The Farnborough air show gets underway July 11, marking the two-year point in an unusual partnership between Britain’s top defence companies and the government that was formed to implement a plan aimed primarily at boosting exports.
Known as the Defence Growth Partnership (DGP), the plan brings together industry and government in a collective “Team UK” approach to export opportunities rather than acting independently.
Whether it will make a real difference to the British defence business is too early to tell, but export business will likely take on an even more crucial role as the country addresses new challenges following its decision to exit the European Union (EU), colloquially known as Brexit.
With funding from the government and a 16-strong industry group including BAE Systems, Raytheon, Lockheed Martin and Leonardo-Finmeccancia, DGP has been implementing the joint action plan unveiled in 2014.
A new Defence Solutions Centre (DSC) is up and running. Innovation challenge competitions are looking to ensure new technology ideas quickly find a marketplace, and industry is loaning staff to the Defence and Security Organisation (DSO), the government’s export sales arm, to boost marketing capabilities.
Allan Cook, the WS Atkins chairman, who co-chair’s the DGP alongside the minister of state for the Department for Business, Anna Soubry, spoke to Defence News’ Andrew Chuter about the partnership’s progress.
Q. What impact will Brexit have on the Defence Growth Partnership?
A. The decision to leave the EU has heightened the importance of the DGP’s role in driving export growth. Working together, government and industry will be able demonstrate that the UK is open for business, building confidence and sustaining investment.
Q. How does the DGP work?
A. The arrangement is we help identify market requirement and market opportunity. The reality is the companies and DSO have already identified what the short- to medium-term export opportunities are anyway so the question we try to answer is: Can we achieve greater levels of success by working closer together? In most cases, but not all, the answer is yes, we can work as Team UK, and then deciding between us who would be best suited to meet the requirement. What the client sees is a joined-up approach to provide a solution to their requirements with one British proposal.
Q. Why does Britain’s defence sector need a growth partnership? They have been pretty successful without it.
A. We have an excellent defence industry but a flat domestic market, so growth is going to come out of securing more overseas business. A more collaborative position for industry should lead to improved export success. We have adopted a Team UK approach involving 16 of the biggest companies here getting together with their supply chains and smaller- and medium-sized enterprises to address export opportunities bringing together the best technology rather than going after deals on an independent basis. That has meant a completely different way of doing business. We are pursuing export opportunities collectively rather than individually. We have got past the level of just looking at the UK market. We know we are under pressure, and we have to look further afield. We have funding up until 2018 and then it’s up to government and industry [as to] how we take this forward beyond that.
Q. So the new approach is also being driven by the potential customer?
A. In most cases clients are basically looking for one solution — they don’t want to see multiple approaches from companies in the UK or France, or wherever. Rather they want a coordinated approach so they can make a sensible, considered decision. Our belief, backed up by extensive analysis, is that being more collaborative will lead to a better probability of success.
Q. Does the DGP have a role in the UK government’s prosperity agenda, or do you sometimes feel the plan is a bit like rearranging the deck chairs on the Titanic — particularly at a time when major deals are heading to US companies without British industry securing much in the way of offsets?
A. The government is committed to the prosperity agenda in defence. It might not look like it but when you talk to people in Ministry of Defence (MoD) and the Department for Business they are actively involved in the prosperity agenda. The question shouldn’t be whether people are rearranging deck chairs on the Titanic because actually the DGP is a fundamental change and our belief from a defence industrial point of view is that if we don’t do this, our export success will be reduced.
Q. The question is, though: How many companies will be around in five to 15 years’ time to benefit from the DGP if they don’t have the design and development work to do now?
A. It’s a very real challenge, but if we just carry on in the same way with business as usual without the across industry/government approach it really will be rearranging the deck chairs. So what we are doing is taking a unique approach to dealing with the challenge we face. That will eventually lead to a higher level of success in some of the markets we are aiming for.
Q. Are there any plans to widen the DGP membership so that it’s a true “Team UK” approach?
A. Yes, we are widening this out and we hope to announce this at Farnborough, so I can’t be specific at the moment. Many companies have been involved as part of the supply chains to the 16 founding members, so having them more firmly aligned with what we are trying to do is one of the next stages that we will go through.
Q. At the launch, the government said the aim was to become more competitive in export markets. Have you started to deliver on that yet?
A. I think we have. We have looked at opportunities in the Middle East and South America, but because these are live opportunities I don’t want to be specific about the countries involved, but the two regions are where we are utilizing the Team UK approach. Defence contracts have a long gestation period but industry and government already see this increased level of cooperation being more effective in export markets. It’s worth pointing out that while people want to see early successes, the objective of the DGP is really looking at the five- to 15-year time frame and how we can position ourselves for taking major, strategic positions in export markets over that period. But there are short-term live opportunities already out there where we have decided or are in the process of deciding that a Team UK approach will provide us with a better win probability. We are ahead of where we expected to be.
Q. What part is DGP playing in strengthening the capabilities of the government’s export sales organization, the DSO?
A. DSO needs to be strengthened. It needs to have more resources. Organisations like Airbus, BAE and Thales and others have been able to parachute resources in. Work on market analyses, getting industry to work with a government organization to share market intelligence has never been achieved here before. Previously the information was strongly protected by companies, but now working more in a Team UK approach they have been able to share market intelligence without jeopardizing the intellectual property rights of individual companies. That’s been fundamental.
Q. One of your initiatives has been to set up the Defence Solutions Centre. How does that fit into the plan?
A. What we have been developing under the DSC banner are technology road maps, which are tied into market requirements across a range of opportunities in a number of sectors, including support and training. Their role is to look at requirements from the market and provide the innovative solutions we think we are going to need. Once we develop that it’s then up to the companies to take it forward. Think of DSC almost like a technology hub. It’s an incubator for ideas but firmly tied into requirements. We have already launched innovation challenges in various sectors and there will be more to follow. One of the things we will be launching at Farnborough is a strategy document, which will lay out DSC’s role in promoting innovation and investment in the defence sector here.
Q. The MoD’s Strategic Defence and Security Review said the government would refresh its defence industrial policy. Do you expect DGP to be part of that?
A. We will certainly play a part. Having a government without having a strong defence industry strategy is suboptimal. So, yes, we need an industrial strategy; yes, it needs to be refreshed; and yes, DGP will play an important part of that.
Source: Defence news