Magazine article New Statesman (1996)

Exports - on the Offensive: With about 25 per Cent of the World Market, Defence Is One of the UK's Best Exporters. but Is It Investing Enough in Research and Development. (Defence)

Magazine article New Statesman (1996)

Exports - on the Offensive: With about 25 per Cent of the World Market, Defence Is One of the UK's Best Exporters. but Is It Investing Enough in Research and Development. (Defence)

Article excerpt

Twelve years after the end of the cold war, defence remains one of Britain's best-performing industries. Domestic demand may have fallen, with the collapse of the Warsaw Pact, but rising tensions elsewhere in the world mean that British defence industries have just about made up for it in exports.

For the past six years, Britain has been second only to America in the arms export market, notching up $5.8bn in foreign contracts last year, compared to $14.1bn by the US. Russia, which dropped back from its usual second place with the collapse of the Berlin Wall, was in third place with $2bn in export sales. France, Britain's traditional rival, came fourth with $1.4bn. South Korea and Israel shared fifth place.

While defence accounts for only 10 per cent of Britain's manufacturing industry, it is of rising importance because much of it is in cutting-edge high technology with direct involvement in the most advanced technological concepts. This is particularly true in the US, where UK companies have rapidly growing influence.

"No other sector of British industry has seized some 25 per cent of the available world market, as British defence has done," said Alan Sharman, director of the UK Defence Manufacturers Association.

The association's statistics show how the relative importance of defence exports to the national economy is increasing. In 1980, 740,000 people were directly employed in British defence industries, of whom 140,000 were involved in exports. By 1999, the total employed had dropped to 345,000, but there were still some 90,000 in exports.

Europe spends 75 percent of what the US spends on defence, but gets only 20 per cent of its military effectiveness. The EU and the Pentagon want greater European cooperation to reduce that disparity. But Britain, France and a number of other major countries want to be able to maintain a full range of defence capabilities rather than specialise, and avoid duplication of effort and expense.

UK defence plans thus call for the next generation of aircraft carriers, for example, to be built in British shipyards, even if French-owned Thales wins the contract. Britain considers it needs a complete defence industrial base in order to continue to be the second most active, experienced and capable military nation in the world, and "punch above its weight" in the corridors of power in Brussels, Washington and elsewhere.

So far, the UK has given up capabilities in only two fairly minor areas -- the ability to produce a successor to the SA-80 infantry assault rifle, and the chemical propellant for artillery shells. Even the latter withdrawal has caused doubts, driven particularly by the initial refusal of the Belgian government to provide the British army with extra 155mm artillery shells during the Gulf war.

Export sales of "big ticket" land and naval systems and equipment have been slowly declining, with the changing nature of security threats and an increasing switch to expensive air power. According to Department of Trade and Industry figures, over the past five years only 20 per cent of all British defence exports have been in land and sea equipment, with 80 per cent in aerospace.

More countries are now able to build their own tanks and guns, and Britain has had recent export success only in modest areas such as the 105mm light gun and the Scorpion light tank. Heavy tanks have been a particularly tough market, a lack of orders forcing Vickers to all but close its Leeds plant. In naval equipment, too, with less shipyard capability and fewer retiring naval vessels, Britain has had less to sell. More countries want to build their own ships. India, for example, has said it wants to replace its inoperable Viraat aircraft carrier -- the former British carrier HMS Hermes -- but has indicated that it wants to build its own carrier, rather than wait for HMS Invincible to become available. …

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