German aircraft engine maker MTU Aero Engines has set up a joint venture for military software with French group Safran’s Sagem unit, as they seek to offset dwindling military budgets.
The new company, which will develop safety-critical software such as for the A400M military transporter, will comprise around 200 engineers, mostly from MTU, and will start operating in 2012.
Total spending by the 26 members of the European Defence Agency — which includes all EU countries except Denmark — fell 7 percent in real terms to 194 billion euros (US$260 billion) in 2010, and will likely fall again this year, according to the EDA.
The sovereign debt crisis in Europe means has put pressure on national defence spending, and EU defence ministers last month agreed to pool resources in 11 defence fields, hoping to shore up European capabilities.
Sagem chief executive Philippe Petitcolin said on Thursday the joint venture would be a “better answer to our customers in the context of pan-European programs and projects”.
MTU said it would be able to access a wider range of market segments and third-party business through the deal with Sagem and Safran. “The German-French joint venture … offers access to a variety of future development projects in the aerospace and defence industry,” chief executive Egon Behle said.