Encouragingly for French aerospace industry Gifas, 2016 proved to be a year of growth, according to figures that it released in April. And, despite continued uncertainty, 2017 seems to be heading in the same direction.
The combined balance sheet for the 376 member companies of Paris-based Gifas climbed by 4.1 percent last year, by comparison with 2015, to show total revenues of €60.4 billion ($67.7 billion). Growth achieved for exports was more impressive at 5.9 percent, with the €41.7 billion ($46.7 billion) accounting for as much as 86 percent of the total—making the sector a significant generator for the plus side of France’s national balance of payments.
“France has never produced so many aircraft, declared Gifas president Marwan Lahoud, who was recently re-elected to lead the organization after stepping down as international strategy chief for the Airbus Group.
Revenue growth for Gifas member companies was stronger on the civil side of the business (4.8 percent) than for the military side (1.4 percent). “Rising military exports have compensated for a reduction in deliveries for French forces,” conceded Lahoud, who has called for national defense spending to be increased back up to two percent of gross domestic product by 2022—up from the current level of 1.43 percent. Whether the newly elected administration of President Emmanuel Macron will respond to this call remains to be seen.
Less positively, the French aerospace industry’s backlog of orders dipped by 6.6 percent last year, compared with 2015, to €73.1 billion ($81.9 billion). There was some reduction in terms of defense exports, with orders for Dassault’s Rafale fighter not making as much of a contribution in 2016 as they had in 2015.
Airbus saw a marked dip in net airliner orders for 2016, which stood at 775 compared with 1,036 in 2015. However, the European airframer did increase deliveries, which stood at 688 aircraft last year (versus 635 in 2015). ATR’s deliveries of its twin turboprop regional airliners dipped slightly from 88 to 80 aircraft, and new firm orders were cut in half from 76 sales in 2015 to just 36 in 2016.
The positive results achieved by the French aerospace industry in 2016 was a result of the aircraft production volumes achieved by both Airbus and Boeing. Output rates for both the A320 and Boeing 737 narrowbodies, and the widebody A350 and 787 Dreamliner models increased last year—driving demand for aerostructures, systems and equipment produced by French suppliers. Looking ahead, Airbus plans to raise the monthly production rate for the A320 to 60 units by 2019, and to more than 10 A350s by 2018. Similarly, at Boeing, output of 737s is set to reach 57 per month by 2019 and for the 787 is due to climb from 10 to 13-14 by 2020. Leading French suppliers such as Safran, Thales and Zodiac stand to benefit from these increases, and this has given Gifas grounds for optimism for 2017 and 2018.
On the other hand, two sectors that are doing less well are helicopters and business aircraft. Dassault Aviation only delivered 49 of its Falcons last year (compared with 55 in 2015 and 66 in 2014.
Meanwhile the rotorcraft sector continues to be suppressed by weakness in the oil and gas sector, with greater negative impact on larger aircraft. Nonetheless, Franco-German manufacturer Airbus Helicopters achieved a 6 percent rise in net orders to 353 units last year, and a 5 percent increase in deliveries to 418 aircraft.
The space sector, which directly supports 14,000 French jobs, had a good year with a 5.4 percent increase in revenues to €4.1 billion ($4.6 billion). However, Gifas also acknowledged an unspecified dip in new orders for this part of its membership.
Dynamism in the French aerospace industry was also manifest in levels of employment. Gifas members recruited around 10,000 people in 2016, taking the total number directly employed by the French industry to 187,000. Over the last five years, a total of 60,000 people have been recruited, but for 2017 the annual total is expected to dip somewhat to just 8,000.
Gifas has acknowledged that member companies are struggling to recruit staff with the right skills. At the same time, the organization is urging small- and medium-sized enterprises among its membership to step up their investments in digital technology and process to remain competitive. The group is investing €11.6 million ($13 million) in the second phase of an initiative to assist some 300 smaller companies in this process. Among the goals for this program are boosting on-time and on-quality delivery performance.