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Interview with Pier Francesco Guarguaglini

The former President and CEO of Finmeccanica speaks to the AVIONEWS' microphones -VIDEO

The full text of the long interview in which the engineer spokes about Leonardo's past, present and future

Mr Guarguaglini you were one of the supporters of the Finmeccanica’s entrance in the United States. How important is the US market for Leonardo today?

I believe that for any defense industry that has an interest in having a worldwide presence, the US market have to be the principal one.

What would you have done and what would you not have done if you had remained at the top of Finmeccanica?

I would have continued in the United States because the process that I had started with DRS was not concluded, because in the first year we had to divide between PROXY and SSA and in the second year we examined what were the synergies to develop with the rest of Finmeccanica. But here we stopped. I would have pushed to create real synergies between European and US parties, and moreover I would have addressed DRS more in the system aspect, in fact with Soccodato we prepared a document which foreseen a sale of some parts and the acquisition of other systems-oriented ones.

In your opinion, wouldn't it be worthwhile to sell the parts considered "less" strategic to increase the investment capacities of Leonardo?

For Leonardo it is necessary a restructuration and the top manager must decide the strategy. They might even think of selling DRS, they have to thinks at the same time about an important purchase in Europe or in the electronic or aeronautical field.

How do you see Leonardo's future in the European context? Do you see the possibility of increasing synergies with other companies in the sector?

By comparing the Fimeccanica of my times I see it very weakened, because my idea was to present its to possible consolidations of the defense industry in a position of strength. Surely we were strong in helicopters, in some aspects of electronics, in the field of torpedoes and in aeronautics. Leonardo has certainly weakened in this period, and first of all the top manager must think about how to strengthen its because if there will be an European consolidation Italy would be in an extremely weak position, binding Leonardo to a marginal role.

How much could the exit from the European Union of the United Kingdom affect Leonardo's programs and finances?

I think that there will be a little impact, because the United Kingdom will always be part of NATO and will always be interested in joint programs with some European countries. So Leonardo must know how to take advantages of these opportunities.

In your opinion, should the Italian Government and Leonardo focus more on the development of armed drones or dual-use drones?

The discourse of the drones seems to me a speech that is not dealt with clearly, because by now there are so many types and they have many uses. What one chooses depends on a global political strategy, because one can choose "big" drones that can be used for surveillance or combat. Or he can choose "small" drones that serve in the civil field. We forget that there are land vehicles and boats that can be controlled remotely. A complicated speech that will be addressed. A very important aspect is the ability to manage a multitude of drones, and in this field the United States is thought to be able to manage hundreds of drones from a single point of command and control. This is the aspect that will qualify the country that will succeed in doing this and Italy, in my opinion, should invest forces in this field.

How do you see the possible joint-venture between Fincantieri and Naval Group that threatens to exclude Leonardo from military naval programs at cause of the presence of Thales in the French company?

Clearly a naval agreement between Italy and France with the many common programs in the past and in the present, it can only strengthen both countries. I believe that Leonardo cannot be excluded because also Fincantieri would be in difficulty, as would be the Italian Navy that needs both companies to carry forward their ideas against the French ones.

How do you see the confirmation of Giuseppe Bono as Chief Executive Officer of Fincantieri?

In my opinion it is a very good thing that Bono was reconfirmed as CEO and I hope he has full powers to be able to develop his ideas. As I said before I hope that Bono will continue with the international agreements, but he must try to find a closer collaboration on a national level with Leonardo.

How do you see the future of European defense and industry?

The problem is quite simple, as long as Europe will not be a political union with a single foreign policy, it will be difficult to think of achieving a single European defense and industry. But it is possible to think, as already happened, of common programs. In this field there will be two programs for the fighter aircraft: one by Germany and France, and the other the UK’s Tempest in which Sweden could participate and probably also Italy. The Italian industries and government has two possibilities. It is good if Italy immediately decides, because is not convenient usually to get on a fast-running wagon, because entering in program that has already been developed means not choosing the most important technologies and products and having a secondary role.

What do you think of the debated F-35 program?

The F-35 is a very complex program and the United States focuses a lot on us even if it has caused some disappointments, but it is enough to read what Pentagon is doing to try to reduce the cost. An important decision that came after a lot was spent. Italy does not participate in this activity, but the reduction will be found externally and will have to update its technologies. A program that follows it in its entirety is very difficult. Italy has spent a lot on initial investments and could not get them back, also because the United States will acquire a much higher number and therefore the ability to reduce the cost of the product for Italian and European industries will always be limited.

In your opinion, what is Leonardo missing to be able to reach new goals in terms of products and the market?

I would start from a minimal thing: in my time I had created Finmeccanica's meeting for the elderly that was previously at the level of a single company. This had created a climate of true union and everyone felt proud to belong to the company, and the fact that now it was forgotten how much people care to be valued at all levels means cancelling Finmeccanica from being unique in terms of human resources. The other aspect is to be careful about product development. During my time each of my collaborators presented their ideas that were examined and managed to make them financial, also thanks to the relationship with the Armed Forces. We took advantage of the financing of the 808, 421 and 266 acts for sold products abroad, because I personally always discussed the fact that it was not enough for an armament to be of interest only in Italy because it had to go on international markets. So we managed to create extremely valid products, even in the space sector such as the Cosmo SkyMed, and these were highly valued and are still purchased. After 2011, however, it has not been invested in this field and except for the Naval Law, enacted between 2013 and 2014, there have been no wide-ranging programs and this means that Leonardo's product technology has not been implemented more. Alongside this, commercial aspects have often been neglected, because one thinks that creating residences abroad is expensive, but salespeople must be efficient and must have something to propose to increase sales. This, in my opinion, is lacking and would need a wing blow, recharge the batteries and leave again. We need to rethink an industrial policy starting from the current situation and making some sacrifices to get to some specific things.

Is his reproach to the Government or to the leaders of Leonardo?

I do not want to reproach anyone, but it has to be clear when we speak about an Italian-System that first of all there it would be necessary that there is really a harmony between industry, armed forces and the Government that must know how to understand what the investments it does because the Defense has often relapses into the civil. Technologies are expensive and if one wants to keep them at the cutting edge, one must know how to invest. The Government's task is to choose in which fields and to invest.

In your opinion, has ENAV 's decision to buy IDS's Air Navigation Division been right? Or would it have been fairer for ENAV to ask Leonardo to develop a new air traffic management system?

I think that the choice of ENAV is right as long as the vision of the service also adds an industrial one, because what IDS has to be updated and improved. With this ENAV can present itself on the international market with an excellent product and affirm certain principles and validity of what it is doing.

Do you think AIAD today is able to represent our industries in foreign markets?

Honestly, I've lost a little of this. When I was at the top of Finmeccanica there where always conflicts at European level with the British and with Airbus which -being present in France, Germany and Spain- tried to impose its will. I tried to defend Italy's role but it has never been easy, because our country has always been considered "little". AIAD must be able to carry on the interests of Finmeccanica (now Leonardo) and small companies, but it is necessary that the industries have confidence in the Federation because we are weak and if there is not a support plan on both sides we always weaken by more.

What do you think on the recently established of Leonardo’s Foundation?

The Foundation must understand that it is not Leonardo, but it is Finmeccanica and must value all Finmeccanica therefore also the companies that were part of it. If I was in the Foundation I would go and see which are all the museums that the various companies have done and I would try to enhance these, because from the cultural and industrial culture point of view, aggregate all the museums and give a unique vision, leaving them even independent, it could give meaning to the Foundation because this should underline the importance of Finmeccanica in the development of Italian industry and of Italy.

M/A - 1219865

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