Between potential and new risks... a strategy is missing for the Italian aerospace industry

(To Philip Del Monte)

The aeronautical sector is an economic-industrial sector that has always been characterized by an oligopolistic market and verticalized production chains. The reason is easy to say: it requires specific technical knowledge and large investments and has a very close link with the political and technological interests of states.

Air and space power is an instrument of power projection not only in the event of war, but also of high international competition in the civil sphere. Aerospace technology is a unit of measurement in competition between states and in trade.

If on the battlefield the evolution of air power materializes in the increasingly massive presence of drones - also understood as an integral part of a "system of systems", as well as the war between Russia and Ukraine today and the GCAP project in perspective, pose attention - and the development of a real hypersonic capacity, in the "civilian" field the real challenge is linked to the development of new types of aircraft and the question of launchers and satellite networks, as well as commercialization (read also politicization and consequent militarization) of space.

It is, therefore, a sector where - after the pioneering era of flight - it has always been the large companies that have determined the market conditions and also the technological evolutions and transformations. players industrial.

In essence, the letter sent by the Committee of Italian Aerospace Districts to the Minister of Business and Made in Italy, Adolfo Urso, in recent days starts precisely from these bases to highlight some central issues for the future of the sector.

Unlike other European countries - France above all - Italy did not foresee major investments in the aerospace sector with PNRR funds, legitimately but perhaps with little foresight, diverting resources to other production chains. The risk is that manufacturing - because the sector is highly competitive but is in fact based on the pillars of "industrial craftsmanship" rather than the "assembly line" stricto sensu – has remained competitive thanks to past investments, but which risks losing competitiveness compared to foreign players in the future, as reported by the Committee of Aerospace Districts.

Italian aerospace has a particularity compared to its foreign counterparts which is crucial and which is in line with the genome of the national industry: 75% of the supply chain is made up of micro and small businesses, while 12,8% is represented by medium-sized companies and only 12% is made up of large companies, as highlighted by Vera Viola on "Il Sole 24 Ore" (28/02/24).

In a oligopoly, Italy has a verticalized but fragmented supply chain. It is an advantage in terms of diffusion of ideas and innovations typical of a sector positioned on the "technological frontier", but in terms of maintaining competitiveness it is a substantial risk, just as risks are emerging in terms of security.

The Italian AD&S (Aerospace, Defense and Security) industry, as can be seen from the latest intelligence services annual report just released, has returned to the center of political-economic but also strategic-military dynamics. This also attracts the interest of enemy countries and beyond - in the complex dynamics of intelligence, speaking of "friends" and "enemies" is somewhat incorrect -, concentrated on the cutting-edge technological realities of the sector.

The innovations in the field of weapon systems and satellites, as well as the important positions held by Italian companies also in j Euro-Western defense sectors are tempting for many international players.

“Imperfect verticalization” is one of the intrinsic characteristics of the development of the defense industry in Italy starting from the early twentieth century; characteristic also noted by Paolo Bricco in his book “Leonardo. Industrial engine and technological frontier of Italy" (Il Mulino, 2023), dedicated to the main industrial-military center of the country, which, in fact, reconstructs the historical-economic events of the entire sector in Italy.

The trade organizations have, therefore, asked the government to draw up a national strategic plan for the aerospace industry, which can allocate resources to the sector, especially with regards to research and development, as well as set up aggregation bodies for smaller entities. In order to avoid transforming one of the country's spearheads into a sector of subcontractors dependent on the requests of large foreign companies, it is necessary to invest in research, both in the supersonic and hypersonic fields, also thinking from a dual use.

The Ukrainian war and, in many respects, the current Red Sea crisis are showing theeffectiveness of the integration of commercial aeronautical and electronic systems - especially in the field of aerial drones - with military ones and their use on the battlefield. The street to go through turns out to be, therefore, precisely this.