The dynamism of the Aeronautics, Space, and Defence sectors and how they can contribute to the Portuguese and European economies was one of the main topics discussed at the TALKS Conference on the first day of the 11th edition of AEDDays.
140 members, €1.7 billion in turnover – 87% of which are exports – and 18.500 jobs. This is the “relevance of the Aerospace and Defence Cluster to Portugal” highlighted by the Secretary of State for Economy, João Rui Ferreira, during his speech at the TALKS Conference. “More than 100 companies work every day from Portugal for the global aeronautics industry. Another 55 are research and development centres. In other words, we have over 150 companies in the defence industry working actively, and all of this – I reiterate – from Portugal,” he stated.
Highlighting Portugal’s competitive advantages, such as its “proximity” to all European partners, its “geostrategic position,” and the fact that the country is recognized as an “international reference” in the aeronautics, space, and defence industry, the Secretary of State for Economy argued that the presence of companies like “Airbus, Embraer, Leonardo, among others” are “clear examples that we are on the right path.” In João Rui Ferreira’s opinion, the AED cluster “is committed to a qualitative leap,” considering the various projects it participates in and, therefore, the Secretary of State for the Economy believes that “the lessons” learned from this cluster “can be transferred to other sectors and create added value.”
According to AICEP President Filipe Santos Costa, this industry “has grown significantly in recent decades.” In an interview during the networking dinner, he also highlighted Portugal’s “attractiveness” mainly because of the “highly qualified workforce”: “We are highly sought after for investments in engineering, computing, design, and development centres precisely because of that. This aeronautics, space, and defence sectors are a research and development sectors that develops alongside the automotive sector. The automotive components sector is the main productive and exporting sector in the country, and we see a parallel trend in the aeronautics sector: more and more, Portugal produces and exports aeronautic components, and it is a rapidly growing sector with more and more companies.”
Although several defence representatives present at AEDDays mentioned the excess bureaucracy, lack of information, or difficulty in accessing financing, the AICEP President does not share this perspective: “I do not believe this is a sector with particular difficulties in accessing financing. It is a sector that has other issues: it may be eligible for some types of financing and not for others; it is a more sensitive sector regarding exports that can be made, for example, outside the European Union and North America… Besides, for people to be in this sector, they already have to be highly qualified. I don’t think they have difficulties understanding the financing mechanism of Compete, whether through AICEP, IAPMEI, or ANI.”
For Filipe Santos Costa, “the main challenge” of this sector is “a greater insertion of Portuguese companies in global production chains,” which can be achieved “with events like this”: “We have these AEDDays that combine international companies like Airbus or Lockheed Martin with companies that, probably in another context, would not have access to these major players in the global aeronautics industry.”
Another example of this is Leonardo, a company that has supplied products and services to Portugal for over 25 years. Eduardo Munhos de Campos, head of New Business Solutions at Leonardo, assured the audience that the company is already working with what he calls the “new generation of aircraft” and “training pilots to fly F-35, F-16, F-15, and F-18.”
While the Portuguese Air Force Chief of Staff, General João Cartaxo Alves, argued for the need to replace the current F-16s with F-35s, Randy Howard, Vice President of Global Pursuits at Lockheed Martin, emphasized that the F-35s are “proving their worth in defending European airspace,” estimating that “by 2035, there will be more than 600 F-35s operating in Europe.” In a presentation at the TALKS Conference, Howard provided some numbers demonstrating Lockheed Martin’s scale: it collaborates with three US military institutions and 17 allies, having delivered 990 aircraft, and trained over 2400 pilots.
Portugal’s Potential in Space is “Enormous”
The past 10 years have seen “significant growth” in space, and the numbers provided by the Portuguese Space Agency prove it: the number of Portuguese companies linked to space has doubled to around 70, the sector employs 500 people, there are 30 research centres linked to space, public funding has doubled to €80 million per year, and companies have raised about €56 million in venture capital, achieving a turnover of €55 million.
In his speech at AEDDays, Portugal Space President Ricardo Conde admitted to having “two concerns” at the moment: security and sustainability. In his opinion, one solution to make the sector more resilient is to “link defence to space”.
For Giorgio Saccoccia, Advisor to the Director General of the European Space Agency (ESA), space “is one of the areas that brings incredible opportunities for expansion in the future.” For the ESA representative, Portugal’s potential in space “is enormous” and what is happening in the country “can benefit the rest of Europe”, he cites the example of the launch of AEROS, the second Portuguese satellite in space, launched in March 2024.
In his speech at the TALKS Conference, Giorgio Saccoccia emphasized that national projects are “an excellent opportunity for the space sector in Portugal to gain importance and move up the value chain,” in the same way that the new space economy can “significantly accelerate economic growth.” But for that, he says, it is necessary to invest. He points to the discrepancy in public investment in space: in Portugal, 0.02% of GDP, compared to the EU average of 0.041%.
“In Europe, we regulate first, then innovate”
“Businessmen hate instability, but instability can prevail” – the statement was made by Paulo Portas, former Deputy Prime Minister and Minister for Foreign Affairs, in his speech at the TALKS Conference, supported by a series of data. “On the one hand, there have been numerous unpredictable events, such as the Covid-19 pandemic, Russia’s invasion of Ukraine, or Hamas’s attack on Israel. On the other hand, Paulo Portas argues that there are two factors that have contributed to instability – the “inability” of the United Nations to “prevent conflicts and manage impacts” and the fact that we are used to conflicts between states when, currently, that is not what is happening: “Hamas is not a state. Putin is not a state. This is the complexity of our international system.”
Despite the adverse context, the former Minister for Foreign Affairs emphasizes that “the predictions were too pessimistic, while the results were better” and, as such, he believes that “what happened in 2023 serves as a lesson.” “A year ago, the US economy was going to enter a stagnation cycle; a year ago, China was going to have a fantastic economic recovery; a year ago, five of the main European economies were going to enter recession. None of these predictions were confirmed by the facts.”
Although Paulo Portas mentioned that “2024 could be a more positive year for the European economy,” he noted two major problems: demographics and research and development (R&D). In addition to China and Japan, the former minister argued that “we have to get used to India” which “is in a good moment” and will, in his view, “surpass China in its contribution to global growth” – a statement supported by data predicting that it is in India, China, and Pakistan that the majority of babies will be born (out of 1000 babies, 172 will be born in India, 103 in China, and 47 in Pakistan, compared to 30 in the US and 22 in Brazil). At the same time, he anticipates that China will surpass the US as the main exporting country, triggering “the tension of our lives” between the two powers.
Regarding R&D, he points the finger at the EU for excessive regulation, particularly in the area of artificial intelligence: “What is the US position? First, we innovate, then we regulate. And in Europe: first, we regulate, then we innovate. In China, they can innovate, but they have to ask the party first,” said Paulo Portas, with a sense of humour, provoking laughter from the audience.
Looking outwards to the broader international context, Portas highlighted elections in the US and their possible impact on geostrategic interests: “I suspect that the elections in the US are more important for the world than for Americans. 50% of Americans do not vote because the state is not relevant to the economy. But we depend a lot on the election results, especially in the international context. There is a candidate who has the possibility of being President again. And, if that happens, as he has already stated, he will ‘give up’ on Ukraine. Interpretation? He will abandon Ukraine. If the US abandons Ukraine, Europe will be left alone to deal with Putin, and Putin will have a political victory, even if he does not achieve a military victory. And he will appreciate the fragility of the Western world. Now think about this: he has made eight military interventions outside Russia’s borders in 23 years. What do these interventions have in common? They are all in former Soviet republics. If he is successful in Ukraine, who can guarantee that he will stop there?”