Industry Faces a Tough Decade Inside This Issue
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Tiger awakes A record arms deal aims to replace India’s DEFENCE ‘flying coffins’ Page 3 FINANCIAL TIMES SPECIAL REPORT | Tuesday September 13 2011 www.ft.com/defence2011 | twitter.com/ftreports Industry faces a tough decade Inside this issue The huge US military budget is shrinking but China is spending Western alliance US more than ever, expresses concern as pace writes James Blitz of European budget cuts increases Page 2 he defence industry is coming to the end of UK military After swingeing what many of its senior cuts, clarity is slowly figures regard as a returning Page 2 Tgolden decade. Sniper rifles British gun Ten years ago, in the immedi- company aims for ate aftermath of the September high stakes Page 2 11 attacks, the US government began a huge injection of cash India A longoverdue into the Pentagon budget. modernisation effort in the Over the course of the decade, armed forces of the world’s the US annual defence budget largest democracy is a has doubled in cash terms to challenge to China’s might reach nearly $700bn in 2010. The Page 3 profits of the US defence indus- try have quadrupled over that Brazil The drawnout period. The country has come to threeway contest to win dwarf all other nations in the a fighter jet contract is amount it spends on military causing casualties Page 3 equipment. Now, however, the tap has been turned off and defence companies in the US – as well as in Europe – face more challeng- ing times. The US government is deeply in debt. Some senior executives in the industry believe Congress will take out up to $1,000bn from the core Pentagon budget over the next decade. US Defence contractors are As the west winds down its being pushed into unfamiliar involvement in Iraq and territory – working to tight Afghanistan – and after the kill- budgets Page 4 ing of Osama bin Laden, the al- Qaeda leader – it is hard to Pilotless aircraft imagine anyone making a case A deal between for increasing US defence BAE expenditure. Systems One strategic threat is very As the west winds down its involvement in Iraq and Afghanistan, defence companies in the US and Europe face more challenging times PA and much on the minds of US policy- Dassault makers: the military build-up of the first time. China’s defence defence assets are still some demanding environment. The canica UK, puts it: “Over the The jet is expected to come Aviation to China. In the past five years, budget grew 7.5 per cent in 2010 way from being at the technical pressures are even greater in next few years, managements into service over the next six cooperate Beijing has expanded its capa- – faster than that of most other level of those of the west. “The Europe, where national govern- will be called to task. People in years. But Robert Gates, the on drones is bility at a pace that has taken countries in the world. technological gap between ments, including the UK, have the defence sector will need to former defence secretary, said ruffling feathers many defence experts by sur- But while policymakers in China and the US could narrow taken an axe to military budgets be more proactive about the just before leaving office this Page 4 prise. The People’s Liberation Washington are becoming but it will not disappear for a over the past few years in way they run their businesses.” year that he thought “the size of Army has evolved from being increasingly alarmed by the long time,” says Malcolm response to the budget crunch. The shadow of cuts and delays the buy” might have to be cut. Russia Price is a vital issue an internally focused force to challenge from China, the threat Chalmers of the Royal United Defence groups are having to is already being seen over exist- In Britain, the Ministry of as tension between one that regularly deploys over- is unlikely to halt the retrench- Services Institute (RUSI). “The cut costs aggressively in order ing programmes. In the US, the Defence is also pressing ahead domestic contractors and seas. In the course of 2011, ment of US defence spending in US has an accumulated advan- to survive. They are also engag- F-35 Joint Strike Fighter multi- with substantial equipment pro- the government rises China has flexed its military the near future. In 2010, China’s tage going back decades.” ing in a frantic search for new role jet, whose lead contractor is grammes. By far the biggest is Page 4 muscles, deploying an aircraft defence budget was one-tenth As a result, defence compa- markets. As Alberto de Benedic- Lockheed Martin, is a project carrier and stealth fighter for the size of that of the US. Its nies in the US must face up to a tis, chief executive of Finmec- worth more than $380bn. Continued on Page 2 Suppliers fight for contract to camouf lage US army centres are, so you very the Army’s civilian person- on equipment such as Uniforms quickly get taken into nel. The traditional green trucks and armour that are urban areas or areas and brown woodland pat- more expensive to change John O’Doherty around the marshes, oases tern is still used by its Spe- than clothing. finds the military or the oilfields, where it’s cial Forces units. The idea is to have differ- not just desert any more. Camouflage serves two ent colour schemes for each hiding beneath “Wearing a yellow suit principal – and essentially of the requirements, but a a ‘coffee stain’ makes you stand out. What contradictory – purposes. It similar underlying pattern you want is something that aims to disrupt the appear- that is recognisably the US will blend in against a vari- ance of the wearer in the Army “brand”. Chocolate chips and coffee ety of backgrounds and eyes of the enemy, so the The entrants have been stains may at first blush that’s the advantage multi- soldier cannot be seen, and experimenting with a sound like unpleasant dis- terrain camouflage has.” to identify the wearer to number of approaches, coveries lurking under- But while Acupat worked other armies by using a dis- incorporating ever more neath the cushions on an reasonably well for the US tinctive pattern, creating sophisticated designs. undergraduate’s sofa, but Army in Iraq, the terrain in the closest thing that mili- “Our pattern is designed for the US Army, they are Afghanistan proved more from fractals, which are the something far more serious. challenging. The landscape repeating shapes found in These culinary terms are varied from desert to lush ‘You want nature,” says Guy Cramer, also some of the colloquial forest, and from grassland something that chief executive of Hyper- names given to camouflage to mountain scrub. stealth Technology, which patterns used by militaries In theory, this was pre- blends in against has submitted a pattern to around the world. As the cisely the landscape for a variety of the competition. US Army tenders for new which Acupat was suited, “We incorporate those patterns this autumn, these but the pattern ended up backgrounds’ shapes into the patterns. So and other models will be making soldiers more visi- the actual fractal pattern is studied and retooled to ble, not less, prompting the something your brain has equip the country’s next US Army in Afghanistan to taries have to a brand. It is seen before and wants to generation of soldiers. switch to another universal this branding process that ignore. It doesn’t want to The contest has attracted style pattern, Multicam, by will be most helped by the waste any time reanalysing the attention of designers Crye Precision. current US Army competi- something that is common the world over, as the prize But Acupat and Multicam tion. While Multicam was a in that background.” for this top-secret couture are not the only patterns stop-gap replacement for One of Hyperstealth’s pat- show is to see the winning worn by the US Army. It clothing only, the new com- terns is already used by the pattern worn by more than already has two desert pat- petition will seek to create Jordanian army, and it 500,000 customers. terns: the “chocolate chip” a “family” of four camou- makes the official snow- Bringing order to the pattern worn in the Gulf flage patterns: a jungle/ terrain pattern used by the clothing of the US Army is a war and now abandoned, woodland pattern, a desert US Marine Corps. difficult task. For an organi- and a three-colour “coffee pattern, a universal pattern However, it will be sation rooted in discipline stain” pattern, still used by and a pattern that will go extremely difficult for out- and uniformity, there is a siders to make assessments surprising diversity among about submissions, as many the outfits of its members. of the companies have kept The official camouflage is them secret, locking their Acupat, a pattern consisting websites to non-military of small squares of differing personnel. This keeps com- colour, each less than 1cm petitors from stealing pat- in size. The squares create a terns, but more impor- pixelated effect, and when it tantly, designers say that a was first chosen in 2004, it previously unseen pattern was hoped that Acupat can confuse enemy forces would become a universal for a split second at close camouflage pattern (or range as they try to estab- UCP), that could be worn in lish the wearer’s affiliation. deserts, cities or woodland.