Mr Haun, you will be speaking at a High Level Seminar on Pooling and Consolidating Demand, co-organised by the Cyprus EU Council Presidency, the Egmont Institute and the European Defence Agency. What is your motivation to devote your scarce time to this topic?
In times of declining budgets and the massive re-allocation of financial resources, all partners in the defence market need to rethink and discuss objectives, structures, and processes. We all act within a system of interdependencies. Creating win-win situations should be our common denominator. Thus – representing the supply side – I feel personally responsible to contribute and listen on this occasion.
When the EDA started to prepare the Effective Procurement Methods work strand as one of the main vehicles to implement Pooling and Consolidating Demand, our research revealed that the potential savings for governments, depending on the degree of demand consolidation, can lead up to more than 30 per cent – so the advantages seem to be rather on the demand side. Yet, European defence industries are constantly calling for it. Can you explain the benefits of Pooling and Consolidating Demand for the supply side?
Well, it finally comes down to economies of scale. Assuming that EU’s nations by and large will have to face the same challenges in land warfare for the time being: Is there really a necessity for six types of 8x8 vehicles developed and produced within the European Union? Or put it the other way round: Do different operators of one and the same vehicle really need different specifications, levels of protection, and so forth? Being an engineering-driven company, KMW loves to supply leading-edge technologies. We are really good at that; but we would do even better if the breadth of demand would be reduced in favour of consolidated high-tech depth.
The benefits of Pooling and Consolidating Demand seem so obvious, and yet it is still an exception rather than a rule. From your point of view, what are the main obstacles to Pooling and Consolidating Demand?
In defence as in many other respects, Europe still is a patchwork. Aiming at pooling and consolidating demand, none of us may start from a blank sheet of paper. Today, military equipment varies from nation to nation. To a certain extent and for some time ahead, this constitutes part of the reference frame for new procurements. Another major obstacle, of course, is national thinking. As Europeans, we share the same values, most of us share the same currency, and we co-ordinate our foreign policy – but in defence issues and in defence industries, things remain pretty domestic. The European Union's package of directives in the field of defence and security is a significant step in the right direction. However, competition on this platform can only be fair and cost-efficient, if governments step back from various ways of supporting or owning their national defence industries.
Please allow us to become a bit more concrete now. We have learned that Krauss-Maffei Wegmann has already long-lasting experience with Pooling and Consolidating Demand, for example through your cooperation with so called weapon systems user clubs like the one for Leopard Main Battle Tanks. At the same time your company is not offering the equipment only but also related training and logistic services. Can you tell us a bit more about your actual experiences and elaborate a bit on where you see further potential for Pooling and Consolidating demand?
We constantly listen to customers, we facilitate communication among our customers. Thus, all involved may benefit from each other’s experiences. With the Leopard user club, we have a platform to define and devise common supply concepts, further development and plans for adaptions. At KMW, this is an integral part of customer relationship management. If we talk about pooling and consolidating demand in the European Union, we are talking about something as efficient, but on a much bigger scale and backed-up decisively by national politics.
If you were given the possibility to deliver one key message related to Pooling and Consolidating Demand to European governmental decision makers, what would it be?
Define your needs, discuss them open-minded with your fellow-nations – and have faith in the market.
Mr Haun, thank you very much for this interview.