The Naval & Defence Sector
by a UK company. This potenally affects all shipbuilding projects for foreign customers, including UK, New Zealand, Philippines and others.
Another sector trend is towards smaller, more capable ships; more OPVs, more corvees. The next 10 years will see very few aircra carriers being built. Even LPDs and helicopter plaorms will be funded in lower numbers. More submarines will be ordered to increase the deterrence factor in Asia Pacific. More technology and capability is being shoe‐horned into smaller vessels. For suppliers of cyber‐security, the opportunies are even more numerous than for equipment suppliers.
One of the greatest challenges is to sasfy the requirements for local industry cooperaon. Technology transfer and local manufacture are becoming mandatory in most contracts. The value of having the product in‐service on a Royal Navy plaorm is high on the list for customers with growth defence programmes. However, this is no longer enough! How close can suppliers get to their customer? Should they establish a subsidiary in country? How do they select the right local partner? Do they accept the Offset challenge? These are major issues, whether the target programme is in India, Malaysia, South Korea or Spain.
What is the effect of the “Make in India” policy? For companies that have been doing business in India for several decades, the difference is arguably small; a local partner and local content has always been essenal. Perhaps the new trend is the local percepon, rather than the regulaons. It can be difficult to demonstrate the actual local content and this can dri into the markeng campaign. The technology transfer is sll expected. The greatest challenge is to make a profit, in the compeve environment, with local manufacture. Although not described as explicitly, the requirements of the Australian future submarine
Astute and type 45 destroyer
programme are the same. Suppliers will need to offer Australian products with an in‐country supply chain.
Global Primes and Tier 1 suppliers are cooperang with each other to win major internaonal business. Perhaps seen previously as teaming to eliminate a competor, or making an acquision for the same reason, the modern term is “progressive alliance”. A geographically close example is the European alliance of Naval Group and Fincaneri. Shipyard cooperaon is a growing trend, especially in Asia Pacific and the Middle East.
What is the sector outlook over the next five to ten years? Trends may be changing, but the good news is that there are plenty of business opportunies out there in the internaonal naval defence market. Protect and build on exisng customer relaonships and look to Asia Pacific and the Middle East for business development! There is no shortage of challenge and risk; but there is no shortage of opportunity.
Brian J Thomson BSc CEng MIET Internaonal Business Manager, MacTaggart Sco
Queen Elizabeth at sea
34 Society of Marime Industries Handbook & Members’ Directory 2018
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