De­fence or­ders in a tail­spin


[By R. Chan­drakanth in Farn­bor­ough]

On the open­ing day of the Farn­bor­ough In­ter­na­tional Air­show—pri­mar­ily a com­mer­cial aero­space show—a £50 mil­lion de­fence con­tracts were signed be­tween a num­ber of UK man­u­fac­tur­ing com­pa­nies and the Min­istry of De­fence. Did that deal set the agenda for more mega deals? The an­swer is a cap­i­tal No.

While many deals were signed in the realm of de­fence, the writ­ing was on the wall – de­fence bud­get cuts had im­pacted spend­ing. The fact that one of the top five de­fence com­pa­nies Northrop Grum­man was not at the show is in­dica­tive of the grav­ity of the eco­nomic sit­u­a­tion. Though Northrop Grum­man said the de­ci­sion of not be­ing present at Farn­bor­ough was ‘in full align­ment with its af­ford­abil­ity and cost re­duc­tion goals. Northrop Grum­man con­tin­ues to fo­cus its in­ter­na­tional busi­ness de­vel­op­ment ac­tiv­i­ties and re­sources in ar­eas that bet­ter sup­port its cus­tomers’ needs.”

Other ma­jors too were sub­dued ex­hibitors, while the com­mer­cial aero­space sec­tor was placed in a rel­a­tively bet­ter po­si­tion.

The UK Prime Min­is­ter David Cameron who in­au­gu­rated the air­show said, “In a hugely dif­fi­cult time in the global econ­omy UK aero­space is, quite sim­ply, fly­ing – em­ploy­ing more than 1,00,000 peo­ple, turn­ing over more than £20 bil­lion a year, hold­ing a 17 per cent share of the global mar­ket. But there can be ab­so­lutely no com­pla­cency. In­ter­na­tional com­pe­ti­tion gets more fierce by the year. The UK has got to fight for ev­ery con­tract and ev­ery op­por­tu­nity.

“That’s why we as a gov­ern­ment are do­ing ev­ery­thing pos­si­ble to get be­hind UK aero­space. We’ve es­tab­lished an Aero­space Growth Part­ner­ship to make sure that five, ten, twenty years down the line this in­dus­try con­tin­ues to thrive and grow. We’re in­vest­ing in skills, in­clud­ing 500 masters level qual­i­fi­ca­tions in aero­space engi­neer­ing over the next few years. We’re pulling ev­ery lever we’ve got to make sure those good, high-skilled jobs come to Bri­tain and stay in Bri­tain.

“The fur­ther de­vel­op­ment of Ty­phoon that we have been work­ing on with our part­ners is good for the RAF who need this ca­pa­bil­ity, good for our ex­port cus­tomers who want it too and bril­liant for the British man­u­fac­tur­ers and British work­ers who are go­ing to ben­e­fit.

“From this Gov­ern­ment you will see noth­ing less than an un­stint­ing, un­re­lent­ing, un­flag­ging com­mit­ment to mak­ing Brit- ain the best place in the world for aero­space busi­nesses to in­vest, de­sign, man­u­fac­ture and ex­port.”

It was loud and clear that the aero­space in­dus­try (both mil­i­tary and civil ver­sions) needed all the sup­port to keep sail­ing in these dif­fi­cult times. To prop the in­dus­try, the UK Min­istry of De­fence placed an or­der for 22 full flight sim­u­la­tors for the Air­bus A400M. They will be de­signed and built by Thales in Craw­ley.

Pur­ple patches

How­ever, in this gloomy sce­nario, there were some pur­ple patches. The Indonesian Air Force or­dered eight A-29 Su­per Tu­cano high­per­for­mance mil­i­tary tur­bo­prop air­craft for light at­tack and tac­ti­cal train­ing from Em­braer, be­sides a flight sim­u­la­tor for train­ing mil­i­tary pi­lots. The Pres­i­dent of Em­braer De­fense and Se­cu­rity, Luiz Car­los Aguiar said that “this de­ci­sion shows the recog­ni­tion given to the qual­ity of the Su­per Tu­cano by the in­ter­na­tional mar­ket.”

In line with Asia-Pa­cific and some Mid­dle East mar­kets driv­ing the de­fence in­dus­try, the Royal Air Force of Oman awarded Lock­heed Martin a $23 mil­lion con­tract to pro­vide ad­di­tional sniper ad­vanced tar­get­ing pods (ATP) for their F-16 fleet. Sim­i­larly, Goodrich Cor­po­ra­tion got a for­eign mil­i­tary sale (FMS) con­tract to pro­vide its DB-110 air­borne re­con­nais­sance sys­tem for the Royal Saudi Air Force F-15S mod­erni­sa­tion pro­gramme.

In­dia seen as the next R&D hub

Ac­cord­ing to con­sul­tancy firm Price­wa­ter­house­Coop­ers (PwC) which re­leased a re­port at Farn­borugh, China ranks as the num­ber one coun­try re­ceiv­ing the most (23) man­u­fac­tur­ing in­vest­ments by aero­space and de­fence com­pa­nies, fol­lowed by In­dia and the US. The UK ranks 7th. How­ever, for R&D in­vest­ments in the same pe­riod, In­dia tops the charts, fol­lowed by the US, Rus­sia and the UK.

The re­port iden­ti­fies five key ar­eas for pro­gramme man­agers to fo­cus on suc­cess: get­ting sys­tems in­te­gra­tion right; so­lid­i­fy­ing part­ner­ships and joint ven­tures; agility and speed in busi­ness pro­cesses; be­ing world cit­i­zens in re­la­tion­ship man­age­ment, and ap­ply­ing a col­lab­o­ra­tive ap­proach to sup­ply chain man­age­ment. In the past, com­pa­nies would spe­cialise in one area such as so­lu­tions lead­er­ship, op­er­a­tional ex­cel­lence or cus­tomer in­ti­macy. But to­day’s en­vi­ron­ment means that

Boe­ing’s C-17 Globe­mas­terer III

Static and fly­ing dis­play of air­craft

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