Recent years have seen an increase in cluster-type competitiveness clusters. These are groupings of SMEs and/or SMIs that take the decision to combine their know-how in order to provide a competitive advantage to at least one of them, and sometimes even to the entire cluster. In the case of defence clusters, the aim is clearly to be able to respond in their own name to public and international calls for tenders.

We can therefore ask ourselves the question of the impact of the rise in power of these clusters on our defence industry: is it a threat to the large groups, a necessary competition to their oligopolistic offer or a credible alternative to their power? In reality, they are positioning themselves as an indispensable complement to a global industrial offer.

"France's defence must be French. It's a necessity that hasn't always been very familiar in recent years. It is essential that it should become so again. A country like France, if it happens to go to war, it must be its war. If it were otherwise, our country would be at odds with everything it has been since its origins, with its role, with the esteem it has for itself, with its soul. Naturally, French defence would, if necessary, be combined with that of other countries".

General de Gaulle's speech to the Saint-Cyr Military School on 3 November 1959

General de Gaulle's speech, which is still relevant today, underlines the strong desire of successive governments of the Fourth and then Fifth ^{Republics to} maintain national independence in the fields of armaments, defence and, more broadly, security.

Today's defence industry, mainly made up of major groups such as DCNS for naval defence, Nexter and Renault Trucks Defence for land defence, Safran and Dassault for theaeronautics, but also Thales and Sagem for electronics, is seeing the gradual emergence of small and medium-sized enterprises (SMEs) positioning themselves in the buoyant defence sector. These SMEs, which are usually subcontractors to large groups, have recently been grouping together within defence clusters in order to be able to respond in turn to public calls for tenders.

We can therefore ask ourselves the question of the impact of the rise in power of these clusters on our defence industry: is it a threat to the large groups, a necessary competition to their oligopolistic offer or a credible alternative to their power? In reality, they are positioning themselves as an indispensable complement to a global industrial offer.

After a review of the situation of the defence industry in France, we will define the scope of action of these clusters before shedding light on their role in the defence industry.The role they could play in terms of innovation and research and development in the very near future to complement the defence industry.

A competitive sector, but dependent on its exports

The economic weight of the defence industry in France is considerable because of the diversity of the industrial fabric concerned, the jobs generated and the importance of this activity in terms of research and innovation in high technologies. Thus, the defence industrial and technological base (DITB) remains a highly competitive sector.

The defence industry accounts for 165,000 direct jobs, at least as many indirect jobs and a turnover of around €15 billion, a third of which is achieved through exports. Depending on the year, France ranks fourth or fifth among the world's exporters.

The arms industry market in France is overwhelmingly in the hands of large groups, sometimes multinationals, in which the State often holds large shares of the capital, or even the entire capital in the case of former public companies such as NEXTER . The preponderance of these large groups can be explained by their ability to assume the management and risks inherent in the development of armaments programmes, which are by definition very expensive and the results uncertain.

To this must be added more than 4,000 SMEs, which often specialise in niche markets and act as subcontractors to the major groups.

Although many of these firms are not public enterprises, the State nevertheless retains control through regulatory, contractual and statutory provisions.

It is important to stress that the French armaments industry seems to be little affected by the crisis. Indeed, the member companies of Gifas (Groupement des industriels français de l'aéronautique, de la défense et de l'espace) achieved a record 17% increase in new orders in 2011 and an increase in turnover of 3.5 billion euros. In addition, this sector hired 13,000 people in France and the trend is expected to continue in the coming years. These exceptional results are due to exports, since 77% of the turnover of Gifas companies is made from exports. On average, one third of the defence industry's production is dedicated to exports, a figure that should continue to grow in the coming years. While it appears that exports are essentially the work of the large industrial groups, some SMEs specializing in high-tech niches also manage to export a significant part of their production.

The armaments market is cyclical and is marked by the weight of large contracts, some of which exceed EUR 1 billion. It is highly dependent on public orders and subject to random political factors.

The French defence industry is therefore strategically very important. It also has a considerable economic and social dimension.

France must have the means to act in defence; it is the Ministry of Defence which is responsible for organising, promoting and regulating the defence tool through the Directorate General of Armaments. The latter must maintain and develop the industrial skills essential to armament. Today, as in the 1960s, the DGA is a determining agent of the balance between the different protagonists of armament policies.

DGA supports the development of DTIB SMEs which possess a large number of skills necessary for innovation and performance. As such, DGA has set up a defence correspondent within each regional industry directorate. This person monitors defence companies as closely as possible, implements support and detects innovation potential. He is the intermediary between the DGA and local players. DGA is also involved in the policy of regional competitiveness clusters by supporting them in their development thanks to its skills and expertise.

Despite the good health of the defence industries, new armament programmes are faced with costs that far exceed what States can invest in their defence. Thus, the European grouping of the defence industry, over and above its current reality, is a necessity. France subscribes to the political project for the construction of a common defence and security area, the most well-known manifestations of which to date are related to avionics and aerospace. The DGA is involved in the governance of these supranational groups when the State holds a stake in them, even if only a minority one.

Although the defence industry is doing well, the fact remains that this success is due to exports and not to national orders. Selling for export makes it possible to produce larger batches and therefore less expensive for the end buyer.

As the trend in the defence budget is not on the rise, it seems important today to develop other outlets than the French market. SMEs in the French industrial fabric did not always have the capacity to penetrate international markets on their own. The idea of grouping them together in clusters then appeared.

What is the purpose of a cluster?

Most of the time acting as subcontractors for large groups, French SMEs and SMIs are gradually mobilizing to avoid being totally dependent on these same large groups. Indeed, some SMEs are totally dependent on one of these large groups, the latter being their one and only customer. The alternative undoubtedly lies in the creation of clusters. These groups of companies where know-how in a technical field is accumulated can provide a competitive advantage. In this way, the members of these clusters combine technical expertise with perfect knowledge of the needs of the defence market. This pooling makes the offer of French companies more coherent, both in the civil and military fields. The members carry out joint prospecting activities, pool their sales agents, share market and business information, and jointly design marketing and communication plans.

In a logic of efficiency and speed, these clusters organise exchange networks. The clusters are present at all the major company trade shows. Thanks to partnerships signed with foreign counterparts, the clusters enable SMEs to seek new growth levers in emerging countries or in Europe.

Two major clusters are emerging: the Eden cluster, based in Lyon, being the most developed, and the Primus cluster in Midi-Pyrenees.

Looking at the case of the Primus cluster, it appears that companies in the Midi-Pyrenees do not lack assets to expand beyond the Eden cluster. borders, particularly in the aeronautics sector, which has acted as a catalyst to show the way to excellence in other sectors. To date, their know-how stands out in sectors that are as diverse as they are interlinked, that rely on synergies between companies and that can thus meet all needs.

Supervised by the regions' chambers of commerce and industry, these clusters work to federate the region's businesses and provide support in high-potential markets by proposing comprehensive, attractive and increasingly competitive offers. The CCI of Toulouse offers the members of the Primus cluster a regular and qualified monitoring of specific European funding programmes that can be used to finance research, development and innovation projects. Thus, the CCI's Europe experts advise and support the cluster's companies on European regulations, RDI, technological and commercial partnership opportunities, and organise technical missions to Brussels to meet the European institutions.

The creation of this cluster aims to promote the growth of companies' turnover and workforce through the conquest of new markets and international development. In this way, the complementary expertise of companies is combined in capacity offers that integrate the entire life cycle of a solution, from the expression of the need to maintenance in operational condition, including design, implementation, qualification and training of end users.

The cluster's industrial focus is reflected in its ability to propose innovative offers with high technological value, specialised industrial production resources and specific know-how such as equipment lifespan.

These clusters are therefore not in competition with the groups of the military-industrial complex. Indeed, the choice of these companies was based on the desire to prosper while remaining SMEs, as their size and investment capacities are not comparable to the giants of the defence industry. However, these SMEs are capable of developing certain highly innovative techniques which make them not competitors but, on the contrary, an essential complement to the defence industry.

A necessary and useful complement

Although they do not represent an alternative, these clusters still have a well-defined function within the defence industry. While the vocation of these clusters is to manage the synergies between their members, the very heart of the latter remains the SMEs. It is these human-sized companies that it seems relevant to study.

Indeed, the very structure of these SMEs and their weight on the market give them a flexibility that large groups no longer have. They are often highly specialised SMEs, located in technological niches in the market. Thus, they are highly innovative. Defence is a sector with high added value and contributes to bringing France closer to the objectives of the Lisbon Strategy, which recommends investing 3% of GDP in research. Investment in military research accounts for one fifth of civilian R&D expenditure ^and is carried out in the framework of major programmes. They concern the entire design cycle, from basic research to production. As such, many large groups outsource their R&D in order to focus on production. SMEs, within clusters, benefit from the RAPID (dual innovation support scheme). Indeed, one of the characteristics of these SMEs is that they are strongly dual. Duality is a necessity that makes it possible to lower production costs by producing the basis of a product on a large scale before modifying it at the margin to meet defence specifications. The will of these companies is therefore always to develop products that can have applications in both the civil and military, defence and security sectors. In the same way, the ASTRID system (specific support for defence research and innovation) aims to encourage research. France is part of a trend towards a reduction in credits allocated to defence R&D because most of the major programmes (A400M, M51 missile, Tiger, NH90) are no longer at the design or development stage. Industrialists must therefore strive to maintain a high level of R&D investment. The defence clusters have therefore understood that maintaining an excellent level of R&D necessarily ensures an increase in their orders, and therefore in their turnover. As the French market is saturated for budgetary reasons, the mission of the clusters is therefore to make the European and world markets accessible. The sustainability of these SMEs therefore depends on their know-how and their ability to export their production. To date, some 300 to 350 SMEs account for 5% of direct arms exports; the potential for growth is therefore significant in a huge market. Thus, on the world market, belonging to a cluster enables SMEs to get to know each other better, to generate collaborations and joint projects (development of industrial partnerships, joint responses to calls for tender and international projects). The pooling of resources therefore makes it possible to be stronger and to win contracts in one's own name and not as a subcontractor. Obtaining this type of international contract allows the company to grow as a member of a cluster but also as an individual SME. Profits from this type of contract will help to increase investment in R&D so that SMEs can maintain a very high level of technicality and technology.

At the European level, the aim of clusters is to push SMEs to take a step towards a European defence and security industry in order to carry out joint international actions.

The aim of the clusters is to help these SMEs develop internationally and not to compete with the large groups. On the contrary, the role of a cluster is to facilitate the access of SMEs to large groups. Indeed, the defence cluster is a spokesperson for innovative SMEs to large groups, it creates privileged links between the various stakeholders and sets up common responses to the expectations of groups. The cluster even acts as a guarantor of the interests of SMEs. Thus, the setting up of SME/major group partnership agreements formalising working frameworks benefits both parties and creates an ecosystem that is more conducive to innovation and collaboration. SMEs are then no longer assisted by large groups, but are seen as true partners. Success is mutual and real teamwork takes place.

These clusters also encourage joint responses to calls for tenders and the construction of global solutions. To this end, they are setting up a system for monitoring national calls for tenders, as well as those of NAPSA (NATO's National Logistics Support Agency) and the European Defence Agency. In the configuration of a joint response, one of the SMEs in the cluster is piloting the project and is working on a subcontracting basis with the other members.

At the heart of the collaborative philosophy, the clusters bring together complementary expertise to offer an effective industrial alternative to their customers by providing them with turnkey offers (from engineering to deployment) that are perfectly adapted to their specific needs, thanks to cutting-edge technologies. Ensuring perfect quality and compliance with the standards and constraints of field operations, these solutions provide their customers with the assets that make SMEs strong: innovation, pragmatic approach, price optimization, proximity, short development and manufacturing cycles. Finally, the clusters regularly invite major industrialists to meetings in order to present all the technologies of their members, but also to organize exchanges with them, gradually decompartmentalizing sometimes difficult relationships.

Thus, in addition to highlighting the innovation and R&D capacities of member SMEs, the clusters enable the latter to deal at the same level with the giants of the defence industry and, as such, to grow in partnership with them. Defence clusters are therefore about complementarity and not competition.

The French defence and security industry is positioned on a mature and perennial market, but one that is constantly evolving and seeking innovation. High technology has a very high cost that governments find difficult to assume. As a result, national order books are becoming increasingly limited. The solution lies in the synergy between large groups and SMEs in order to achieve optimal and/or optimized industrial solutions. Clusters therefore have a real vocation to bring together the two market players, each with qualities that the other does not have. Thus, large groups will bring their reputation, their financing capacities and sometimes their production capacity, where defence SMEs will have specialised in R&D and innovation and will develop their duality in order to be permanently competitive. In view of the technological advances of the last decades and the costs associated with their implementation on defence equipment, will the duality of these SMEs be sufficient to maintain acceptable costs for defence?

A semi-direct recruitment officer, Captain Sabrina MACCAGNO CERF, after a first part of her career resolutely oriented towards operational tasks, is doing her DT at the Toulouse Business School in a master's degree specialising in "supply chain and procurement management". On this occasion, she had the opportunity to rub shoulders with the rich industrial sector of the Midi-Pyrénées region.