02 Feb 06. Unconfirmed reports received by BATTLESPACE suggest that the FRES Programme is slipping again to as late an ISD as 2020. “There just isn’t enough money to pay for all the projects,” our source told us. “It appears that the French offer of £300m to part-fund the CVF Programme has pushed the money that way.” Of course that money is being spent more in Labour Constituencies than FRES where the bulk of the money is rumoured to being spent in Europe with Newcastle being the prime UK beneficiary. CVF is a huge project with at least £9bn required for the ships and support and a further £12bn suggested for the aircraft (whatever that might be!)Certainly French involvement in UK Projects has always resulted in a large quid pro quo fro France.
“What about the urgent requirement to replace Saxon and other vehicles?” we asked. “The 432 upgrade should meet some of the Saxon requirement, with the rest of the fleet having a major Upgrade Programme, including a smooth bore replacement for Challenger 2 to make it interoperable with other Allies. The first demonstration took place this week without a short being fired. The Rheinmetall projectile is a single piece not the two-piece RO currently used. “The storage of the ammo in Challenger 2 for this smoothbore requirement will be a greater challenge than the gun itslef,” our source said.
It looks as if the current TDPs and rainbow Teams will continue their work for a final Report from Atkins and then quietly disappear, this will suit the Treasury which was under threat from the NAO over the wasted £95m in the FRES/FSCS project.
The huge upgrade programme would likely go to the only business capable of such work in the UK, ABRO. This would boost the ABRO balance sheet vat a convenient time for the Government that announced its intention to sell the business in the DIS Paper announced last month. (See: BATTLESPACE UPDATE Vol.7 ISSUE 49, 15th December 2005, DEFENCE INDUSTRIAL STRATEGY – THE GRADUAL ERROSION OF THE U.K. MANUFACTURING BASE)
However, given the rumblings in the Army and the casualty rise in Iraq the possibility of an interim buy, now more urgent, will not go away. Mowag has announced some excellent orders in the last few weeks for Belgium, reported here and Ireland with its sister company Steyr winning the Czech requirement. An interim Piranha buy would satisfy GD’s aspirations in the UK and keep them sweet after a large investment in FRES. They would be the most likely candidate for the PSI for any Piranha buy with the vehicles supplied from Switzerland.
The possibility of this delay also shows that BAE could have paid top dollar in the Hedge Fund-inspired foray to deter GD from winning the AlvisVickers fight. The company would have thrived better in these circumstances under a GD regime given the strength of that company in Europe. BAE’s UDLP acquisition was a master stroke that puts AlvisVickers in a back seat. Mike Turner commented on this when the Editor posed the question last year but he parried it by stating, quite rightly, that the Hägglunds business was thriving. But, with FRES delays possible and the Hägglunds business running off towards the end of the decade, will BAE be met with the possibility of lay-offs at Newcastle as Trojan/Titan slows and in Sweden where the transfer of the Warrior 2000 project to CV 90 for Switzerland was caused by the huge costs of lay-offs at Hägglunds. The Challenger 2 smooth bore contract award to BAE would assuage any possibilities of lay offs in a constituency so close to that of Tony Blair, now limping into the political obscurity after his disastrous decision not to vote on Monday in the vote that defeated the government on racial hatred. A write-off on the acquisition costs, given the failure of the projections for Newcastle, is a possibility that would stop the current surge in BAE’s share price.
If these conjectures are true and we stress that we have no confirmation of this story, it casts a pall over the Ar