Page 54 - Five Forces of Americanisation Richard Hooke 04072025 final post SDR1

The UK Defence Industry in the 21 Century
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The Five Forces of Americanisation

company’s flexibility to respond to market changes. This in turn will place companies at a disadvantage
to private equity funds and other, less risk-averse, entities in financing acquisitions or other
expansionist policies that would increase the level of risk to lenders. This is now generally becoming a
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major threat to the competitiveness of many publicly-quoted companies, not only in defence.
“We have discovered a UK procurement system which is highly bureaucratic in style, overly
stratified, far too ponderous, with an inconsistent approach to safety, very poor accountability
and a culture which appears institutionally averse to individual responsibility”. It referred to an
equally critical Public Accounts Committee report that the MoD’s “system for delivering major
equipment capabilities is broken and repeatedly wasting taxpayers’ money”
(House of Commons Defence Committee: Ninth Report of Session 2022-23; 11 July, 2023)
In identifying countries considered successful in managing defence procurement, the House of
Commons Defence Committee has cited South Korea and Israel. Their companies are a mixture of
publicly- and privately-owned entities. Israeli defence contractor, Elbit Systems Ltd, for example, is
listed on the Nasdaq US Stock Exchange.

However, both countries are at war. Many of its employees are armed forces reservists. These
characteristics imply intimate relationships with the end user, a sensitivity and responsiveness to their
needs, both operationally and, of necessity in view of the need for transparency and compliance,
financially. This proximity to the customer stimulates innovation, viewed in South Korea as its ability
to integrate existing technologies or systems “innovation by combination” as well as in developing and
producing entire platforms like the KF-21, a South Korean multirole fighter aircraft first flown in 2022.
Even so, whilst the US government (with major US defence contractor, Lockheed Martin in support)
assisted the development programme, it rejected repeated requests for technology transfer in several
areas, including target acquisition, navigation and defensive aids.
Close customer relationships are familiar to many of the world’s defence contractors, though many
(or according to Parliamentary reviews, most) in the UK have been undermined or subordinated to
the doctrine of competition and the unsentimental conventions of corporate finance. The assumption
that these would deliver value for money has proved to have been misplaced.
However, the wider significance of the DIB (in trade, foreign diplomacy and influence in world affairs
as well as keeping the nation safe) seems now to have been accepted by the UK government. The
Defence & Security Industrial Strategy (“DSIS”) published by the Johnson government in 2021, set out
a series of significant actions regarding both policy and practice.
“We need flexibility in our acquisition to deliver and grow the onshore skills, technologies and
capabilities we need, and we must ensure consistent consideration of the longer-term
implications of the MOD’s procurement decisions for military capability and the industry that
produces and supports it.
“Therefore, we are replacing the former policy of ‘global competition by default’ with a more
flexible and nuanced approach which demands that we consciously assess the markets
concerned, the technology we are seeking, our national security requirements, the opportunities
to work with international partners, and the prosperity opportunities, before deciding the correct
approach to through-life acquisition of a given capability”
“DSIS will ensure a more consistent consideration of the longer-term implications of Defence’s
procurement decisions for military capability and the industry that produces and supports it.”
“For both defence and security industries there are opportunities to diversify and areas where
reform and closer collaboration between government and industry would lead to greater export
success overall”
(“Defence and Security Industrial Strategy: A strategic approach to the UK’s defence and security
industrial sectors”: Secretary of State for Defence; March 2021

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07/07/2025 Richard Hooke 2025