End of a “golden decade”

With defence budgets under pressure here and in the US, companies are becoming concerned about the amount of work that may not flow through the related supply chain in the years ahead. And that's because the US is the world's largest spender on military wares, while the UK comes in as is the fourth highest spender (in cash terms) and is also a significant supplier the US. Martin Wright, chief executive of the North West Aerospace Alliance, is reported recently as having said that cuts to government defence spending meant military aircraft-making could be in permanent decline. "The main worry in the supply chain is the defence cuts", he offers, although highlights that civil aerospace industry was growing faster than expected. And with "a flat defence industry and a growing civil industry" he says many contractors were looking to shift towards civil work. This is amply underscored by BAE Systems' announcement of a potential 3,000 job loss, related to slowing Eurofighter Typhoon and F-35 Lightning II (Joint Strike Fighter) work; while Airbus has just opened a £400 million factory at Broughton to make wings for the A350. Over the longer term, the US-led F-35 programme, the world's largest defence programme (3,000+ aircraft were predicted), is reckoned to be the last such fighter plane – unmanned aircraft are the future; indeed, are increasingly the present. That said, JSF, which is not yet in service, will be in production, albeit at a lower rate than expected, and in the skies for many years to come. At the moment, the programme supports 1,000 jobs at BAE Systems' Samlesbury site, and it was predicted as supporting 20,000 direct and indirect UK jobs. Two years ago, at the time of the government's Strategic Defence and Security Review, the Defence Industries Council was highlighting how important the defence sector as a whole was to the UK. It pointed out that it employs over 300,000 people across all regions of the UK. Of particular note, it said that, at 3,000, the UK boasts more small and medium sized enterprises (SMEs) in the sector than France, Germany, Italy, Spain and Norway combined. Any effect will spread far and wide, on this measure. And much is linked to BAE Systems, the UK's largest manufacturer. In 2009, the company explained it spent over £3.5 billion with its UK suppliers, while its 42,000 full-time equivalent UK jobs in 2009 supported a further 52,000 jobs across 9,000 suppliers in its UK supply chain, plus, through these people's spending, another 31,000. Overall, BAE Systems supported a total of just over 125,000 high value jobs in the UK at that time, claimed Dick Olver, chairman, BAE Systems. No one is suggesting a wholesale collapse of BAE Systems' military business, but the company, just like North West Aerospace Alliance firms, is casting around for civil work. Publication Mining Australia reported recently that BAE Systems is targeting Australia's manufacturing for mining sector as a possible growth area. As one writer across the pond put it: "the wars in Iraq and Afghanistan are winding down, Osama bin Laden is dead, and the federal government is deeply in debt. This spells the end of what was a golden decade for the defense [sic] industry". Whether the description "golden decade" is appropriate in the context of war or not, there will be change; of that there can be no doubt. Got an opinion you'd like to share with Machinery's readers? Then we'd be happy to hear from you. Email machinery@findlay.co.uk