2002 – 2005 The new millennium and international expansion
The history trail
The expansion strategy
2002 marked the start of an expansion policy, obtained through agreements and acquisitions, to strengthen Finmeccanica’s presence in the sectors where it had focussed its core business: aerospace, defence, and security, but without losing sight of the civil Energy and Transport sector, with strategies focussed on excellence enhancement. A significant role was played during these years by the collaborations started by Finmeccanica on major international programmes, both in the field of aeronautics, and in the space industry, with the world’s most important players in the sector. These strategic choices changed the appearance of the Group which, while maintaining solid basis in Italy, became increasingly more international, both in the way of its industrial presence and in its participation in major aerospace development programmes.
New international collaborations
In 2001 Alenia Aeronautica began collaboration with Airbus on the A380 project, the largest aircraft in the history of commercial aviation, showing an industrial cooperation which made the Italian involvement the most significant one by a European industry, except for partners of the multinational company. The contract signed allocated Alenia Aeronautica around 4 per cent of the production of the aircraft “cell”. In 2003 agreements were reached with Boeing for involvement in the B787 Dreamliner programme, the most advanced programme in the field of civil aviation, followed, in 2005, by the agreement with the Russian company Sukhoi Civil Aircraft for the development of the Superjet 100, a new family of aircraft for regional airlines. In 2006 an agreement was signed with the US company Lockheed Martin for involvement in the programme for the new Joint Strike Fighter, the most important industrial collaboration programme in the history of global military aeronautics, which included eight partner countries: United Kingdom, Italy, Holland, Canada, Australia, Turkey, Denmark and Norway. The early 2000s also saw the start of two major space programmes in which Alenia Spazio took a leading role: COSMO-SkyMed, a satellite constellation equipped with radar sensors for observing the Earth for civil and military use, and Galileo, a satellite positioning and navigation system for civil and commercial use sought by Europe as an alternative to the American GPS which was subject to military control. Not forgetting the determining contribution, which began in these years, to the construction of the International Space Station.
In 2002, Finmeccanica acquired, from the British Marconi Corporation plc (GEC's new name, after the separation of the defence activities gone over to BAE Systems) Marconi Mobile and OTE - Officine Toscane Elettromeccaniche, leaders in the defence communications and radio systems sector, which were merged to create Selenia Communications. These acquisitions brought a number of investments to Finmeccanica that were owned by Marconi Mobile in companies specialized in communications and ICT (Prodel, Larimart, Sirio Panel, Elmer) and internet network security (Amtec). At the same time, Telespazio, a pioneer in satellite systems and services, joined the group. The year ended with the full acquisition of Aeronautica Macchi, world leader in the field of trainers. In 2003, Finmeccanica acquired 30% of Fiat Avio, which would fall to 15% three years later with the new Avio SpA. Fiat Avio had started doing business in 1908 designing aircraft engines, just five years after the extraordinary exploit of the Wright brothers, and later expanding into the field of space propulsion. That same year, again from Marconi Corporation plc, Selenia Communications acquired MMA (Marconi Mobile Access), a centre of excellence for the development of mobile radio technology for public, private and defence applications, with offices in Genoa and Chieti. In 2004 Finmeccanica sold to Cassa Depositi e Prestiti around 10% of the capital it held in ST Microelectronics for a purchase price of 1.44 billion euros. The transaction provided Finmeccanica with the necessary cashflow to support its investment in AgustaWestland, i.e. acquiring its full block of shares continuing its strategy of selective growth in core sectors. In May 2004 Finmeccanica acquired GKN’s 50% in the joint venture AgustaWestland, making it the sole owner of one of the major global players in the helicopter sector.
EuroSystems agreement and Space Alliance
2005 saw the first results of the expansion strategy launched three years earlier. With the US101 model, AgustaWestland was awarded the order to supply the White House with the helicopter to be used by the President of the United States of America, beating competition from Sikorsky, the historic supplier of US presidential helicopters. At the same time the strategic partnership agreement signed by AgustaWestland with the British Ministry of Defence opened the door for Finmeccanica to the British market which was starting to become a second domestic market. In the same year, as a result of the EuroSystems agreement reached with BAe Systems, Finmeccanica acquired important British assets in the sector of avionics, military and secure communications and air traffic control which contributed to reshaping the entire European sector for Defence Electronics. The SELEX family was established, which brought back, in its acronym, the historic name of Selenia, the company which forty years earlier had started Finmeccanica’s adventure into radar and defence electronics: SELEX Communications for military and secure communications, SELEX Sensors & Airborne Systems for avionics, electro-optics and airborne radars, and SELEX Sistemi Integrati for command and control systems and air traffic management systems. As a result of the agreements with BAe Systems, Finmeccanica gained the second place in the European Defence Electronics sector and became part of the select shortlist of major international players, laying down the foundation for its subsequent expansion into the rich American market. 2005 was also the year of the Space Alliance, thanks to which Finmeccanica became European leader in the space sector. Finmeccanica and Alcatel set up two joint ventures: Alcatel Alenia Space (Alcatel 67% and Finmeccanica 33%) for manufacturing activities and Telespazio (Finmeccanica 67% and Alcatel 33%) for satellite services. Two years later, in 2007, Thales replaced Alcatel Lucent in the joint ventures. Alcatel Alenia Space became Thales Alenia Space (Thales 67% and Finmeccanica 33%), while the name of Telespazio and the respective holdings of each remained unchanged (Finmeccanica 67% and Thales 33%).
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- Marconi Mobile
- OTE - Officine Toscane Elettromeccaniche
- BAE Systems Avionics
- Aeronautica Macchi
- The EuroSystems agreement: the SELEX family
With the acquisition of Marconi Mobile, another important piece of Italy's industrial history returned under the control of an Italian group. Marconi Mobile was the heir of Officine Marconi, founded in Genoa in 1906 by Guglielmo Marconi as the Italian branch of Marconi's Wireless Telegraph & Co. of London. The company, like other sister companies founded throughout the world, installed national broadcasting transmitters. In 1921, it took on the name of Società Italiana Marconi, obtaining the exclusive licence for radio transmissions, by land and sea. In the fifties, the company provided a large proportion of TV transmitters for national television broadcasts, and worked closely with the armed forces, becoming NATO's main partner in telecommunications systems. In the same period, Società Italiana Marconi started to develop multi-channel telephony systems, and in the early seventies, it began an expansion phase in the domestic and foreign market. Meanwhile, the British GEC (General Electric) had acquired Marconi's Wireless (1969) and, consequently, also Società Italiana Marconi. GEC started a period of great expansion in the communications industry. In 1987, it acquired Plessey, dealing in electronics and telecommunications. In 1998, at the height of its growth, Società Italiana Marconi was in the forefront of telephone equipment production, with exports to Europe, North Africa and the Middle East, and about 2,500 employees. That same year, GEC started a major reorganization of the communications business in order to ride the rapid development of the "new economy"; two US companies were acquired (Reltec Corporation and FORE Systems) that manufactured components, and later on the whole telecommunications business was reorganized. Thus were created Marconi Communications (fixed network communication systems), Marconi Services (consulting services) and Marconi Mobile (mobile phones). In 1999, GEC's defence assets - merged into GEC Marconi - were acquired by BAE Systems, and GEC changed its name to Marconi Corporation plc, which brings together all the businesses dealing in communications and electronics. Later on, the collapse of the "dot-com bubble" and the temporary setback of the so-called "new economy" dealt a serious blow to the prospects of the Marconi Corporation. The collapse of stock prices forced the drastic downsizing of the Italian units and opened the door to the sale of several business units, including the Genoese and Italian ones. When in 2002 Finmeccanica took it over from Marconi Corporation, Marconi Mobile was the second European operator in military communications, it controlled in turn four companies in the United Kingdom dealing in the communications and security business, as well as other companies in Germany, Turkey, Brazil and Romania. In the UK, where it was making 20% of the sales, it had maintained its headquarters in Chelmsford, in the historic building that had seen the start, in 1897, of Guglielmo Marconi's Marconi Wireless and where the world's first wireless telegraph plant was put into operation.
OTE started in 1954 as an Officine Galileo spin-off, on the initiative of some amateur radio operators, and was dealing in the production of electronics and defence radio communications. At the same time, they also developed biomedical technology. During the seventies, OTE came under the control of the Montedison group. The growth of the biomedical branch, in the early seventies, caused the split of OTE into two distinct companies: OTE Biomedica and OTE Telecomunicazioni. The former was later sold to STET (under the Selenia-Elsag grouping) to be merged with its subsidiary Esacontrol, dealing in electromedical equipment. Thus started Esaote, which went over to Finmeccanica in the late eighties (after the acquisition of the Selenia-Elsag grouping) and left the Group in 1994. OTE Telecomunicazioni instead remained with Montedison, and with the early nineties began to diversify its products, developing additional project capacity in the civil sector, starting with various types of mobile phones, and building the Italian national network GSM for Telecom Italy, with 24 switching centres and more than 3,000 base station sites, moving on next to the creation of equipment for the new digital telephone networks. In 2002, after a long series of ownership and corporate changes, OTE came under the control of Marconi Corporation plc. By the time it transferred to Finmeccanica, OTE was the leader in private mobile radio communications (Police, Carabinieri and other institutional users) and in the development of new digital mobile radio communication systems for utilities, transportation and public safety based on the TETRA standard (Terrestrial Trunked Radio, a digital multi-access system for integrated voice and data transmission), in addition to producing air traffic control systems. It was present in Italy with three sites (Genoa, Pisa, Florence), and had two other sites, one in the United Kingdom (Chelmsford) and the other in Russia (Moscow).
BAE Systems Avionics too had crossed paths with Marconi's Wireless. In 1909, the company founded by the Italian physicist had started working with Elliott Brothers Ltd to produce avionics equipment for the first airplanes. After English Electric acquired the Marconi Company, Elliott Brothers was absorbed into the new group. In 1969, after GEC acquired English Electric, the whole avionics sector was renamed Marconi-Elliott Avionics Systems Limited and became part of GEC-Marconi, the defence sector subsidiary. In 1990, Ferranti Defence Systems was added to the avionics sector. In 1999, it was merged into BAE Systems, after the latter acquired Marconi Electronic Systems (GEC-Marconi's new name) under the new name of BAE Systems Avionics.
Telespazio had been founded in 1961 by Italcable and RAI to test the newly developed satellite telecommunications technologies, for which it was granted an exclusive licence from the Ministry of Post. With Telespazio, Italy officially entered - with the United States, Russia, France and Britain - the small group of "active participants" in the new space transmissions. From the early months of 1962, with the installation of a first antenna in Fucino ( L'Aquila), the engineers and technicians of Telespazio, led by Piero Fanti, were engaged day and night in the "pioneer" phase of activity. Through the Telstar and Relay-1 satellite, they achieved the first receptions and, since 1964, the first transmissions of voices and images between the two sides of the Atlantic. Telespazio soon acquired a leading role in the space communications market, expanding and diversifying over the years the scope of its activities. Within a few decades Telespazio became one of the industry leaders worldwide, creating infrastructures with complex management yet extraordinary capabilities. The first experimental station, built in the Fucino basin, has become the largest station in the world for telecommunications and space services.
Aeronautica Macchi was a historic company, founded in 1913 by Giulio Macchi under the name of Nieuport Macchi, a joint venture with Italian capital and French Société Anonyme des Etablissements Nieuport technology. The Macchi name had actually a much older tradition; starting in 1840, the Macchi family began manufacturing tramcars and carriages in Varese, and at the start of the twentieth century Giulio Macchi had set his sights on the nascent aviation industry to diversify the family business. The agreement with the French company Nieuport, whose monoplanes were used successfully by Italy during the war in Libya, was reached in November 1912. In order to meet contractual deadlines, the first planes were put into production without waiting for the new company to be formally established. In 1915, the Italian Navy commissioned Nieuport-Macchi to copy an Austrian Lohner seaplane captured intact. This gave the company an entirely new field and started it on the path to realizing independent projects. Nieuport Macchi marked the entire evolution of aviation in Italy; from the fighters used by the Army in the Great War to the seaplanes that contended with the Austrian Navy's control of the Adriatic and the fighters used by Italy's royal Air Force on all fronts of the Second World War. In the fifties, the company laid the foundations for its future development by producing a special jet for the training of military pilots. The MB326 flew for the first time on December 10, 1957, proving to be an instant success, especially in foreign markets, including through licensed production programs. In the seventies, the plan was launched to design the MB339, still serving today in the Frecce Tricolori aerial aerobatic team. In 1980, the company took the name of Aermacchi, becoming a group with the acquisition of other small businesses and building a new factory in Venegono (Varese). In 1997, they acquired the SIAI Marchetti trainers business unit from Agusta and the manufacturing of nacelles from Alenia. A centre specializing in training aircraft was started and soon Aermacchi gained international prestige, thus being consecrated as a world leader in the sector, ending up with the presentation of the new M-346, the only new generation advanced training aircraft currently in production in Europe.
SELEX Sistemi Integrati (100% Finmeccanica) brought under the full control of Finmeccanica the Italian business of the former AMS joint venture (which was dissolved) in command and control systems and air traffic management systems. The scope of the new company also included Air Traffic Management (ATM) and Air Traffic Control (ATC) businesses acquired by BAe Systems in England, Germany (Gematronik) and the United States (ASI). The company, with offices in Rome, had around 3,000 employees, with production plants in Italy, United Kingdom, Germany and the United States. SELEX Sensors and Airborne Systems (75% Finmeccanica and 25% BAe Systems) grouped together the business of Galileo Avionica and BAe Systems Avionics Ltd, a British company belonging to BAe Systems, producing a leading integrated group in the field of avionics, electro-optics, airborne radars and electronic warfare systems. SELEX Sensors & Airborne Systems, with offices in Florence, was the parent company of Galileo Avionica in Italy and Selex Sensors & Airborne Systems Ltd. in the United Kingdom. It had around 7,600 employees, 4,400 of whom were in the United Kingdom, in Basildon, Luton and Edinburgh plants. SELEX Communications (100% Finmeccanica) integrated the business of Selenia Communications with the military and secure communications segment acquired from BAe Systems. The company, with offices in Pomezia (Rome) and production centres in Italy, United Kingdom, Romania, Turkey and Germany had around 5,100 employees, 1,000 of whom were in the United Kingdom.