Copenhagen: Little Denmark is offering big clues to the European Union’s defence-policy ambitions.
Terma A/S, a closely held Danish aerospace company, says business is looking up because of the EU’s fresh focus on security.
The maker of radars for airports and electronics for the F-16 fighter jet recently accepted its first loan from the European Investment Bank after the terms for the €28m ($32m) deal proved more attractive than anything from private lenders, including the company’s financier, Danske Bank A/S. A minnow in an industry dominated by the likes of Lockheed Martin Corp. and BAE Systems Plc, Terma now wants to expand participation in the EU’s research programme.
“The EIB loan is a significant opportunity for Terma,” Per Thiesen, the company’s chief financial officer, said in an interview at its offices outside Copenhagen.
“Instead of having a five-to-seven year innovation cycle, we were able to reduce that to a three-to-five year cycle. That is competitiveness at the end of the day.”After almost a decade of debt-crisis fire fighting, European policymakers are shifting their attention to security and the role it can play in bolstering a sluggish EU economy.
The bloc is being driven by everything from Russia’s encroachment in Ukraine and US President Donald Trump’s vocal campaign for allies to ramp up defence spending to a refugee influx and terrorism.
While EU countries have ceded control over trade, antitrust and monetary policies to the bloc, the latest push for centralised power touches the core of national sovereignty and will be marked by political battles in the months to come. The discussion revolves around plans to boost EIB lending to companies with a foot in the defence business, increase spending on military research from the EU budget and streamline arms procurement.
Terma, whose revenue and profit have increased for the past three years, never imagined that the Luxembourg-based EIB would venture where other lenders balked.
The company, which is also involved in the F-35 fighter programme, the most-expensive US weapons programme, had a profit last year of €12.2m on sales of €231m.
