El Tallerón and Escribano: Indra's plan to overthrow Santa Bárbara as the leading national manufacturer of military vehicles

Indra's chairman, Ángel Escribano , is intent on turning the technology company he leads into a major Spanish manufacturer of military vehicles. Although the acquisition of Escribano Mechanical & Engineering (EM&E) has not yet received the approval of the board of directors—which voted unanimously to create a committee of independent directors to "supervise compliance with the applicable rules for the proper management of conflicts of interest," given that it is the company of its own chairman and is now run by his brother, Javier Escribano—Indra will move forward with its plan to acquire EM&E.

This company offers a product line of turrets, robots, and military vehicles, as well as industrial capabilities, something Indra lacks. While the potential value of the transaction is still unknown, Javier Escribano—who also has a seat on Indra's board of directors, as EM&E is the technology company's second-largest shareholder—stated in April that his company was worth more than 1 billion euros.

This acquisition, if completed, will be in addition to the purchase of the El Tallerón plant in Asturias from Duro Felguera—a company currently in pre-bankruptcy proceedings —in exchange for €3.6 million and the retention of the factory's 156 workers. Although the deal has not yet been signed, sources close to Duro and Indra tell this newspaper that the agreement is closed pending the resolution of bureaucratic issues. With this, Indra seeks to make "Asturias the nerve center of its production, assembly, and integration of land platforms," according to the company chaired by Ángel Escribano. The plant, which, according to industry sources, requires a significant investment to be fully operational, has a surface area of more than 75,000 square meters and a privileged access to the Cantabrian Sea.

The implementation of these plans will entail the creation of a Spanish manufacturer of tracked and wheeled military vehicles with sufficient clout to compete with General Dynamics, the US company that purchased Santa Bárbara from SEPI (Sociedad Estatal de Participaciones Industriales) in 2000 and which until now was the only company with these capabilities in Spain, through its European subsidiary, General Dynamics European Land Systems (GDELS).

This double move by Indra follows the US company's refusal to sell Santa Bárbara, which has two plants: one in Alcalá de Guadaira (Seville) and one in Trubia (Asturias). The first is dedicated to vehicle maintenance, and the second to the production of artillery and armored vehicles such as the Ascod, whose Spanish version is called the Pizarro. This vehicle is a success for GDELS, as demonstrated by the agreement with Latvia to supply that country with 42 units in exchange for €373 million, signed in January. This agreement was just extended in July with another 42 Hunter vehicles—as Latvia has called it.

Another relevant GDELS product is the VCR 8x8 Dragón, a vehicle manufactured at the Trubia plant through Tess Defence, a company it shares with EM&E, Sapa, and Indra. Indra has become the dominant player in Tess after acquiring a 51.01% stake in the company for €107 million, following the company's difficulties in delivering the Dragóns to the Spanish Army on time.

The Ministry of Defense even considered imposing a multimillion-dollar fine on Tess for failing to meet its commitment to deliver 92 units by December, out of a total of 348 purchased by the government for 2 billion euros. For this program, Sapa was responsible for the transmissions and engines; Indra, the software; GDELS provided the ground platform; and EM&E provided the combat turret.

Despite the delays, GDELS highlights the results of TESS, where it has been the leader until now. “It is a unique model in Europe (...) This collaboration is fundamental and positions Spain as one of only two countries in Europe with the capacity to design and manufacture both wheeled and tracked combat vehicles and artillery systems. In fact, at TESS we are already in full production of the 8x8 Dragon and soon the VAC [Tracked Support Vehicle],” GDELS tells this newspaper.

Indra now faces the challenge of taking control of this joint venture (UTE), which includes a company it has turned into a direct competitor. GDELS until now enjoyed the status of "the" Spanish armored vehicle manufacturer, a title the American company must now fight for. It's worth remembering that the Alcalá de Guadaira and Trubia factories are not owned by GDELS, but rather by the state, which has ceded them to the company until 2031, with a possible extension to 2036.

Furthermore, within Indra, GDELS has one of its main clients and its landlord, the Spanish State, which owns 28% of the shares, making it Indra's main shareholder and giving it three seats on its board of directors. While GDELS has made efforts in recent months to demonstrate its Spanish identity with Santa Bárbara—as emphasized in its industrial plan presented in June, which included a section entitled "101% Spanish and European technology"—the State seeks to create a national defense champion that will serve as a driving force for all SMEs and companies in the sector, something that GDELS already claims to do.

In fact, along these lines, Indra brought together more than 150 companies at its headquarters in Alcobendas (Madrid) in June to create synergies—among which was GDELS. “What's new is that we brought the ICO and the CDTI to this meeting, so that these companies have access to the heads of these two public financing institutions,” explained Escribano, who expressed great satisfaction with the meeting. Another factor that could play in Indra's favor over GDELS in its bid for Spanish and European contracts is the current geopolitical situation. The Russian threat and the withdrawal of a long-standing partner like the US are pushing countries on the Old Continent to invest more in defense, but above all in their own companies. As much as GDELS defends its Spanish and European character, it is a subsidiary of an American company.

Aside from what happens with EM&E, Indra is also eyeing the sale of the military division of the Italian company Iveco, which would give it even more leverage. Indra has made an offer , but is competing with three others: one from the American fund Bain Capital, one from an Australian firm, and a joint bid from the German company Rheinmetall and the Italian company Leonardo. José Vicente de los Mozos, Indra's CEO, stated that the Spanish company would be "directly or indirectly" involved in this operation , leaving the door open to negotiating an alliance with other companies.

Specifically, Indra signed a strategic agreement with Rheinmetall in May, within the framework of the International Defense and Security Fair (FEINDEF) held in Madrid, to cooperate on armored vehicle projects for the Spanish army. "The agreement represents a significant step in Indra's strategy of forming alliances and establishing collaborations to strengthen military vehicle manufacturing and digitalization capabilities in Spain. This is an example of what we Europeans can achieve when we work together," Escribano said when the agreement was announced.