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15 Dec 06. Defence Industrial Strategy – One Year on. Defence Minister, Lord Drayson, today marked the successful first year of the Defence Industrial Strategy with key UK industrialists at an event in the City of London. The DIS was launched on 15th December 2005 and represented a major shift in the way that MoD does business. It called for a competitive and ‘lean’ defence industrial base which delivers long term value for money and provides the UK’s Armed Forces with the equipment they need, and set out clearly the MOD’s future equipment priorities. Commenting on the successful implementation of the strategy, Lord
Drayson said: “The MoD and industry should be proud of the achievements made this year in delivering the vision in the DIS. There has been real progress in all key sectors including, most recently, the signature of the MoU that takes us into the next phase of the JSF programme; the exciting Taranis UAV contract; and the very positive news yesterday of a joint venture in the maritime sector between BAE Systems and VT. Industry has got the message that DIS is here to stay and is now starting to see the benefits. In addition, there have been significant structural changes within the MoD, not least the merger of the DLO and DPA, which will streamline the acquisition process. “There is still work to be done in some areas but we now have the framework for success. “My focus in 2007 will be on enshrining a culture in the MoD where staff are focused on continuous improvement in performance. I want to see staff motivated to take responsibility for project delivery, rewarded where they perform well, and held accountable where they perform badly. “At the heart of all this is providing the right equipment to our Armed Forces who serve with such distinction on the front line. It is my number one priority to ensure this happens.”

14 Dec 06. Attempts by EADS to break into the lucrative US defence market are being hampered by the French government’s 15 per cent stake in the European aerospace group, according to its German co-chief executive. Speaking at the launch of a military helicopter for the US Army this week, the first big Pentagon contract for EADS, Tom Enders said the “government shareholding is not conducive to doing business in the US”. EADS, in common with its European peers, is desperate to win a greater share of the $450bn a year US defence budget and is competing with Boeing to supply a fleet of air refuelling tankers that could eventually be worth more than $100bn. But US executives at EADS fear the perception of state intervention in the company’s affairs plays into the hands of political opponents and lobbyists pushing a “buy America” agenda. The comments from Mr Enders will be contentious because they suggest that German interference in EADS is less of a worry than French meddling. “I don’t know of any German government shareholding in EADS,” he said. French and German interests in the aerospace group are safeguarded by a delicate balancing act, where France owns 15 per cent directly and controls another 7.5 per cent through Lagardère, the media group. DaimlerChrysler, the German carmaker, owns 22.5 per cent. Germany’s desire to keep the balance was highlighted recently when it lined up a group of German banks to buy a 7.5 per cent EADS stake that Daimler wants to sell. EADS is eager to build its defence business to bring it more in line with Boeing, which makes about half its sales from passenger aircraft and half from defence. Boeing and EADS, which has teamed up with Northrop Grumman, a leading Pentagon contractor, are locked in a fierce competition to supply 179 new tanker aircraft, the US Air Force’s priority procurement programme. The deal is expected to be worth about $10bn initially, but support and maintenance revenues would lift this sharply. The tanker contract had been in danger of becoming entangled in a WTO dispute between the US and Europe over state subsidies for Boeing and Airbus a

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