BERLIN (Reuters) - German trade groups said European Union states will have to relinquish some sovereignty to implement German Finance Minister Olaf Scholz’s call for mergers in the European defense industry.

FILE PHOTO: German Finance Minister Olaf Scholz speaks at an event in Jouy-en-Josas, near Paris, France, August 29, 2018. REUTERS/Benoit Tessier/File Photo

Scholz told a business conference in France on Wednesday that governments should support mergers and stop concentrating projects solely on local companies to make better use of procurement spending and stay competitive.

Volker Thum, a former Airbus executive who now heads the BDLI German Aerospace Industries Association, agreed that changes were needed to allow European firms to keep up in an increasingly competitive global market.

“Given ever more complex and cost-intensive development programs, this will only be possible through increased cooperation and a consolidation of the European defense industry,” Thum said in a statement to Reuters.

“Giving up some sovereignty would mean big gains in capability. We cannot afford to continue to have 28 isolated solutions,” he said, referring to the number of EU member states.

Hans-Christoph Atzpodien, managing director of the BDSV German Security and Defence Industry group, said the conditions were ripe for a more intensive European defense cooperation.

“The joint political and military will to cooperate is an important prerequisite for successful industrial cooperation. At the same time, it requires industrially doable structures that are not overshadowed by political wishes.”

Atzpodien said the defense industry could only become more European if military requirements, competitive conditions and export regulations were harmonized across the 28 member states.

Despite long-standing calls for mergers, European governments and defense contractors have made little progress toward consolidating the industry.

French Finance Minister Bruno Le Maire, who was at the conference with Scholz, said this month that plans to combine the civilian shipyards of French state-owned shipbuilder Naval Group and Italian group Fincantieri should not include defense assets.

The multinational Airbus A400M military transport plane has also set an uninspiring example for cross-border defense cooperation as the program has been plagued by cost overruns and delays.