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“Leonardo prepares challenge to the East”

Genoa - Lorenzo Mariani explains to the MediTelegraph how the aerospace and defence group is working toward a turnaround that in theory should take place between 2020 and 2022.

Genoa - Leonardo is looking to Asia, the Middle East and certain parts of Africa to grow its business once again. The company is doing so by investing in its commercial network, projecting a doubling of its presence outside Italy’s borders, including offices, joint ventures and subsidiaries in countries considered to be “good opportunities”, such as Australia and Thailand, but also Algeria and Egypt. Lorenzo Mariani, the new commercial director to whom managing director Alessandro Profumo assigned the task of relaunching the company on the Italian and international markets, explains to the MediTelegraph how the aerospace and defence group is working toward a turnaround that in theory should take place between 2020 and 2022.

Fincantieri-Naval Group

Concerning the military alliance between the Italian Fincantieri and the French Naval Group, in which systems manufacturer Thales is a stakeholder, Mariani, who is currently in charge of commercial strategy after having built his career in naval systems and electronics, responded dryly to those who claim that Leonardo has ‘product problems’. “The Italian industrial world that is Leonardo and the entire SMB supply chain, has no reason to envy French industry,” the engineer said. “If anyone says that we have product problems, he is voicing a personal opinion. Orizzonte Sistemi Navali would make it possible to rebuild and upgrade Italian capabilities around a shared entity before joining a company (in France) that has already gone through this process, because Thales is part of Naval Group. If this is not possible, another solution would be to establish an unambiguous and well determined relationship between Leonardo and Fincantieri, starting from the 2014 agreement. That agreement must be enriched with a component concerning the relationship between Leonardo and Naval Group.” The manager says that on the military side, fundamental principles such as the rule that the ship must be “under the sole authority of Fincantieri” are “not up for discussion”. “But there is a difference between the French and Italian systems,” he added, “In France, the combat system is partly at Thales and partly at Naval Group; in Italy it is all at Leonardo and not in Fincantieri at all. It would therefore make no sense for us to talk only about Fincantieri (an entity that can only talk about ships) and Naval Group (an entity that can speak about both ships and electronics). The government has cultivated this bizarre situation. Leonardo is Thales’s partner in aerospace, but they are competitors on radar, command and control systems, and communications, which are sectors in which we do not have any kind of product problem, and are in fact making new investments.”

Leonardo in the world

Just under half of Leonardo’s 12 billion in revenue now comes from abroad. Foreign markets are expected to contribute at least 60% of the 16 billion forecast for the end of the plan. The “One Company” reorganisation led by the former CEO Mauro Moretti left behind a group that “took a great step forward in terms of image, effectiveness and industrial efficiency,” Mariani said. But within the market, the divisions have been “fragmented” and this makes it necessary to have “a super account manager for the Italian market” and makes it an urgent matter “to reappear” on the foreign scene. The plan calls for the number of offices, joint ventures and Leonardo subsidiaries to increase from 25 foreign employees at the end of 2017 to more than double that number by its end. “Of the 25-30 companies that we will open, ten are planned for 2018-2019.” The priorities are Indonesia, Australia, and Thailand. “We already have a presence in the Middle East: Qatar, Bahrain, Kuwait, and Saudi Arabia. In Africa we are present in Algeria, where we are creating a JV, but there are important opportunities in Egypt, and we are also opening an office in Angola.”

Production in Liguria

The historic Oto Melara of La Spezia promises results: “The 76 millimetre above-deck cannon is an object that is already being sold under the Italian Naval Law,” Mariani said, “As soon as it is approved by our Navy, it will also be offered in international tenders.” Guided ammunition is a family of products in which Leonardo is considering “deals with American industry, dialogue is under way”. In ground warfare, the group moves along “lines consistent with European development” and although it is true that the segment has suffered in recent years, Mariani explains that “planning is back, and a hard floor can be guaranteed” bearing in mind that “the tanks of the future will not be made only in Italy, so it is right to open up to countries like France and Germany”. Then there is niche production, like industrial automation, “which requires investments in product and market promotion,” the manager concluded, “so because things are going well, we are working without anxiety in development partnerships that won’t move the centrality of the business away from us.” In cyber security and cyber defence there are “between five and ten opportunities concentrated in the Middle and Far East.” For the Galileo satellite system, Leonardo is negotiating new contracts based on an increase in work because of the exit of a British supplier from the consortium due to Brexit: “We’re planning on closing within the year.”

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