of helicopters, arguably the most successful
European collaborative venture of recent years, as all three types
are all still in service with the UK, France and many other nations.
2. In 2008, ECG delivered 588, and took
orders for 715 helicopters from both military and commercial
customers, in roughly equal proportions: this military/civil mix
provides a sound foundation to the Group's business model. Revenues
were 4.5 billion, having risen steadily from 2.6 billion
in 2003. The Group's design and manufacturing capability is complemented
by a major support and services operation, accounting for over
one third of turnover. In military sales it shares the world market
with other European, American and Russian manufacturers, but it
consistently dominates the civil and "parapublic" (police
and emergency services) markets with over 50% of world sales.
3. With a workforce of 14,000, the Group's
headquarters and principal manufacturing facility is at Marignagne,
near Marseille, where it is led by a German Chief Executive Officer,
Dr Lutz Bertling. Development and production are also conducted
at sites in Donauwörth, near Munich, at Albacete in Spain,
and at of other sites including major production facilities in
the USA and Australia.
4. Eurocopter's product range covers the
full range of single and multi-engine helicopters and includes
the EC225/725 Super Puma/Cougar, NH90 and Tiger, AS365 Dauphin,
the EC145 and 135 family, EC120 Colibri and AS350 Squirrel;
variants of all types are used by both military and commercial
customers. There are currently over 10,000 ECG helicopters
flying around the world with over 2,500 customers, covering
the full range from major defence and oil-and-gas fleets through
to private owners. The Group has 20 subsidiaries around the
world, with a particularly strong presence in Europe, North America
and South East Asia; with markets outside France, Germany and
Spain generating over 50% of turnover.
5. The support and services operations complement
the design, development and manufacturing activities by offering
customisation/completion, maintenance, repair and overhaul, retrofits
and upgrades, technical support, flight testing, certification,
training and logistics. Sales and support in the defence sector
is a critical feature of our operations globally, and Eurocopter
products are flown by the Armed Forces of many nations, including
most NATO nations.
UK PRESENCE
6. The UK is a very important market for
Eurocopter, with over 400 of our civil and military helicopters
in service here.
7. In the defence sector, Pumas are flown
by the Royal Air Force and based at RAF Benson and RAF Aldergrove;
the current fleet comprises 44 aircraft. Approximately 40 Gazelles
remain in service with the Army Air Corps in 5 Regt AAC and
other units. The last component of the current defence fleet is
the AS350 Squirrel, 38 of which are in operation at
the Defence Helicopter Flying School.
8. Within the UK commercial and parapublic
fleets, 42% are EC aircraft, while in the combined UK/Ireland
market, Eurocopter accounts for over 50% of corporate/VIP helicopters,
with 75% of the Emergency Medical Services sector and 80% of the
UK's Police forces.
9. The importance of the United Kingdom
to Eurocopter was demonstrated most clearly by its acquisition
in December 2007 of McAlpine Helicopters Ltd (MHL), ECG having
previously held a minority share in the company. MHL had been
EC's UK and Ireland distributor since 1977. EC UK has 200 employees
and its strategy is to grow, particularly in the defence sector,
with a specific aim to create a National Support Centre for all
marks of Puma. Turnover has increased steadily, reaching £78 million
in 2008.
10. Eurocopter has operations throughout
the UK and Ireland. With the highest concentration of skilled
engineers, EC's Oxford HQ is its UK Technology Hub. A team near
Bristol handles the Puma Life Extension Programme (LEP). Personnel
are also detached to RAF Benson, and to Bedford, Belfast and Newcastle,
with additional sites at Hawarden and Dublin. A major investment
at Aberdeen will start in April this year, to cater for the vital
offshore oil and gas market, currently served by some 59 Super
Pumas, flying 85,000 hours annually.
11. The decision to acquire MHL could in
part be traced to the 2005 Defence Industrial Strategy (DIS),
which made clear that a UK footprint was a requirement for success
in the defence sector. In respect of helicopters, the DIS sought
to establish a closer and more transparent relationship with the
industrial sector, with particular emphasis on the forging of
partnerships, reflecting the sector's well-established position
in, and importance to the UK.
12. DIS identified several critical capabilities
for which sovereign capability should be retained/developed: (i)
integration of platforms, powerplant, navigation and communications
systems, complex integration of mission systems; sensors and processors;
and capacity for modelling and simulation. On mission systems
alone, EC UK's dominance of the Police market flows from its development
and integration of advanced, bespoke mission systems, of which
the recently delivered Metropolitan Police EC145s are the latest
example.
13. The DIS section on helicopters tended
to focus on AgustaWestland, reflecting amongst other things its
Design Authority (DA) status in respect of the Lynx and Sea King.
Consistent with this, AgustaWestland is the only helicopter manufacturer
with which the MoD has to date established a Strategic Partnering
Arrangement. However, in view of EC's status as DA on Puma and
Gazelle, and its planned role as prime contractor for Puma Life
Extension, EC and MoD are jointly developing a Partnering Framework
Arrangement.
CURRENT PROCUREMENT
ISSUES
14. EC is engaged with the MoD on two main
programmes relating to the Puma fleet, Through Life Support (TLS),
and the Puma Life Extension Programme (LEP).
15. Last December, EC and MoD signed a TLS
contract under which EC provides logistical support for the Puma
fleet, providing a wrap-around spares and repair and overhaul
service similar to the Integrated Operational Support solutions
which are now standard for other MoD helicopter types.
16. Puma LEP is in negotiation, and will
be EC's most significant programme with MoD for many years. EC
is currently conducting the Assessment Phase and is refining the
details for the 5-year "Demonstration and Manufacture"
(production) phase, for which a contract is expected within weeks.
17. LEP is critical because it addresses
MoD's most pressing helicopter shortfall, namely for battlefield
lift that can operate in support of UK forces in the harshest
and most demanding operating environmentsnotably Afghanistan.
LEP will deliver a Puma Mk2 whose performance will exceed
most other helicopters, and is the most cost-effective means of
meeting MoD's short to medium term helicopter needs. The Mk2 will
offer at least 10 years' additional service, and be capable
of performing a year-round role in any theatre, in all climatic
conditions. Comparable new aircraft would be significantly more
costly, and could not be built by the time the current Puma Mk1 reaches
its out-of-service date (OSD) in 2012. Lastly, UK-specific elements
of LEP such as secure communications will be integrated in the
United Kingdom at EC UK, thereby satisfying the DIS criteria for
an onshore capability for upgrades and urgent requirements.
18. In addition to the Puma programmes,
EC UK is supplying additional equipment to the MoD, details of
which are being made available separately to the Clerk.
FUTURE REQUIREMENTS
19. Eurocopter is confident that its developing
relationship with MoD will raise awareness of its potential as
a partner on various important programmes planned in the short
to medium term.
20. On the Search and Rescue Helicopter
(SAR (H)) programme, to be contracted jointly by MoD and DfT/Maritime
and Coastguard Agency, the EC225, the latest version of the Super
Puma family, is the chosen platform for the Air Knight consortium.
The military version, the EC 725, will be a strong contender for
the forthcoming Future Medium Helicopter Programme.
21. ECG already provides most of the helicopters
at the Defence Helicopter Flying School, and is participating
in the early stages of the Military Flight Training System (Rotary
Wing) programme to provide a successor to the DHFS contract.
CONCLUSION
22. Eurocopter strongly believes that the
capability demonstrated in this submissionits status as
the world's leading helicopter manufacturer, its comprehensive
support organisation and aircraft modification capability, underpinned
by a growing onshore capability with Eurocopter UK Ltd, confirms
its suitability as a partner to HMG and as an alternative supplier
of helicopter capability.
3 April 2009
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