PARIS — France and Italy may eventually follow through on consolidation of their naval industries, but major hurdles, including a legal dispute over French shipyard STX, remains to be conquered.

The issue was highlighted this week by Antoine Bouvier, chairman of European missile maker MBDA, who said the decision by France and Italy to continue to develop separate warships rather than seek cooperation.

“There are two types of warships which have very similar missions, but which are completely different,” Antoine Bouvier, said informally Sept. 19 after a meeting of the French association of aeronautic and space journalists. “The only thing they have in common is the MBDA missile. That is not a very satisfactory situation.”

There is no clearer sign of the gap between the two nations’ industries than the French decision to spend €3.8 billion (U.S. $4.5 billion) for the FTI intermediate frigate, at the same time Italy is plans to procure the PPA multi-purpose vessel.

Those are national programs without shared design or equipment, despite what some see as obvious similar requirements.

The track record for cooperation has been historically weak, with lower collaboration on the Franco-Italian FREMM multimission frigate compared to a higher shared procurement on the Horizon air defense vessel, Bouvier noted.

He contrasted the situation to the team-up of Krauss-Maffei Wegmann and Nexter to develop a next-generation heavy tank and artillery for France and Germany, he said. Bouvier is a non-executive board director of KNDS, the joint venture between KMW and Nexter.

The importance of a program launch can be seen with London and Paris ordering the Scalp/Storm Shadow cruise missile, which led to the creation of MBDA as an Anglo-French joint venture.

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Britain and France have ordered the ANL-Sea Venom light anti-ship missile, allowing MBDA to adopt an industrial “specialization,” setting up four centers of excellence to cut duplication of supply in French and U.K. missile programs.

STX dispute

While signs are not strong at the moment for French-Italian naval consolidation, there have been some mixed media reports that a restructuring could happen in the future.

A summit is scheduled for Sept. 27 in Rome between France and Italy, as the two nations seek resolution of a highly political dispute over STX and look at the wider rationalization of commercial and naval shipbuilding.

Ahead of that meeting, France’s BFM TV has reported that there is progress in talks on the STX shipyard and also a wider consolidation.

That could result in a 50-50 ownership, with Italian state-owned Fincantieri taking management control of the ship builder, which is under a temporary French nationalization. There has been “very positive” progress, said a source at the Economy and Finance Ministry, BFM reported.

The aim is to open direct negotiations between Naval Group and Fincanctieri, as the two governments — respectively majority shareholders — have agreed the STX plan, BFM reported.

Italy had previously called for a majority holding on STX.

In the wider naval restructuring, there is a plan for Fincantieri and Naval Group to take initially a 10 percent stake in each other, later rising to 20 percent if all went well, BFM reported. That approach is based on the merger between French car maker Renault and Japanese partner Nissan.

Naval Group is keen to pursue a broad industrial alliance, which would help beat competition from new market entrants, a company spokesman said.

Under such a plan, a 50/50 joint venture would also be created, which would share research and development costs, order equipment and pitch the same vessel in export tenders, BFM reported. Naval Group spends some €100 million a year on R&D. The synergy benefits are estimated at €100 million-€150 million. Naval Group’s submarine activity would be excluded.

The proposed Franco-Italian alliance, under the project name Magellan, would bring in electronics specialists Thales and Leonardo, Reuters reported.

That is where the whole plan for wider consolidation may be pushed back, as the details of fitting Fincantieri, Leonardo, Naval Group, Thales and STX into a single group are too complex, business website La Tribune reported. That has led the office of the French president, prime minister and the Armed Forces Ministry to “back pedal,” and to handle sectoral restructuring as a long term project, the report said. The STX dispute can be resolved in the near term.