October 23, 2018 / 9:25 PM / a month ago

French, Italian firms seal naval co-operation venture

PARIS (Reuters) - France and Italy moved closer toward a military shipbuilding alliance on Tuesday when state-controlled shipyards Naval Group and Fincantieri announced a 50-50 joint venture to bid for Franco-Italian warship projects and export to the world market.

France and Italy agreed at a summit in September last year to study an industrial alliance and further naval cooperation, and originally aimed to outline such a deal by June after Fincantieri took control of France’s STX shipyards in February.

In a joint statement, Fincantieri of Italy and France’s Naval Group, in which defense group Thales has a minority stake, said the joint venture “represents the first step toward the creation of the alliance”.

Besides bidding for joint naval programs, the Franco-Italian venture will look for efficiencies from suppliers by taking advantage of their bigger scale, jointly conduct some research, and share testing facilities.

French and Italian defense and economy ministers welcomed the new industrial and commercial plan and said the venture would start operating in 2019.

“These measures will improve the competitivity of the alliance’s offers on the world market,” they said in a statement.

The two countries have been looking at merging their naval shipbuilding companies to fend off competition, particularly from China and the United States.

Without such consolidation, there are concerns European players would be too small to compete with foreign rivals.

In Tuesday’s statement, the two governments stressed, however, they would maintain the ability to direct the “capacity and strategic resources” of the two naval firms.

Reporting by Tim Hepher; Editing by James Dalgleish

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