French aerospace association Gifas (Hall 1, Stand A1/A10) announced in May that 2015 represented a new record year, with significant growth in exports. Gifas president Marwan Lahoud (who is also Airbus Group’s chief strategy and marketing director) said that the sector was in good shape, with orders reaching €78.3 billion ($88.1 billion) and the order book now representing five years of production.

Much of this is driven by Airbus, which has an order book of more of €1,000 billion ($1,113 billion) and 10 years of production. Revenues in 2015 reached €58.3 billion ($74.4 billion or +8.5 percent) with a forecast demand for 32,600 commercial airliners over the next 20 years, meaning the future is rosy, according to the Gifas, which believes around half of them should be built in Europe by Airbus and its suppliers.

However, the most impressive result of 2015 for the French aerospace industry has been the comeback by the defense sector. The export success of the Dassault Rafale fighter, which was sold to both Egypt and Qatar, and the pending deal with India, has had a positive impact, leading to export sales of €16.2 billion ($18.3 billion) in 2015 (the figures are from the DGA, the French procurement agency, adding up the aerospace, maritime and weapons industries).

International tensions will also have positive effect on the industry in 2016: According to IHS, France will become the second biggest defense export country, overtaking Russia, thanks to its latest success—the sale of submarines to Australia (a deal worth €32 billion/ $36.2 billion). French companies are profitting from international defense sales, success that can to some extent be attributed to Defense Minister Jean-Yves Le Drian. He has proven particularly adept at nurturing the contacts with foreign governments, such as Egypt and Qatar, which were developed during his many years as representative in charge of the defense sector. Meanwhile, the French industry has developed expertise in technology transfer that helps to secure big deals with foreign countries. Both Thales and Dassault, for example, opened subsidiaries years ago in India to help negotiate a potential Rafale deal and to learn how to work with local aerospace leader, HAL.

Risk in 2017

However, if the government of France changes with the 2017 presidential election, it could have a negative impact on its aerospace industry -- if the team in charge of exports changes completely. Either way, the procurement office head, Laurent Collet-Billon, whose expertise and knowledge has been praised by the industry, is due to leave his position at the beginning of 2017, leading to fear that he will leave a vacuum in this influential post.

The environment is also changing fast: Germany is to become a defense exporter and could offer stiff competition to France in some markets. Berlin has also decided to raise its military spending over the next five years, and is pushing its own industry to developed new products and enter new markets.

The French space industry also recorded very good figures in 2015, with consolidated revenues of €3.88 billion ($4.38 billion). The sector contributed €1.8 billion ($3.7 billion) of exports in 2014, according to Gifas figures, and this figure is expected to continue to grow; 2015 was a record year for Arianespace (€1.43 billion/$1.62 billion in 2015 revenues).

2016 will be a year of change for the industry, with the integration of the Ariane supply chain in Airbus Safran Launchers giving France the central role in the development and manufacturing of Ariane 6. The preliminary design review of Ariane 6 was concluded on June 10, confirmed Alain Charmeau, program director, during the last month’s ILA Berlin Air Show.

The European Commission will soon make a final determination on the purchase of the CNES segment of Arianespace by ASL, which will allow the final integration of the company. As for the space industry, the director general of the European Space Agency, Jan Woerner, has pleaded for a “European preference” in launchers, a position that could have a positive effect on the industry.

Public Funding

The equipment leaders have invested heavily in the ramp up of major aerospace programs. The difficulties of Zodiac Aerospace—which was not able to manufacture and deliver airliner seats fast enough last year leading to profit warnings—is a symbol of an industry that has grown too fast to keep up with record backlogs.

The smaller French aerospace companies achieved combined revenues of €20 billion ($22.6 billion) in 2015, a slight increase over the previous year. These companies expect 2016 to be flat before a heavy ramp up over the next few years.

The French companies benefit from “the best public investment devices,” according to Pascal Veillat, CEO of Arelis group (an aerospace and defense supplier which is part of the Gifas-Coliét Aero PME small companies group). However, the small companies also object that they are “not being considered as real partners” by the big companies, which sometimes give them only “six months of visibility,” while also delaying payments by over 60 days.

Overall, however, Gifas believes the current situation of the French industry puts it a strong position, driven by Airbus production. It has taken steps to boost training of skilled personnel, with €2 million ($2.26 million) having been spent by Gifas on training courses for technicians. The digitization of the aerospace industry has started, with more and more companies using virtual testing, for example. This allows companies such as Thales to test its missiles 10,000 times before adapting the prototypes to the digital model.

Additive manufacturing, or 3D printing, is a key topic as well, and will be used by Airbus Safran Launchers for many Ariane 6 components. Many programs and companies are being encouraged to invest thanks to public funding via BPI (Banque Publique d’Investissement) and its very active aerospace division, that is already helping with funding and loan guarantees for more than 1,000 companies of the sector. Gifas hopes that this will continue under the next government too.