The creation of BVT, merging VT Group and BAE's naval warship construction assets, but with a BAE call option on the business in a few years (when CVF construction will be ramping up) will likely see a BAE acquisition by default of the VT business (VTG:L).
Incoming CEO Ian King's objectives of building a stronger position in civil nuclear dovetails nicely with his old boss Mike Turner's move to become Chairman of Babcock International Group (BAB:L). Under-the-radarscope Babcock has built a very strong position in naval support as well as positions in the CVF programme and civil nuclear support and decommissioning. BAE can keep warm its position in this business until such time as acquisition becomes more urgent.
Elsewhere, Thales position has eroded dramatically from its high watermark of 2003 when it nearly unseated BAE's position on the future carrier programme to more niche provision of UAV's and higher end electronics.
QinetiQ remain in no-mans land in terms of managing erosion in R&D budgets and relying on core long term contracts for managing test ranges to keep them going. Meanwhile more nimble players such as BMT pick away at selected capabilities.
Meanwhile a reverse version of 'the Italian job' is underway with Finmeccanica busy acquiring in the UK and building a position to rival or even exceed that of Thales in the United Kingdom in a short space of time.
US players are in a paradoxical position. Exchange rates make quick UOR purchases highly attractive to the cash strapped Ministry, plus long term R&D strength in the USA make access critical. However the dust is only now settling after the ITAR-waiver debacle which affected relations for a couple of years at the high-end.
Post Defence Industrial Strategy (DIS) it could be suggested that the point will likely be reached within five years where BAE Systems is the sole significant OEM and support company in the company, serviced by niche players and international competition (A) filling the gaps and (B) keeping BAE 'honest' in commercial discussions.
For the UK Government a strong BAE in both the US and UK hopefully gives them more leverage to buy higher tech equipment from the 'back of the BAE lorry' without having to invest painful overheads in R&D. Utimately Geoff Hoon's SDR: New Chapter whilst tactically a political faux pas in terms of tieing Britain to the USA at the start of the unsupported Iraq War will, long term, become the logical consequence of industrial and procurement decisions in train.
No comments:
Post a Comment