US and UK Defence - To be one Market?

Whilst it sounds fairly light weight the reality behind the JSF technology transfer deal is that the UK and US will have no barriers to trade between their respective defence markets. All it has to do is get through the US Foriegn Affairs committee in September. This is very good news for both US and UK firms, especially the smaller US and UK players who faced high market entry costs.

This deal will fundamentally change the UK defence market and will be good for UK Defence Plc. Watch this space.

 

Joint Statement Between the United States and the United Kingdom  (White House Briefing)
President Bush and Prime Minister Blair Sign U.S.-UK Defense Trade Treat

President Bush and Prime Minister Blair have today signed a Defense Trade Cooperation Treaty which will further strengthen and deepen the effort between our respective defense establishments to achieve fully interoperable forces, and to leverage the strength of our defense industries in direct support of our armed forces.

At a time when American and British forces continue to work closely together on operations overseas, the President and the Prime Minister share the view that we need to do all that we can to enhance our ability to cooperate by reducing the barriers to exchange of defense goods, services, and information between the United States and the United Kingdom.

This further cooperation will benefit the operational defense capabilities of the United States and the United Kingdom by improving the interoperability of equipment and systems between our armed forces. Our armed forces must have the most effective means possible to fight not only in traditional battlefield situations, but also when they face asymmetric threats such as IEDs. By removing barriers to communication and collaboration between, and among, our armed forces and our defense industries, we will provide our forces with the most effective means possible to counter these threats.

In addition, these new arrangements will help maintain the strength of our respective defense industries. By enhancing the ability of our defense industries to take advantage of the rich and deep technical experience in the United States and in the United Kingdom, we will continue to develop and field the most effective military capabilities possible.

Together, both governments will also aim to finalize implementing arrangements by the end of the year and to complete steps necessary under their respective domestic laws to implement the treaty.

Logistic C2 and RFID Markets still born?

Four years it looked like logistic C2 (command and control) and RFID (Radio frequency Identification) markets were going to boom, there were numerous programs and lots of promised funding, but that hasnt happened. Why?

There are two key issues:

1) RFID produced a host of electronic signature management issues that defence ministries have issues with. This is less with say with small Oxley tags but more with SAVI large scale equipment.

2) The maintenance and support of military systems is being increasingly contracted out to industry. Thus the armed services dont need lots of Logistic C2 systems but rather service suppliers needs the system. The contracting of services will continue to grow and a number of logistic programs now face being cut. There will always be a basic demand for logistic C2 but not in the same way that was imagined.

It does alot of questions as to where UK JAMES will go.  With DRUMM cancelled not so long ago, its successor could now also be in trouble.

BAE Systems Share Price recovers

Up nearly 4% at one point today. The share price has long recovered since it collapsed 10% under the news that it was to be investigated in the US for its dealing practices. Which are no different from absolutely anyone else’s, so its all a waste of time.

With Saudi Eurofigher to be confirmed, CVF confirmed, Armour holdings continued rise in profits, Saudi Destroyer likely to be won, FRES utility funding to be confirmed and FRES Recon set to be a sexed up CV-90 its going to be a good second half of the year for BAE. With a host of opportunities for trainer aircraft and fighters next year things are looking good for BAE Systems.

440.25p is the current share price. I suspect the share price may now well hit 480p in the next 6 months if the current market turbulance doesnt turn into a rout.

Rebuilding the Libyan Air Force

Libya has an an incredible 950 aircraft platforms. Even more amazing is nearly the entire lot needs to be replaced in the next ten years. Obviously they wont buy 400 odd jets but still its going to be big bucks.

If there was ever a time to get into business it would be to set up some sort of small aero-engineering or manufacturing firm in Libya and present your self for offset deals. That is if you could fight your way through the beaucratic tape that apparently clogs all and sundry up in Libya.

It will be interesting to see what mix Libya goes for and what mix will be Russian vis-a-vis European. I dont really see the US getting in there to be honest.

Iran to start jet fighter production - orly?

When I work out how to do a poll I am going to run one to see what percentage of you believe this will be the “Arjun Fighter Jet” and what percentage really believes this will actually happen. I have almost no faith that Iran can produce anything other than an ineffective, expensive sub standerd jet. Their efforts to keep 1970s era US planes flying is impressive but this does not mean Iran has the industrial base to build a competitive fighter. Nationalism over actual national interest and political meddling in an industrial matter is going to make this the saga of the decade. Seeing that Iran has an almost national policy of interfering in industrial matters and making heavy handed political moves this program is going to keep alot of commentators amused for a long time. Why not just buy Russian and develop sub components or mission systems? Very few countries can afford to develop a competitive jet alone and Iran doesnt have the funding levels required to do so.

Iran to start jet fighter production
(source Press TV)

Iranian made fighter, Azarakhsh.

Iran’s Minister of Defense and Armed Forces Logistics has described the test flight of the country’s second homemade fighter jet as successful. Mostafa Mohammad Najjar said the fighter jet, Azarakhsh, would reach industrial production and join the country’s air force soon. Azarakhsh, which has been designed and built by Defense Ministry and Hesa Airplane Manufacturing industries’ experts, conducted a successful test flight on Sunday in the central city of Isfahan, where it was built.

Read on here… http://www.presstv.ir/detail.aspx?id=18667&sectionid=351020101

1 Para at War in Afghanistan in 2006

This video put together by I Parachute Battery demonstrates the ferocity of the fighting in Helmond last year. The strike asset C4I improvements in recent years appear to have paid off but the UK needs to continue investment in battle management and communications to further shorten the kill chain as Taliban targets learn to reduce their exposure. Certainly the member of 1 Para Battery I spoke to was very pleased with his detection radar, night vision kit and c4I capability. It will be interesting to see what improvements that JETTS and the 12 odd BII programs in the pipeline bring us in coming years. Whilst I dont advocate “war porn” this video very clearly demonstates the improvements made in FAC capability. (Note the main video starts one minute in)

The Libyan spending spree continues

This is going to be one of many Libyan arms deals for 2007. Gadaffi is going to get his hands on as much military equipment he can before he has to arrest a load of East Europeans and make them a scapegoat for a prior state screw up.

So far its been tactical BMS, CNR and battlefield Integration C2. Now missiles. The big sales are yet to come though. It appears that Libya is a very open field so sales should indicate quality over political weight. Libyan buys should be a good indicator of performance of equipment and sales teams. We wait and see with great interest.

France to Supply Libya with European Weapons

(Source: Deutsche Welle German radio; ; issued Aug. 1, 2007)

Negotiations over French arms supplies played a role in the release of the Bulgarian medics held in Libya. Germany said Wednesday that it will continue to stay out of business with the African nation.

France has agreed to sell Libya anti-tank missiles as part of the military agreement reached last week by French President Nicolas Sarkozy and Libyan leader Moammar Gadhafi.

“We are going to buy [Milan anti-tank missiles worth up to] 100 million euros in France,” Gadhafi’s son Saif al-Islam Gaddafi was quoted as saying in an interview published in Thursday’s French daily Le Monde. “There’s also a project for a weapons factory.”

A [tripod]-mounted anti-tank weapon, the Milan is built by a subsidiary of Europe’s joint EADS defense and aerospace company.

$63bn US military aid to the Middle East - Doesnt add up

Israel will get $30bn of military aid, Egypt $13bn, while Saudi Arabia, Qatar, Bahrain, Oman and UAE will share $20bn.

Well Iran only spends $2bn at most a year on procurement. A simple flick through Iranian military company brochures will tell you that their electronics are totally outdated. The Iranian navy is ineffective, the threat of the small missile armed speed boat is all but over and their main surface platforms need retiring and fundamentally basic upgrades to be vaguely competitive. The world is amazed that their 1970s airforce is flying.

Saudi Arabia already has a decisive advantage over Iran, as does the UAE. Although Oman, Bahrain and Qatar need the help. Why more arms? Iran is getting nuclear weapons precisely because its conventional military power is fading very fast.

Israel has a huge qualitative edge over its opponents. Syria hasnt been able to improve its capability since the late 1980s. Their kit is largely 30+ years knackered. Why bother increasing the arms supply to Israel and Eygpt Why not reduce it for all sides? Spend the money on educating young arabs who are currently taught a hopelessly biased view of the world.

Sooner or later Saudi or Eygpt is most likely going to be overun with nationalist islamists who are going to turn US weapons on people who dont deserve it. The money would be better spent on education and investment in afghanistan.

DSEI Sale in trouble?

With DESO being disbanded the sale of DSEI is under threat.
It appears that DSEI was announced for sale on the Tuesday and on the Wednesday  it was announced that DESO would be disbanded. Without the delegations organized by DESO is DSEI really worth the £50m asking price? Most defence contractors are already disgruntled by the cost of DSEI, without the delegations (many of whom need to be “paid”) the asking price could collapse. Rumours are that DSEI turns over £15m for each show and that 40% is profit; this now appears to be deeply under threat.

How much joint work share will there really be on the Carriers?

Erm, not much.

And thats despite the French DGA being desperate for joint workshare so they can afford a second carrier.

Well, having seen DCN “new build” ships being delivered in the Middle East and knowing how they operate I wouldnt allow DCN to build anything for me. The main problem being that the UK defence market is just that, a “market”. The French Defence industry is not, its a monopoly, and DCN has had next to no pressure on it to reform.

I really hope that work share can be found, especially on design and sub systems and mission systems, it will save both countries money. But if the French really want a truely joint system they will have to adopt a market not monopoly approach. But that just isnt going to happen until France goes through the painful reforms the UK did in the 1980s.

Thales to win 500 mln euros from British carriers

Fri Jul 27, 2007

PARIS, July 27 (Reuters) - French defence systems and electronics company Thales said on Friday it expected to gain business worth at least 500 million euros from Britain’s aircraft carrier project.

Britain gave the go-ahead on Wednesday for plans to spend 3.9 billion pounds ($8 billion) to build two aircraft carriers.

Thales is involved in the design of the carriers.

“It will be at least 500 million euros,” Thales Chief Excecutive Denis Ranque told analysts on a conference call, referring to the value of work in which Thales is involved.

Thales is working on the project with Britain’s two largest shipbuilders, BAE Systems and VT Group, who have announced plans to merge shipbuilding operations. The French company is also part of a separate project to build a new French carrier together with state shipyard DCN, recently renamed DCNS, in which it has a 25 percent stake.

France says talks are continuing with Britain over plans to pool part of the two programmes such as procuremwent.

But the British government appeared this week to reject French calls, supported by Thales, to combine the construction of the three sets of hull blocks using yards in both countries.

None of the British hull sections will be built in France, British Defence Equipment and Support Minister Paul Drayson told Reuters in an interview this week.