SPENDING cuts and dithering over big defence contracts mean British and American arms suppliers are chasing new business in the Middle East and Asia to make up for stalling domestic military spending, executives told a conference yesterday.
“We can’t rely on traditional markets for growth any more – the real growth will come from international markets,” Ian King, the chief executive of Europe’s biggest defence contractor BAE Systems , told an ADS defence conference in London.
“In five years India will be spending more on defence than the UK. China and Russia will also become accessible in time,” King said.
Aerospace and defence companies have been hit by uncertainty about the future path of UK and US defence expenditure, both of which have slowed in recent months.
Such cuts – on top of a recent round of defence-related budget belt-tightening in Europe – may mean there is not enough work to go around for Western defence firms, which are likely to continue to shift their focus elsewhere.
“The future will be dominated by China, Russia and India and we need to work in their world,” said Richard Fenning, Chief Executive of UK defence consultancy Control Risks.
“People are preoccupied by the UK and US but this gloom is not shared in China, India, Brazil, Turkey and Korea,” he added.
Britain is the second-biggest defence exporter in the world after the US. Its defence industry, with £35bn ($56.01bn) in annual turnover, sustains some 300,000 jobs in the UK.
However, Britain last week said it would make 22,000 redundancies at the Ministry of Defence and in the UK armed forces over the next four years, leaving many concerned about the government’s plans for the industry.
Peter Rogers, chief executive of UK military firm Babcock International believes Britain needs to develop a clear strategy to develop its defence industry or risk losing out to emerging nations which are building up their own defence sectors.
Competition between British and US arms makers is also seen intensifying as they look to offset belt-tightening in their home markets.
The US government is pushing hard to help defence contractor Lockheed Martin win a deal to supply Taiwan with 66 new F-16 fighter jets, a sale that would help the firm weather possible cuts to US weapons programmes.
The Obama administration has also begun consulting congress on plans to sell Global Hawk spy planes made by Northrop Grumman to South Korea – a deal which would require a waiver for an arms control pact involving about 30 countries.
Britain is also pushing defence exports. Business secretary Vince Cable has led trade missions to India and Brazil over the last year.
Russia`s arms exporting monopoly Rosoboronexport recently said it may have lost some $4bn (£2.49bn) in existing and potential deals with Gaddafi’s government.
