"British" Aeroscrape - Friend or Foe ?

British Aerospace - a National Asset ?

  • We should outsource ALL our mil procurement

    Votes: 0 0.0%
  • No

    Votes: 0 0.0%
  • Is this a wah?

    Votes: 0 0.0%
  • Yes

    Votes: 0 0.0%
  • They COULD be - if HMG supported more

    Votes: 0 0.0%
  • Once maybe - sadly no more

    Votes: 0 0.0%
  • MoD should protect itself by looking for alternative suppliers.

    Votes: 0 0.0%

  • Total voters


Book Reviewer
Hmmm....from this week's Economist ( reproduced by kind permission Werner Siefert)

Link here

BAE Systems - Changing places

Oct 26th 2006

Britain's national defence champion may soon be American

THE divorce has been so long in the making that few eyebrows were raised when Lord Drayson, the defence-procurement minister, said he was “relaxed” at the prospect of BAE Systems, Britain's biggest defence contractor, leaving the country. More important than who owns BAE, Lord Drayson told the Financial Times in an interview published on October 23rd, is where the company's skills and intellectual property reside.

Lord Drayson's comments are of more than passing interest to BAE, whose heritage can be traced back to the firms that built the Spitfire and Hurricane fighters that duelled with German aircraft in the Battle of Britain. The firm has long wanted to move to America where defence spending is almost ten times higher than in its home market (see chart). But it can do so only if the British government lifts a veto barring takeovers and foreign management of BAE established when the company was privatised in 1985.
The Economist article goes on to say:

Although BAE already sells more weapons in America than it does at home, it is shackled by a security agreement that requires its business there to be run by citizens of that country. Not even Mike Turner, the company's chief executive, is allowed to know the details of its most sensitive American contracts. This constraint is becoming untenable now that almost two-fifths of its sales are there.
And although the company is well rooted in America—its directors include Anthony Zinni, a former general, and Richard Kerr, a former deputy director of the Central Intelligence Agency—it still bumps up against protectionist sentiment. “The only way BAE can move its business forward is by becoming American,” says Paul Beaver, a defence analyst.

The company coyly says that it does not plan to become American until half of all sales are made there and Americans hold half its stock (it reckons they now hold about a third of the company), but it may not have long to wait. Last year it completed the $4.2 billion acquisition of United Defense, a maker of infantry carriers, to become the seventh-largest defence contractor in America. The purchase was cannily timed. More than $17 billion has recently been set aside by the defence department to repair and replace the tanks and vehicles that are being worn out by constant use in Iraq.

At the same time BAE is scaling back some of its businesses in Europe, where defence spending has fallen. This month it sold its 20% stake in Airbus, a troubled maker of (mostly) civilian jets, freeing up cash for more American acquisitions.

But the move presents its own risks. Although BAE tries to present itself as a local company in each of its markets, ownership still matters in the defence industry. In tying itself to America BAE may be forced to withdraw from other markets. For two decades it has been sustained by the flow of £43 billion ($80 billion) from the Al Yamamah contract to supply Saudi Arabia with jets. The order would probably have gone to American firms but for that country's powerful pro-Israeli lobby.

Moving abroad may also threaten its detente with the Ministry of Defence. After years of clashing with BAE over cost overruns the government has now begun treating it like a national champion of old, says Keith Hartley, who heads the Centre for Defence Economics at York University. The government may not be quite as generous when signing contracts if it becomes just another American contractor.
Having just seen the scope of the Armoured Vehicle Support Initiative
( a breathtaking bit of Monopoly play that can be summed up as " If it's got tracks, BAeS owns it") I'm a bit less sanguine than His Lordship......

Le Chevre
Not to mention the fiddled tender, in order to allow BAE to build one of the future carriers.

It will be interesting to see what happens with the ownership of existing IPR (under British law) if the company became American. Have their been any precedents set?
Their plastic bags are rather good .But surely everything else could be found better and cheaper elsewhere?
Just because it is my area of interest:

UK based parts of BAE are already basically American. Land Systems (which - following the Economists track - can trace it's history back to tudor times via Royal ordnance etc.) is already technically part of BAE Systems Land & Armaments Operating Group an American based part of BAE Systems.

BAE are closing sites down and moving to American sourced items/material, which - if you know ITAR - now means that every item BAE M&O (the old Royal ordnance) will produce in the future will be controlled from production to final use (with no exemption for the UK Government) by the US Government.

But then again how is a company going to survive when faced with a Government that has decided that in-country supply of ammunition is NOT in the strategic interest of the country???



Book Reviewer
In case people haven't come across the Armoured Vehicle Support Inititiative (AVSI) - this from the DLTP Newsletter (Page 5)

In the May 06 edition of Driving Change, Air Cdre Phil Heard discussed the wider benefits of Contracting for Availability (CfA).

These benefits apply just as equally to the Armoured Fighting Vehicle (AFV) fleet in the Land environment.

Subject to initial gate approval, the AVSI team will adopt an incremental approach by independently submitting five vehicle groups to main gate in order to de-risk the programme while maintaining momentum and helping to realise early benefits.

The vehicle groups are:

Challenger II,
Combat Vehicle Reconnaissance (Tracked) (CVR(T)),
430 Series and
Infantry Support.

The first of these, Challenger II, will go to main gate in 2007.

Creating the conditions for AVSI is the AFV partnering agreement, signed on 15 Dec 05 by Min (DP) Lord Drayson and Mike Turner, Chief Executive Officer of British Aerospace Systems (BAES).

AFV Partnering between Defence and BAES Land Systems (LS) concentrates on ensuring cost effective support to the in-service fleet and sustaining UK AFV industrial capability, acknowledging that BAES LS is the Design Authority for 95% of the in-service AFVs.

As it was a Defence Industrial Strategy requirement to define the future capability and capacity of the AFV industrial base, AFV partnering cannot ignore the delivery future platforms and capability such as Future Rapid Effect Systems (FRES).

First, however, BAES LS must transform from an organisation that has traditionally concentrated on just ‘design and manufacture’ into one that can also deliver ‘in-service’ support by way of CfA, and ultimately to one that will deliver Through Life Capability Management (TLCM).

If successful in this evolution, BAES LS will be well placed to take a leading role in FRES.

Subject to initial gate approval, it can be seen why the AVSI programme and delivery of CfA to the in-service fleet will be at the heart of AFV partnering for the foreseeable future.
In other words, outsourcing Through Life Management of ALL British Army A vehicles to BAeS, between now and 2010.......

Don Cabra


Book Reviewer
Sympathetic_Reaction said:
Similar thing is being proposed for Ammunition Supply.
Project MASS ?

AKA..." let's just give the whole shooting match to..."

[Insert name of large defence contractor here]

( I'm getting far too cynical to work here)

Don Cabra
"2/5s of it's sales are there, “The only way BAE can move its business forward is by becoming American,”

Short term greed I think.
BAE is good friend to it's shareholders.

Latest Threads