Page 78 - 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

Systems Thinking: “Industry as a Strategic Capability”

There are several options available to a buyer when considering a major defence procurement.
demonstrates how vital the experience and expertise of an international prime contractor is to any
country seeking to deliver a major defence export programme.
Defence Procurement Options

Indigenous Off-the-shelf
Project Import

Collaboration Indirect Defence Offset

Licensed
Direct Offset
Production
Co-Production

Higher High
Investment required

At one extreme, it can involve several elements, from co-production (like Japanese airframe content
on the Boeing KC-46C tanker) and direct offset (South Korean manufacture of drop tanks for the BAE
Hawk) to special projects covering a wide range of industrial, transportation and infrastructure, energy
and public services sectors. Providing a military capability often involves rebuilding or regenerating an
entire economy. At the very least, the expense needs to be approved by a nation’s entire cabinet or
leadership team: their various interests need to be addressed, whether they be healthcare, policing
and security, business, energy or transport.
In the Middle East, the Al Yamamah programme has evolved into a major Industrial Participation
programme that continues to this day, both part of BAE’s long-term business whilst also supporting
the Kingdom’s National Transformation Plan and Vision 2030. This has involved a wide range of
projects outside of defence, from desalination plants to fruit farming, education, health and even, in
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its early years, football development under the supervision of The Football Association .
Direct Offset: “participation in the customer’s industry in the manufacture and assembly
of parts of the equipment to be supplied”
Indirect Defence Offset: “also known as co-production, whereby manufacturing
opportunities identified under a direct offset programme are extended to include
deliveries to other customers of the same equipment”
Unrelated Offset: “… subcontract work on programmes other than that being supplied
to the customer: promoting and developing export trade from the customer’s country;
involvement in the R&D, equipment or product development programmes”
Special Projects: “ creating commercially viable ventures which will develop or enhance
local industry (possibly) introducing appropriate specialist foreign partners and
arrang(ing) institutional funding ..”
Source: PwC, 2005
NGOs view offsets with suspicion in the belief that they both distort trade and provide cover for
corruption. The EU has banned their use and the UK’s withdrawal from the Union has enabled the
country to continue to conduct this form of trade. UK imports from the US have generally involved

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