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Battling against defence cuts

CONTRACTS worth £300m which have been won by North East firms to develop two new aircraft carriers are unlikely to be threatened by planned defence spending cuts, a major industry body has forecast.

However Northern Defence Industries (NDI) has warned that the delay or scaling back of future projects could impact heavily on the region’s defence sector supply chain.

The Newcastle-headquartered organisation – which represents over 200 businesses – has urged defence, aerospace and security-related businesses in the region to focus on export markets to survive the uncertain times ahead.

NDI’s chief executive Robin Fox also told bdaily that, despite the threat of Ministry of Defence cutbacks, there remains huge opportunities for innovative North East firms who can help solve military problems such as the handling of improvised explosive devices (IEDs) like roadside bombs.

North East firms, such as A&P Tyne of Hebburn, have won a significant portion of the £5bn project to build two new aircraft carriers for the Ministry of Defence.

The combination of a change of government and the threat of a double-dip recession, however, has meant that the project – like any which rely on the public purse – has come under scrutiny.

Former defence staff chief Lord Guthrie earlier this year described the project as “nice to have but non-essential”.

Mr Fox said the new coalition government was unlikely to backtrack on the project and championed the many new opportunities for the region’s firms, despite the tough market conditions.

“There will continue to be some significant opportunities in defence for supply network companies because even if they cut defence spending by 20% we could still be spending £12bn a year on it, which is still an awful lot of money.

“The industry generally has to become more innovative and value adding than ever before if it wants to survive.

“We are working closely with UKTI to develop markets across the world and in places like India where defence spending is increasing dramatically.

“We’ve recently been to China to look at where the opportunities are for the small companies. It’s a significant market place and will be the biggest in the world for aerospace products.”

NDI currently employs 11 people directly, generating £1.2m-a-year in turnover - a figure Mr Fox said will remain stable or drop this year after enjoying record growth last year.

This was posted in Bdaily's Members' News section by Ruth Mitchell .