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UK TO SHARE INDUSTRIAL STRATEGY

19 Sep 05. ANDREW CHUTER of Defense News reported that
Britain is preparing to share with allies the conclusions of a critical defense industry strategic review. France, for one, is greeting the offer with enthusiasm, raising the possibility of wide-ranging European coordination of defense spending and research.

By year’s end, the British Ministry of Defence (MoD) intends to produce a short list of strategically vital industrial skills and capabilities that must be retained by U.K. firms.

“We think it’s important that the conclusion we reach we share with our key industrial partners and our key international collaborators, including Europe and the U.S.A,” said Lord Drayson, the recently appointed defense procurement minister who is driving the review effort.

The decision to share is about more than just being a good ally. It signals London’s willingness to cooperate on a long-term spending map for research and production.

But this would require care. “The MoD and industry need to think carefully about where and how we match competences or disinvest from areas compared to the allies,” Drayson told a British Defence Manufacturers Association dinner Sept. 15.

Sectors under study include shipbuilding, ship support, fixed-wing aircraft and unmanned aerial vehicles, rotorcraft, guided weapons, general munitions, armored fighting vehicles and others, Drayson said.

Drayson said there would be no great retreat to the bad old days of blanket protectionism but warned that non-competitive procurement would be used where it was more effective and efficient. He said the imminent risk of losing industrial capabilities prompted the rush to get the proposals complete by year’s end.

“We know that several companies are fundamentally reviewing their business strategies over the next few months,” he said. “Industry’s independent conclusion could, if we are not crystal-clear, see some reduction in capability before we have specified whether or not the MoD regards them as important.”

A BAE SYSTEMS executive said the study must also look at the depth of capability, not its mere existence.

“It’s not about hiring a bunch of clever consultants to design and build an Astute submarine,” said Julian Scopes, head of BAE’s government relations. “So you need a depth of capability if you want to sustain that sector.”

French Reaction

France, Europe’s other leading defense industrial and military power, is also keen on the idea of strategy-sharing. Drayson’s French counterpart immediately reciprocated by offering a look at Paris’ own capability review.

“I would like to compare the surveys to better coordinate our research investments and cut down duplication,” said François Lureau of the Délégation Générale pour L’Armement (DGA). Lureau went even further, suggesting sharing such information with Germany, which is engaged in a similar study, and envisioning wider European coordination on research.

France’s DGA regularly reviews defense technologies as part of its effort to retain needed capabilities, Lureau said. This is separate from the decree being drawn up by French Industry Minister François Loos, which aims to identify 10 strategic sectors or activities to be protected from foreign takeover, including some in defense. Drayson, who met Lureau during the Defence Systems & Equipment International show in London last week, says the warming ties with France is part of a trend toward regional cooperation. “It’s a sense of a growing development of the European dimension and collaboration within Europe,” he said.

Britain and France, old political and industrial adversaries, already are leaning toward a virtually unprecedented cooperative program to build aircraft carriers.

Paul Beaver, a director of London-based consultancy Beaver Westminster, said Bri

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