How to Invest in the Future While Paying for the Past: Frost & Sullivan Analyses the UK Defence Conundrum

October 1, 2009

LONDON, Oct. 1 /PRNewswire/ – With billions already overspent on defence purchases and major budget cuts looming on the horizon, the UK Ministry of Defence (MoD) must urgently reassess its defence capabilities. Can the UK retain a full spectrum of conventional capability while fighting the global war on terror, or will it eventually have to surrender some capabilities, like the Trident nuclear system, in favour of soldier equipment, armoured vehicles, helicopter communication gears and other specialist capabilities? Most importantly, can such a transition occur during a weakened economy without compromising national security?

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Budget cuts of up to 14 percent (approx 5 billion pounds Sterling) by 2016 threaten over 300,000 high-value jobs in the UK. “The government must find a way to protect the largest defence industry in Europe, not only to save jobs, but also for security in terms of retaining indigenous capability and technological lead,” states Frost & Sullivan’s Aerospace & Defense Research Analyst, Major Sabbir Ahmed (retd) in a new Market Insight entitled UK MoD Conundrum – Conventional versus Specialist Capabilities.

Can the MoD help sustain the industry by providing a consistent stream of revenue? While cutbacks or rescheduling on major conventional projects like Trident, Astute Submarines, Future Carriers, Type 45 Destroyers, Euro fighters and Joint Strike Fighters seem inevitable, a few specialist capabilities including Cyber warfare, Command-and-control systems, the Civilian-military stabilization and reconstruction force, and urgent operational requirements in Afghanistan may well see increased investment despite the economic slump.

As a way of cutting cost on conventional capabilities and to free up resources for specialist capabilities, the MoD should consider sharing more expensive strategic capabilities with allies (such as the United States and France). For example, the drop of the Trident replacement programme alone would save approximately 6 percent of the budget every year and 70 billion pounds over its lifecycle.

The UK MoD should closely monitor ongoing restructuring efforts at the US DoD. “A UK-US-EU joint initiative towards wiping out global nuclear arsenals altogether might seem radical in short term, but would be good for the comprehensive security of the world in the longer term,” argues Ahmed. “This has the potential to free up significant resources for investing on the research and development of futuristic specialist capabilities.”

Individual companies should evaluate how their revenue stream and sustainability will be impacted by inevitable budget cuts; defence industry associations should work with government to ensure the sustenance of the sector; and a Strategic Defence Review should be undertaken to balance conventional and specialist capabilities and pursue technologies, skills and capabilities that better meet the needs of the 21st century war fighter.

If you are interested in receiving more information on the UK Defence Industry please contact Monika Kwiecinska, Corporate Communications, at monika.kwiecinska@frost.com with your full name, company name, title, telephone number, e-mail address, city, state and country. Upon receipt of the above information, an overview will be sent to you by e-mail.

Frost & Sullivan, the Global Growth Consulting Company, partners with clients to accelerate their growth. The company’s Growth Partnership Services, Growth Consulting and Career Best Practices empower clients to create a growth focused culture that generates, evaluates and implements effective growth strategies. Frost & Sullivan employs over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 30 offices on six continents. For more information about Frost & Sullivan’s Growth Partnerships, visit http://www.frost.com.

    Monika Kwiecinska
    Corporate Communications - Europe
    P: +48 22 390 4127
    F : +48 22 390 4160
    E: monika.kwiecinska@frost.com


SOURCE Frost & Sullivan

Source: newswire

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