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France ASD Industry


The French industry is highly focused on the Defense sector, with the country being the only self-sufficient Defense market in Europe

French ASD industry overview


2012-17 CAGR

The French ASD industry grew by 8,2%/ year, reflecting an increase of 0,8 pp in % GDP (2012-17)


French ASD consolidated revenues [€bn, 2012-17]


  • The ASD industry weight in the countries’ GDP has been increasing, largely due to growth in Defense and Aeronautics
  • However, the percentage of R&D investment over total industry revenues is decreasing, which may result in future loss of competitiveness
Increasing air traffic and pressure from NATO to meet the 2% GDP target are the main drivers for continuing growth



  • France increasing vertical specialization in Aeronautics has already led the sector to have a 130% higher weight in total exports than the average (1) of peer markets
  • The sector has benefited from strong growth in air traffic, resulting in higher sales of civilian aircrafts and airlines’ maintenance


  • The Space industry has been growing steadily, also leveraging the integration of Ariane 6 (a Spacecraft launcher) in the Airbus Safran Launchers supply chain
  • Positive outlook with more contracts to develop satellites parts with EU markets (e.g., multi-million Airbus deal with Eutelsat in 2018)


  • Expected growth in Defense expenditures with NATO’s 2,0% GDP target is leading to an increase manufacturing capacity and military personnel
  • With €4,1bn military sales in 2017, France plans to invest €1bn per year in R&D until 2022 as part of government’s drive to encourage innovation

Note: (1) Comparative analysis between France, US, United Kingdom, German, Canada, and Italy
Sources: Ministry of France and Foreign Affairs, Statista, AIN Online, Safran, Oliver Wyman, Mergent, GIFAS, EY analysis


Tier 1 players key system exports, while lower Tiers focus on supplying the domestic market

French ASD industry: market breakdown


More than half of total ASD revenues come from Tier 1 companies, which reflects a market focused on high value-added activities


French ASD sales breakdown by value chain segment, destination market and employment [€bn, %, 2017]


  • Over 80% of Tier 1 players manufacturing products is exported, which reveals potential for supply chain improvement in this segment
  • Tiers 2 and 3 focus in domestic market since most of its activities feed the local demand of OEMs and Tier 1 players
The French ASD industry is mostly focused on exports, despite strong domestic demand


French ASD market mix as % of consolidated revenues [%, 2017]


  • In 2017, French exports accounted for the greatest proportion of unconsolidated revenues (69,1%) mainly due to increasing aircraft orders
  • More than half of French ASD exports are for European and North American markets

Sources: GIFAS, EY analysis

The French aerospace industry is particularly strong in ecosystem cooperation and end-to-end manufacturing capabilities

France ASD industry: SWOT

Internal Factors


  • Ecosystem characterized by high levels of cooperation, particularly in R&D activities: coordinated approach by CORAC (1), virtually all stakeholders are members of GIFAS (2)
  • World-leading anchor companiesacross value chain segments (e.g., Airbus, Thales)
  • Best-in-class Aerospace cluster supporting the local industry
  • High collaboration between prime contractors and their suppliers allows for enhanced innovation potential
  • End-to-end manufacturing and integration capabilities


  • Military segment facing cuts in defense budget(e.g., fighter planes) under the Military Programming Law
  • Labour shortage of qualified technical manual workers
  • High government influence in privately-owned players (4):Government frequently resorts to public subsidies and procurement procedures
  • Heavy local taxation schemes limit profitability of domestic players and reduces global competitiveness
  • Limited local demand and high dependence on exports
External Factors


  • BoostAerospace platform, focusingon improving collaboration across the supply chain
  • High order backlog will continue to drive demand from OEM and Tier 1 players
  • Large orders and heterogeneous customer base absorb the cyclical effects
  • Rising demand for commercial aircraft from Asia among worsening US-Asia trade relations


  • Aircraft OEMs moving into the MRO segment due to LCCs (3)closing down for financial reasons or leasing contacts
  • Increasing competition from emerging countries with lower labour costs for MRO and lower-tier subcontracting (e.g., Brazil, China, India)
  • Airbus looking to insource production of some systems (e.g., nacelle) to increase aircraft performance
  • Protectionist measures and developing domestic industries in emerging countries(e.g., Russia, China)

Notes: (1) French civil aviation research council; (2) French aerospace industries association; (3) low-cost carriers; (4) French government holds “golden shares” in Airbus
Sources: Ecorys, Marketline, Mordor Intelligence, EY analysis