Renault Trucks Defense Seeks Core Role in Industry Consolidation
(Source:; published Nov. 19, 2012)
The VAB Mk 3, developed by RTD for the export market, has attracted interest from ten countries; initial deliveries are planned for late 2013 or early 2014. (RTD photo)
PARIS --- Having undertaken what it considers as the first step in the consolidation of France’s army equipment industry by purchasing Panhard, Renault Trucks Defense (RTD) hopes to resume its merger talks with the state-owned Nexter group.

Despite current uncertainties about the new French government’s defense industry policies, RTD continues to be interested in a combination of its mobility know-how with the Nexter’s range of weapons, but is also looking at Finland’s Patria and the Australian-based army equipment business of Thales as possible strategic partners, company CEO Gérard Amiel told reporters here Nov. 14.

With the previous purchase of military truck-maker Acmat, RTD now has over 1,000 employees spread over seven facilities, and is well on the way to reach its goal of 700 million euros of annual sales by 2015, from the 400 million euros it projects for 2012.

More significantly, its product range now covers the full range of wheeled platforms, from under 3.5 metric tonnes to over 42 tonnes, and for military missions including combat, fire-support and logistics. Much of its recent business, however, has been generated in the homeland security sector, which is also where it sees the fastest growth in the coming years, Amiel said during an even marking its formal take-over of Panhard.

RTD believes there are two main reasons why it should be the core of a consolidated French army equipment industry: it belongs to the Volvo AB group, on which it can rely for access to technology, major components and financial assistance; and all of its facilities and personnel are based in France, where it also is in the running for taking over and operating French army logistical centers, a profitable and growing business.

Amiel makes a persuasive case for the benefits of belonging to a dual-technology group active in both civil and military markets, as a company which has to buy components and technology from outside suppliers at a premium has little chance of staying in business as the market becomes even more price-sensitive, and technology becomes more expensive to develop or buy.

“We buy our engines from Volvo at cost, while Nexter buys its components from Mercedes at twice their cost price,” Amiel says: which is the better deal, he asks?

And, to illustrate how the cost of buying in components from outside suppliers can boost costs, he points out that Panhard’s PVP, which tips the scales at just over 4 tonnes, costs as much as RTD’s own Sherpa Light, with an empty weight of 8 tonnes.

In the meantime, the new defense white paper due out in February has delayed the next major army program, the VBMR multirole armored vehicle on which RTD and Nexter have partnered for at least two years. There are even some doubts about the future of the ambitious Scorpion program, which called for a multi-billion euro overhaul of almost all in-service equipment.

But, whatever the future holds, RTD is presently focused on integrating Panhard, developing export sales, expanding logistic support services to the French army, and accompanying the shift from military to homeland security acquisitions, especially in Africa and the Far East.

“Our core business is mobility, not weapons” says Amiel, so whatever happens the company will not have to merge to survive because there is much less competition, and less duplication, at this end of the business.

RTD’s closest competitor, Iveco, is also part of a large, predominantly civilian maker of trucks and buses, and there are a lot of similarities in how the two approach the military market. Iveco has already beat out RTD to a major French truck contract, but Amiel notes with satisfaction that his company “beat Iveco three times in Egypt,” where it has won contracts worth over 400 million euros over the past year.

RTD is also making good progress in taking over the French army’s in-service support; it has taken over and now operates a first workshop at Fourchambault, in central France, and will bid for more as the outsourcing process continues.

RTD’s support business is now worth about 100 million euros per year, and the gains that it brings in terms of effectiveness can be astounding compared to military procedures. RTD has involved its civilian truck dealers in supporting their local French army units, so “a part that is ordered before 6 p.m. is delivered to the army workshop by 8 a.m. the next morning,” Amiel says, while “comparable army procedures allowed 40 days from order to delivery,” and thus made for needlessly big, unwieldy and very expensive inventories.

The company also continues to develop armored vehicles, and will begin production next year of the VAB Mk III, a new variant of this wheeled armored vehicle that it developed on its own funds for the export market. This vehicle is likely to interest the ten export customers which already operate earlier models of the VAB, as well as others who do not require vehicles as advanced or as costly as the VBCI or the VBMR.


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