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The Industry.

UK Defence: Building a Prosperous Future Through Innovation and Exports #ADSfacts -- 16/5/2019

This week ADS launched our Facts & Figures for 2019. This annual release covers the headline numbers that demonstrate the health, vitality, and importance of our sectors to the UK economy.

Turnover in the UK defence sector remains strong, increasing from [pounds sterling]22.1 bn in 2017 to [pounds sterling]22.7bn in 2018; overall the sector has enjoyed turnover growth of 6% since 2010. The UK defence industry has proven itself to be a stable, innovative, and highly productive market; delivering world-class capabilities such as the world-leading Queen Elizabeth class carriers.

The UK continues to be the second largest defence exporter in the world, helping to deliver equipment and services not only to our own armed forces but to our allies and partners across the globe. In 2017 the UK received [pounds sterling]9bn in export orders and held an estimated 13% market share in global defence exports; with platforms such as Typhoon continuing to be an important contributor. Looking ahead to the future of Combat Air, the UK will want to build from the success of Typhoon and create an internationally attractive capability with best in class technology and support.

In order to achieve this goal the sector will need to attract and retain new skills and talent. There are over 4,400 apprentices in companies of all sizes across Defence, this is a figure that continues to grow year on year. Defence companies offer a range of challenging opportunities in areas from electronics and mechanical engineering to astrophysics. At [pounds sterling]35,000 pa. the average annual earnings within the sector are 18% higher than the national average. The opportunity to work on world-class projects with some of the most demanding engineering and digital challenges available today makes UK Defence a sector to aspire to join.

As the Dunne Review on prosperity demonstrated Defence (both Government and Industry) is present right across the UK; from industrial presence in major cities such as Bristol and Manchester to RAF bases in the remotest parts of the Highlands and Islands. Regional and national investment is an important factor in Defence's contribution to national prosperity; the Defence Technology Exploitation Programme (DTEP) is a joint programme supported by Invest Northern Ireland and the Department for Business, Energy, and Industrial Strategy (BEIS). DTEP will be worth an expected [pounds sterling]1.2m in research and development investment to Northern Ireland.

A critical part of this future picture is the Defence Growth Partnership (DGP), an collaborative initiative between Government and Industry which looks to coordinate capability exploration between customer and supplier, as well as maximising the UK's export potential. The DGP is also reaching into the supply chain to support companies with an 'Improvement Framework'; an important feature of improving productivity and competitiveness for UK companies.

Source: ADS

Military Air Boosts UK Defence Exports

In late July HMG published the UK's defence and security export statistics for 2017. When looking at defence exports in isolation the news is positive; on a rolling 10 year basis the UK remains the second largest global defence exporter; winning [pounds sterling]9 billion of defence export orders in 2017 and holding 12% of the global export market.

These statistics demonstrate the strength and vitality of the UK's defence industry, and serve to highlight the opportunities for further growth in export sales in the coming years.

Looking in more detail at the data and the trends from previous years demonstrates the volatility of the global defence market. Having been declining for 2 years since 2015 the UK's market share began to increase again in 2017, potentially a sign of regained momentum that industry will hopefully maintain in 2018.

Military air was the significant contributor to the increasing exports in 2017, these included;

* numerous F-35 sales throughout 2017 to the USA

* Rolls Royce engines for Multi Role Tanker Transport (MRTT) aircraft to Germany

* future capability components to Turkey

These new contracts are supported by the significant defence orders during the past decade, including;

* Typhoon aircraft to Kuwait

* Hawk aircraft to Oman

* Typhoon aircraft to Saudi Arabia

* Hawk aircraft to India

* helicopters to Norway and South Korea

* Trent 700 engines to France

* offshore patrol vessels (OPVs) to Brazil

* F-35 work and bridging (USA)

* minehunters to Estonia

From 2008 to 2017 DIT estimate that the 57% of the UK's defence exports went to Middle Easter countries, with 20% going to North America and 11% to Europe. Digging deeper into these figures; DIT estimate that the trends show sales to Europe increasing (14% in 2016, up from 8% in 2015) and sales to Asia-Pacific region decreasing (13% in 2016, down to 7% in 2017).

Aerospace represents the biggest exporter for the UK based on domain; between 2008 and 2017 87% of the UK's defence exports were aerospace, with 7% land and 6% maritime. Air is likely to maintain this large lead in the coming decade; and with the next generation of combat aircraft being announced this dominance is also likely to be replicated globally.

ADS warmly welcomes the news of increasing defence export figures and will continue to work with Government to support important defence air exports as well as diversify the UK's export offer to other systems and services. As the UK looks to life outside of the European Union it is increasingly important that Government supports the defence industry of all sizes to export. There are opportunities for Government, and particularly MoD, to support initiatives such as not-in-service-equipment, emerging technologies pioneered by UK SMEs, and a more complete offer on systems and services delivered by a consortium of SMEs for larger platforms.

Source: ADS
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Publication:United Kingdom Armaments
Geographic Code:4EUUK
Date:Aug 20, 2019
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