Ministers have repeatedly hailed the arms industry as the vanguard of the government's export drive
BAE's cuts are a severe blow to skilled workers, especially in the north of England. They also augur ill for the government's planned export strategy. Ministers have repeatedly hailed the arms industry as the vanguard of the government's export drive. Arms exports, the defence secretary, Liam Fox, said earlier this year, would help the country out of its economic problems.
He called for "enhanced defence exports" as David Cameron toured the Middle East accompanied by representatives of BAE Systems, Thales UK, QinetiQ and Rolls-Royce. Fox said: "The MoD can be at the forefront of the government's export-led growth strategy." He repeated the aspiration this month at the opening of the biennial arms fair at London's Docklands.
But now it looks extremely vulnerable. As Ian King, BAE's chief executive, made clear, the company's foreign customers, notably the US, are cutting their weapons programmes. He referred specifically to Lockheed Martin's F-35 project, bedevilled by delays and big cost overruns (and a version of which is due to fly from one of the UK's new aircraft carriers), and the Typhoon (Eurofighter), which is struggling to attract foreign buyers.
"The four partner nations in the Typhoon programme have agreed to slow production rates to help ease their budget pressures," said King. Ironically, the government is trumpeting the Typhoon's role as a ground attack plane during the Libyan conflict.
Indeed, the F-35 is a rival to the Typhoon in heated worldwide competition, including within Europe, for fast jet contracts and also involving France's Rafale, Sweden's Saab Gripen and Boeing's F/A-18 Super Hornet.
According to the Stockholm International Peace Research Institute (Sipri) global defence spending grew by just 1.3% last year with European nations cutting spending by 2.8%. "The global increase in military spending of 1.3% is the slowest annual rate of increase since the surge in global military expenditure began after 2001," it said. "Between 2001 and 2009 the annual increase averaged 5.1%."
Sipri noted in its report that the world's biggest military spender, the US, recorded an increase in its arms budget by just 2.8% last year, against an annual average increase of 7.4% per year between 2001 and 2009.
Then biggest increases in military expenditure was in Asia where India is becoming one of Britain's biggest potential markets. But weapons exports to the Middle East, where Gulf states have traditionally been the UK's most lucrative markets, were also sluggish.
The years of big spending on aircraft, involving scores of planes ? the mainstay for BAE's exports ? may be ending as the world's armed forces consider switching to other weapons systems, including missiles and pilotless drones.
Source: http://www.guardian.co.uk/business/2011/sep/27/bae-cuts-bad-news-uk
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