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Avio head: Europe risks becoming a 'half-baked cake'

From Richard Quest, CNN
updated 3:20 PM EDT, Thu April 12, 2012
  • The head of aerospace firm Avio says a new model is needed for European growth
  • Europe must innovate to avoid being "squeezed" by the muscle of China and the U.S.
  • Avio is the prime contractor for the Vega rocket system, first launched in February
  • The system is for small satellites, which Avio believes will drive the aerospace market

London (CNN) -- Europe risks being squeezed between "low-cost China" and "high-tech America" unless it can rediscover the knack for innovation, says the head of aerospace company Avio.

Francesco Caio, the CEO of Turin-based Avio, told me that Europe's prospects were bleak unless it could find a "new frontier of innovation."

"Europe runs the risk of (being) squeezed between the muscles of low-cost China and the innovation of high-tech America," said Caio, a corporate high-flyer whose resume includes heading Cable and Wireless, Indesit and Olivetti.

"I am genuinely concerned that if Europe is not determined to go all the way we run the risk of having a 'half-baked cake' -- which would be very dangerous if ... digested."

Europe runs the risk of (being) squeezed between the muscles of low-cost China and the innovation of high-tech America
Francesco Caio, CEO of Italy's Avio

European leaders need to face the fact that "an industrial model that has worked very well to create wealth and growth has come to an end," he said.

"That is the challenge and that is the role of leadership in Europe -- (to) make sure we have the ideas, vision and new ability to mobilize the great forces and strength that Europe has for growth."

Avio is the prime contractor for Vega, the new European rocket system designed to launch the small satellites that are expected to be the main driver of the aerospace industry.

Watching the Vega's maiden launch from the Guiana Space Center in February had been exhilarating, said Caio.

"You put seven years of development on the line -- you have a few seconds in which the system needs to perform particularly well," he said. "It was a relief in the first 12 seconds, the first 24 seconds, and then it was off."

Made from carbon fiber, the Vega uses a solid propellant which gives it faster speeds than the Ariane 5.

"I think it lowers the barriers to entry for satellite launch, and for the exploration and exploitation of space technology, for smaller companies, university centers," he said.

Of the nine satellites launched into orbit by Vega rockets so far, seven had been developed by European students.

Despite the gloom surrounding his country's economic fortunes, Caio said there were "two stories" for Italian business at present.

"Companies that have a mix of domestic and export are doing very well, indeed, because they have hooked on to growing markets," he said. "People who have been focused just on domestic market? Yes, they are suffering."

Avio was now looking to Brazil and China for growth, said Caio. "We're going where new consumers are learning the beauty of flight."

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