Page 89 - Five Forces of Americanisation Richard Hooke 04072025 final post SDR1

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

management regime; composition of the shareholder base (including so-called
“activist” investors or hedge funds)
▪ Overseas trade
 market intelligence
 priority campaigns, trade negotiations
 countertrade or offset policy, obligations/opportunities, international partnering
options
 cross-government departmental support requirements (FCDO, Treasury, Export
Finance, MoD, Business & Trade, Science & Technology, Justice & Home Office)
*At the date of completing this paper (April 2025), the current use of share buybacks to
increase shareholder value will be of particular interest to a British government keen to
invest in future growth. This should be the focus for an informed, insightful discussion

Company Amount Timing
Rolls-Royce £1,000 million February to end 2025
BAE Systems £1,500 million Aug 2023 to July 2025
QinetiQ £250 million 2024 to 2026
Chemring £90 million Aug 2023 to May 2024/
Feb 2025 to 2027
Babcock Int’l £150 million 2023 to 2025

At a time when defence spending is increasing worldwide, can the government consider better
investment opportunities for future growth and improving share price performance?

iii. Using procurement as a strategic tool
In its Defence Industrial Strategy Statement of Intent published in December 2024, the new
UK government literally rewrote the rules for defence procurement, aligning the country’s
security and economic priorities.
The aim of the Government’s new Defence Industrial Strategy is to make sure the
imperatives of national security and a high-growth economy are aligned …
Prioritise UK businesses: We will examine how best to prioritise and promote UK
based businesses for defence investment without losing the benefits of
competition, including in those areas of the defence sector that present the
greatest opportunities for UK economic growth and competitive advantage,
including in our strong clean and emerging technological sector. We will reform
procurement to reduce waste, leverage inward investment, promote UK leadership
in related sectors and technologies, and boost sovereign defence industrial capacity
to create good jobs and grow UK exports.
(Defence Industrial Strategy - Statement of Intent, 2 December 2024)
The termination of “competition first” represented a major change in defence procurement
enabling pricing and supply arrangements to be attuned to the level of commoditisation or
differentiation in the market. The approach set out in the government’s Statement of Intent
provides MoD Defence Equipment & Support (“DES”) with the means to direct collaboration
and foster valuable supplier relationships and investment and, in particular, to adopt
transparent, effective and efficient practices in circumstances where there is a single supplier
source. Recognising too, that a single source (especially a prime contractor) will develop or
acquire access to distinctive foreign intelligence in specific export markets.
iv. Providing discipline and clarity on the conditions, dependencies and limitations that will
affect potential mergers and acquisitions and alliances; including developing a “fit and
proper” test to evaluate the suitability of bidders as a first step.

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