Government Licensing:

Indonesia increases amount of foreign defence loans approved for 2021

02nd Aug: The Indonesian Ministry of Finance (MoF) has granted approval for the country's armed forces (Tentara Nasional Indonesia: TNI) and defence ministry to obtain up to USD5.8 billion in foreign loans for fiscal year 2021. Permissions to source foreign loans have been approved for a total of 31 procurements, upgrades, and maintenance programmes across all three services of the TNI, according to documents and circulars that have been provided to Janes by Indonesian government sources. The approvals have been granted after consultations with the Ministry of Defence (MoD) and the Ministry of National Development Planning (Kementerian Perencanaan Pembangunan Nasional: BAPPENAS).

Janes Analysis: Indonesia's increasing reliance on foreign financing for its military modernisation programmes is driven in part by relatively limited government funding for such activities. Although the country's defence budget expanded swiftly in both 2020 and 2021, it remains only 10% larger in real terms than its previous peak of USD8.8 billion in 2016, despite its substantial military acquisition plans.

Already a Janes customer? Read more here.

Israeli defence budget moves forward with government agreement 

04th Aug: Israel's ministries of defence and finance reached an agreement together with Prime Minister Naftali Bennett on a new annual defence budget for 2022, worth ILS58 billion (USD17.95 billion) net, the bureau of Defence Minister Benny Gantz announced on 28 July. The development comes after the Israel Defense Forces (IDF) and the Ministry of Defense (MoD) relied on a continuation budget in 2020 and 2021. The last time that Israel approved a new defence budget was in 2019, totalling ILS55.5 billion, and the Ministry of Finance has also conducted several ad hoc cash injections during the continuation budget years, to maintain the budget's real value relative to the 2019 budget.

Janes Analysis: Israel has been able to support many of its procurement initiatives through the MoU with the US, which allows a Foreign Military Financing grant of USD3.3 billion per year. Of this amount, USD795.3 million is being converted into shekels in 2021 for procurement of Israeli-made equipment, with this figure set to decline to USD785.3 million in 2022. 

Already a Janes customer? Read more here.

Technology Updates:

Japan proposes air-launched Type 12 missile for F-2 fighters 

16th Aug: The Japanese Ministry of Defense (MoD) plans to meet its requirement for air-launched long-range anti-ship missile (LRASM) capability through the development of the Mitsubishi Heavy Industries (MHI) Type 12 Surface-to-Ship Missile (SSM) system. A spokesperson from the MoD told Janes on 12 August that it plans to install a modified version of the Type 12 weapon onto MHI F-2 multirole fighter aircraft operated by the Japan Air Self-Defense Force (JASDF). This follows an MoD decision – announced early August – to scrap plans to fit Lockheed Martin's AGM-158C LRASM onto the JASDF's Mitsubishi-Boeing F-15J/DJ Eagle fighter as part of a proposed broader upgrade for that aircraft.

Janes Analysis: Earlier this year, the MoD in Tokyo also announced plans to begin mass production of an extended-range version of the MHI-developed ASM-3 supersonic, air-launched, anti-ship missile. The new missile is named ASM-3A and is expected to be deployed on the F-2 and Japan's future F-X fighter aircraft.

Already a Janes customer? Read more here.

South Korea draws up plans for Ulsan-class Batch IV frigates

05th Aug: South Korea's Defense Acquisition Program Administration (DAPA) has drawn up plans to equip the Republic of Korea Navy (RoKN) with Ulsan-class Batch IV frigates. Initial plans for the programme were discussed as part of DAPA's 138th Defence Business Management Committee meeting held on 4 August. According to a media release from the agency, the Ulsan-class Batch IV frigates will be equipped with improved anti-aircraft capabilities when compared with its predecessors, and feature substantial use of domestically developed technologies. The vessels will replace the RoKN's fleet of older combatants and are expected to come into service between 23 and 32 years from the present day. The project is expected to cost the South Korean government about KRW3.51 trillion (USD3 billion), but there were no details on the number of hulls expected.

Already a Janes customer? Read more here.

Australia, US formalise co-operation on Precision Strike Missile programme 

13th Aug: Australia and the United States have signed an agreement to formalise co-operation on precision-strike capability. The Australian Department of Defence (DoD) said on 12 August that the recently signed memorandum of understanding (MOU) facilitates Australian Army participation in the US Army's Precision Strike Missile (PrSM) system. Under the accord, Australia has contributed USD54 million to the PrSM project, with a commitment, said the DoD, to “increase the lethality, range and target engagement of the baseline missile in development”. Major General Simon Stuart, head of land capability in the Australian Army, said the agreement supports PrSM development under Increment 2 of the programme aimed at incorporating technologies allowing ships and air-defence systems to be engaged with the system. 

Already a Janes customer? Read more here.

Industry Movements:

UK to probe Cobham's bid for Ultra Electronics

20th Aug: UK Business Secretary Kwasi Kwarteng has directed his country's Competition and Markets Authority (CMA) to review Cobham Group's proposed acquisition of Ultra Electronics, citing potential “national security concerns” about the deal, the UK government announced on 19 August. The CMA will have until 18 January to complete its work and report its findings to Kwarteng, according to the Department of Business, Energy, and Industrial Strategy (BEIS). The secretary will then decide whether to clear the merger with or without conditions or instruct the CMA to conduct a more in-depth “Phase 2” investigation.Kwarteng did not say what national security concerns he might have. However, while Cobham and Ultra are both based in the United Kingdom, Cobham is owned by US private equity firm Advent International. Advent has raised eyebrows by divesting several Cobham businesses since it acquired the company in January 2020.

Already a Janes customer? Read more here.

Babcock to sell Frazer-Nash Consultancy to KBR 

16th Aug: UK-based Babcock International Group has agreed to sell its Frazer-Nash Consultancy to fellow engineering company KBR of the United States for GBP293 million (USD405.1 million) to reduce its debt, Babcock announced on 13 August. KBR said that buying the Babcock subsidiary will expand its international advisory capabilities. Frazer-Nash serves government and industry customers in defence and other sectors, and operates mainly in the UK and Australia. Its defence engineering expertise spans such areas as air, land, and naval systems; C4ISTAR; space defence; and weapons. “Frazer-Nash is highly complementary with KBR's global priorities with minimal overlap because of its geographic footprint,” KBR said.

Already a Janes customer? Read more here.

Parker Hannifin moves to buy Meggitt 

03rd Aug: US-based Parker Hannifin Corporation has agreed to acquire fellow motion and control system provider Meggitt plc of the United Kingdom for GBP6.3 billion (USD8.8 billion) in cash, nearly doubling the size of its Aerospace Systems segment and diversifying its offerings to customers, according to a joint announcement. “We strongly believe Parker is the right home for Meggitt,” Parker chairman and CEO Tom Williams said on 2 August. “Together, we can better serve our customers through innovation, accelerated R&D, and a complementary portfolio of aerospace and defence technologies.”

Janes Analysis: Besides scrutinising the Parker-Meggitt deal, BEIS is closely monitoring Cobham Group's proposed purchase of UK-based Ultra Electronics for GBP2.6 billion, which Ultra announced on 23 July. Although Cobham is based in the UK, it is owned by US private equity firm Advent International.

Already a Janes customer? Read more here.

Serco buys naval firm Clemaco 

13th Aug: UK-based government services provider Serco Group has expanded its defence portfolio by acquiring Clemaco, which maintains ships for the Belgian Navy, according to a recent Serco announcement. “The combination of the skills, experience, and knowledge of Clemaco with Serco's global expertise and capability will provide added value for existing Serco and Clemaco customers, including in particular the Belgian Ministry of Defence,” Serco Europe CEO Gaetan Descl´ee said on 2 July. By joining a larger company, Clemaco, which was previously family owned, will gain “the certainty of continuity and stability of operations and further development of the business”, Clemaco CEO Frank Verdonck said. Rear Admiral Jan De Beurme, commander of the Belgian Navy, also endorsed the acquisition, noting that Serco and Clemaco have worked together for years.

Already a Janes customer? Read more here.

L3Harris to divest Electron Devices business

04th Aug: US-based L3Harris Technologies has agreed to sell its Electron Devices business to US private equity firm Arlington Capital Partners for USD185 million as part of its portfolio reshaping effort, L3Harris announced on 3 August. Electron Devices makes radio-frequency amplification products for the defence, intelligence, industrial, and medical sectors. Its travelling wave tubes are used in communication satellites, ground broadcast stations, guidance systems, and military aircraft radars. Electron Devices has more than 800 employees at three facilities in Folsom and Torrance, California, and Williamsport, Pennsylvania. Arlington plans to turn the business into a standalone company called Stellant Systems, but keep its leadership.

Already a Janes customer? Read more here.

Lockheed Martin eyes ties with more tech firms

10th Aug: Lockheed Martin is exploring potential co-operation arrangements with about a dozen leading technology companies to enhance its expertise in such areas as semiconductors and telecommunications, according to the US defence contractor's top executive. “I doubt that we're going to be acquiring any of those 10 or 12 major corporations, but we're going to strive to work with them to get the capabilities, the [intellectual property], and the collaboration that will make us even better,” said Jim Taiclet, Lockheed Martin's chairman, president, and CEO. In March Lockheed Martin announced a “strategic interest agreement” with Omnispace to explore jointly developing a space-based 5G wireless communications network. “You don't necessarily need to buy companies to work with them,” Taiclet said at Lockheed Martin's virtual investor event on 5 August.

Already a Janes customer? Read more here.

Virgin Orbit to go public

24th Aug: Small satellite-launch firm Virgin Orbit plans to become a publicly held company and use part of the proceeds to boost its rocket production rate, the US-based business announced on 23 August. The transaction, which is expected to raise up to USD483 million in cash, will also help Virgin Orbit grow its other offerings, such as satellite-enabled communications and Earth observation, the company said. Virgin Orbit intends to change its ownership status by merging with special purpose acquisition company NextGen Acquisition Corporation II, which is publicly traded. After the combination is completed by the year-end, Virgin Orbit's shares will be listed on the Nasdaq stock exchange under the ‘VORB' ticker symbol.

Already a Janes customer? Read more here.

International Affairs:

Danish MoD seeks better Arctic capabilities 

17TH Aug: The Danish Ministry of Defence (MoD) wants to upgrade its capabilities in unmanned aircraft and spacebased communications and surveillance to enhance its ability to operate in the Arctic, according to the MoD's new defence industrial strategy. Advances in energy storage and transport, materials, and multidomain command-and-control would also help Danish forces conduct missions in the remote, rugged polar region, where maritime traffic is increasing, the strategy document says. In addition to defending Greenland, Denmark's military performs many civilian functions for the vast island territory, including search and rescue, environmental disaster response, and vaccine distribution.

Already a Janes customer? Read more here.

KAI signs T-50TH deal with Thailand 

02nd Aug: Korea Aerospace Industries (KAI) has signed a contract with the Royal Thai Air Force (RTAF) to supply two T-50TH Golden Eagle lead-in fighter trainer aircraft, the company announced on 2 August. KAI said in a stock exchange filing that the deal, which includes a follow-up support package to facilitate localised aircraft operation and maintenance, is valued at USD78 million and that the aircraft will be delivered to the RTAF by the end of November 2023. The contract represents the fourth and final phase of the RTAF's T-50TH programme, taking the service's fleet to 14 aircraft. The RTAF ordered two batches of four and eight T-50TH aircraft in 2015 and 2017 for USD380 million, with eight of these aircraft having been delivered. Phase 3 was a USD52.5 million upgrade of these aircraft announced in 2019. The contract represents the fourth and final phase of the RTAF's T-50TH programme, taking the service's fleet to 14 aircraft. The RTAF ordered two batches of four and eight T-50TH aircraft in 2015 and 2017 for USD380 million, with eight of these aircraft having been delivered. Phase 3 was a USD52.5 million upgrade of these aircraft announced in 2019.

Already a Janes customer? Read more here.

US increases military assistance to Southeast Asia 

11th Aug: The US government has outlined a commitment to increase financial assistance to countries in Southeast Asia to support regional defence and security capability development. The intention reflects Washington's growing effort to counter China's assertiveness in Southeast Asia and is also being channelled through increased diplomatic ties: US Secretary of Defense Lloyd J Austin visited the region in late July, and Vice President Kamala Harris will do the same later this month. To support military capability development, the United States has requested for 2022 Foreign Military Financing (FMF) of USD129 million for Southeast Asian countries. In 2021 requested FMF for the region was nearly USD86 million, and in 2019 and 2020 the actual FMF for the region was USD101 million for each year.

Already a Janes customer? Read more here.

US approves Javelin sale to Thailand

02nd Aug: The US State Department has approved a potential sale of Raytheon/Lockheed Martin Javelin anti-tank missiles to Thailand for an estimated USD83.5 million, the US Defense Security Cooperation Agency (DCSA) announced on 30 July. The Foreign Military Sale (FMS), which is subject to US Congressional approval, includes 300 Javelin FGM-148 missiles, 50 launch units, and associated equipment and support. The DCSA said the Javelin will replace the Royal Thai Army's (RTA's) M40 series 106 mm recoilless rifle, which it acquired through US military aid in the Vietnam war era. It added that the proposed sale will allow the RTA to “modernise [its] light anti-tank capability and maintain its current force posture, as well as enhance interoperability with the US during operations and training exercises”. 

Already a Janes customer? Read more here.

Government Licensing

Biden orders review of defence industry competition – 12 Jul

US President Joe Biden has told the Pentagon to review the state of competition in the defence industrial base, including “areas where a lack of competition may be of concern and any recommendations for improving the solicitation process”, according to a new executive order. The order also calls for developing “a plan for avoiding contract terms in procurement agreements that make it challenging or impossible for the Department of Defense or service members to repair their own equipment, particularly in the field”. Already a Janes customer? Read more HERE.

Indonesia seeks foreign lender for T-50 lead-in fighter trainer programme – 21 Jul

The Indonesian Ministry of Defense (MOD) has begun a search for foreign lenders to fund the acquisition of six additional T-50i Golden Eagle airframes for its lead-in fighter trainer (LIFT) programme. An approval to obtain the foreign loan was approved by the country's finance ministry, after consulting with the Indonesian MOD and the Ministry of National Development Planning (Kementerian Perencanaan Pembangunan Nasional: BAPPENAS). A document provided to Janes by an industry source indicates that a limit of USD240 million has been set for this foreign loan allocation. Korea Aerospace Industries (KAI) disclosed in a financial regulatory filing on 16 July that it has secured a “contract” to supply the Indonesian Air Force (Tentara Nasional Indonesia – Angkatan Udara: TNI-AU) with the aircraft type. Janes Analysis: The procurement programme for additional T-50i trainers was established amid an anticipated need for greater training bandwidth. Already a Janes customer? Read more HERE.

GAMI reports increases in licensing as localisation remains sluggish – 14 Jul

Saudi Arabia's General Authority for Military Industries (GAMI) revealed in its first half 2021 report on 13 July that 99 companies had received licences to operate in the Kingdom's military sector by the end of the period, as localisation rates reached 8% of procurement by the end of 2020. Of the 99 companies, 29 had been issued with licences since the end of 2020. Overall, 85% of the 99 companies are Saudi-owned, 9% have mixed foreign and local ownership, and 6% and foreign-owned. Saudi Arabia liberalised foreign ownership in the defence sector in 2020 as part of an effort to attract foreign investment, as the government seeks to become a major regional hub for defence and manufacturing outputs. Janes Analysis: Attracting local companies into the defence manufacturing sector is an essential element of the country's efforts to increase localised production and will be an important part of the steps towards achieving the results of Vision 2030. As a result, the increase in licences issued for firms engaging in defence activities in the Kingdom is a vital part of the programme's success in bolstering the localisation levels. Already a Janes customer? Read more HERE.

International Affairs

India allocates USD9.5 billion for domestic procurement in 2021-22 – 20 Jul

The Indian Ministry of Defence (MoD) will allocate funding worth INR714.38 billion (USD9.5 billion) towards “domestic capital procurements” in fiscal year (FY) 2021–22, Ajay Bhatt, India's Minister of State for Defence, said in parliament on 19 July. In a parliamentary reply, Bhatt said the figure represents 64% of total defence capital acquisition funding for 2021–22, which he said totalled INR1.11 trillion. He added that in the past three fiscal years the MoD has signed 102 capital procurement contracts with Indian defence companies. In another reply, Bhatt said that since FY 2018-19 the MoD had approved 119 defence procurement contracts worth INR2.15 trillion. He indicated that the majority of these contracts supported domestic manufacturing programmes. Janes Analysis: India's figures for domestic capital procurements do not reflect the high proportion of underlying foreign components, systems, and technologies that are integrated onto ‘Indian-made' defence products and platforms such as the Tejas light combat aircraft programme. Indigenous content in this aircraft is currently about 60-70%. Already a Janes customer? Read more HERE.

Switzerland tweaks offset policy – 1 Jul

Switzerland has made several modest changes to its offset policy, which regulates the investment foreign companies must make in Swiss industry when selling military equipment to the European country, according to the Federal Office for Defence Equipment, which is also known as Armasuisse. The updated policy, which takes effect on 1 July, imposes an offset obligation on a foreign prime contractor that receives a contract worth at least CHF20 million (USD21.6 million). Such a threshold did not exist previously. The new threshold also applies to foreign subcontractors if their share of a contract exceeds 50% of the total value. Janes Analysis: Armasuisse unveiled the revised policy on 29 June, a day before Switzerland announced it would spend up to CHF8 billion to buy the F-35A fighter from US-based Lockheed Martin, and the Patriot missile defence system from US-based Raytheon Technologies. Already a Janes customer? Read more HERE.

China's defence exports stay strong despite dip in 2020, Janes data shows – 15 Aug

Newly compiled Janes data shows China's defence exports declined mildly in 2020, interrupting a period of solid growth since 2016. According to the data, China's international military sales in 2020 were equal to USD2.65 billion, a 4% decline on the figure in 2019. The decrease can almost certainly be attributed to the Covid-19 pandemic and resulting challenges related to marketing, production, supply chains, and logistics. The value of China's defence exports between 2016 and 2019 increased on average by 11% per year, growing from USD2.34 billion to USD2.76 billion. Janes Analysis: Beijing does not disclose any information about the value of its defence exports, although Chinese state media sometimes acknowledges that the sales effort has become an important part of the country's strategies to boost revenues and to expand its international profile. Already a Janes customer? Read more HERE.

Georgia outlines defence procurement priorities – 26 Jul

The Georgian government has revealed its defence procurement priorities up to 2030, which include the acquisition of unmanned aerial vehicles (UAVs), new artillery systems, and a revitalisation of its defence housing infrastructure. At a ceremony for the release of the Action Plan of the Georgian Defence Forces 2020–30 on 22 July, Minister of Defence Juansher Burchuladze revealed that the country would be acquiring additional Javelin anti-tank missiles in 2021 from the United States. Negotiations are also under way with Polish and South African companies to establish joint ventures (JVs) in the country with the Ministry of Defence (MoD)-owned company Delta STC in 2022. The JVs would be established to manufacture small and large UAVs in country as part of efforts to bolster its intelligence, surveillance, target acquisition, and reconnaissance (ISTAR) capabilities. Janes Analysis: The modernisation of Georgia's military comes as the country is preparing to apply for full EU membership in 2024. Collaboration with partners in Europe and beyond are key to the country ensuring interoperability with allied forces, particularly as it aims to shed Soviet-era systems by 2030. Already a Janes customer? Read more HERE.

Technology Updates

Japan, UK pledge accelerated talks toward engine collaboration – 21 Jul

Japan and the United Kingdom have pledged to accelerate talks on the joint development of aero-engine technologies in support of the two countries' respective next-generation fighter aircraft programmes. The agreement was announced by the Japanese Ministry of Defense (MoD) on 20 July following a meeting in Tokyo between Japan's defence minister Nobuo Kishi and his visiting UK counterpart Ben Wallace. “The two ministers affirmed accelerated discussion to explore FX/FCAS collaboration at sub-system level, with a special focus on power and propulsion systems,” said the MoD in reference to Japan's F-X fighter programme and the UK's Future Combat Air System (FCAS). Janes Analysis: Should Japan and the United Kingdom conclude an agreement on aero-engines, the project will be led by the two countries' air propulsion specialists, Japan's IHI Corporation and the United Kingdom's Rolls-Royce. Already a Janes customer? Read more HERE.

MAKS 2021: Kazakh firm takes stake in Russian aircraft manufacturer – 23 Jul

Kazakhstan Aerospace Industries (KAI) has taken a 20% stake in Russian aircraft manufacturer Baikal-Engineering, the Kazakh government's Ministry of Industry and Infrastructure Development (MIID) announced on 22 July, with an agreement signed at the MAKS 2021 airshow in Zhukovsky near Moscow. Baikal-Engineering is a subsidiary business of Ural Civil Aviation Works and was established to develop the replacement for the venerable Antonov An-2 ‘Colt', which is widely used in regional aviation. First produced in 1947, Janes data shows that an estimated 67 are still in military service with countries including Mongolia, Guinea, and Ukraine. A further 260 aircraft built under licence in China are in service with China and North Korea. Janes Analysis: While a predominantly civil project, the need to revitalise short-range fixed-wing fleets in military forces, particularly with STOL capability, remains a key capability requirement for many nations. Relying on leased and contractor operated platforms may be an option for some countries on an as-needed basis, but for others that utilise such aircraft for humanitarian aid and disaster relief the chance to acquire newly designed aircraft that meet modern capabilities is important. Already a Janes customer? Read more HERE.

Lockheed Martin profit rises despite classified programme charge – 27 Jul

Lockheed Martin grew its net earnings by 11.6% to USD1.8 billion in the second quarter of 2021 despite recording a USD225 million charge for “performance issues” on a classified programme in its Aeronautics business segment, the US defence contractor announced on 26 July. While Lockheed Martin officials said they were not permitted to name the programme or describe its performance problems, they insisted that the effort continues to enjoy significant long-term potential based on independent reviews and reviews with the customer. “It's a development contract that we believe will be successful from a schedule and performance standpoint, and it, ultimately, will turn into a production programme,” chief financial officer Ken Possenriede told analysts. “We also believe there are additional opportunities out there. I'll assure you ... that there is still a very strong business case given these associated opportunities.” Already a Janes customer? Read more HERE.

Saab closes US camouflage factory – 22 Jul

Saab recently shuttered its camouflage netting factory in the United States because the facility had insufficient business, according to the Swedish defence and aerospace company. “The company exhausted every alternative before making this difficult decision,” Saab said in a statement on 21 July. “Should future opportunities arise in the US, Saab stands ready to support production from Sweden or reinstate US production.” The Saab Barracuda factory was located in the state of North Carolina and employed 39 people. It closed because it lost the US Army's Ultra-Lightweight Camouflage Net System (ULCANS) Increment I contract to a competitor and faced a lack of new opportunities in the US market, the company said. Janes Analysis: Saab's previously announced reorganisation took effect on 1 July. Saab eliminated its two service-oriented business areas and moved their activities into its four remaining business areas. Already a Janes customer? Read more HERE.

Industry Movements

Cobham makes bid for Ultra Electronics – 26 Jul

Cobham Group has submitted a non-binding offer to acquire fellow UK-based company Ultra Electronics for GBP2.6 billion (USD3.6 billion) in cash, Ultra announced on 23 July. Ultra said its board is “minded to recommend” the bid to its shareholders but first wants to resolve “other terms and arrangements”, including the establishment of unspecified national security safeguards. “Accordingly, the board will engage in discussions with Cobham to explore the proposal in further detail,” Ultra said. Ultra wants Cobham to firm up its bid by 20 August, although the “put up or shut up” deadline could be extended. Janes Analysis: Ultra generated revenue of GBP404.5 million in the first half of fiscal year (FY) 2021, down 2.1% overall from the same period in FY 2020 but up 4.7% organically, the company reported on 19 July. Its underlying operating profit totalled GBP62.2 million. Already a Janes customer? Read more HERE.

Huntington Ingalls to buy Alion Science and Technology – 7 Jul

US shipbuilder Huntington Ingalls Industries (HII) has agreed to acquire Alion Science and Technology for USD1.65 billion in cash to enhance its capabilities in such growing areas as artificial intelligence, big data, C5ISR, electronic warfare (EW), and training and simulation, HII announced on 6 July. Alion's technology will help HII's platforms meet the US Navy's (USN's) requirement for a more agile, connected, integrated, and protected force, according to the shipbuilder. “The future of the navy is going to be platforms plus, and we need to be engaged in the plus side of this to make it successful,” HII president and CEO Mike Petters told analysts. “The last thing we need to do is to continue to try to build the navy of the past.” Already a Janes customer? Read more HERE.

Artificial intelligence firms Shield AI, Heron Systems join forces – 26 Jul

Shield AI announced on 22 July that it has acquired Heron Systems, bringing together two US software companies that are developing artificial intelligence (AI) pilots for military aviation. “Together, Shield AI and Heron will accelerate the deployment of advanced AI pilots to legacy and future military aircraft – an urgent and necessary step towards achieving national security priorities and remaining credible in the face of sophisticated peer countries,” the announcement said. Heron Systems made headlines last year when its AI software defeated a human US Air Force F-16 pilot 5-0, as well as five other AI pilots, during the US Defense Advanced Research Projects Agency's (DARPA's) AlphaDogfight Trials. “Heron has developed the most advanced AI pilot for fighter aircraft in the United States,” Shield AI co-founder and CEO Ryan Tseng said. Janes Analysis: Shield AI raised USD90 million from US venture capital firm Point72 Ventures and other investors in February, saying it would use the money to integrate its Hivemind AI software into additional defence platforms beyond its Nova reconnaissance small UAS. Already a Janes customer? Read more HERE.

RENK finishes buying L3Harris propulsion business – 8 Jul

German transmission manufacturer RENK has completed its previously announced acquisition of L3Harris Technologies' Combat Propulsion System (CPS) business for USD400 million, RENK said on 6 July. Ted Trzesniowski, CPS' general manager, has been named CEO of the Muskegon, Michigan-based business, which is now called RENK America. RENK plans to retain L3Harris' nearly 400 employees, who make engines and transmissions for tracked and wheeled military vehicles. The then-CEO of RENK, Florian Hofbauer, said in March, when the transaction was unveiled, that the CPS acquisition would give his company a strong presence in the US armoured vehicle market and position it to play a significant role in the US Army's new Next-Generation Combat Vehicle programme. Already a Janes customer? Read more HERE.

Israel's SK Group, Plasan buy Greece's ELVO – 7 Jul

Israeli defence businesses SK Group and Plasan announced on 6 July that they have jointly acquired Greek military vehicle manufacturer ELVO, expanding their European footprint. The new owners plan to invest in ELVO by improving its infrastructure and technology and “recruiting highly skilled personnel for key positions”, said Orly Katsav, ELVO's chairwoman and SK's deputy chairwoman. ELVO, which was previously state-owned, builds both wheeled and tracked vehicles, and is also known as Hellenic Vehicle Industry. Dimitrios Angelopoulos, ELVO's general manager, said that SK's development, manufacturing, and marketing experience and Plasan's vehicle protection expertise will strengthen his company's presence in Europe and elsewhere. Janes Analysis: The acquisition announcement came a week before the 13 July start of the Defence Exhibition Athens (DEFEA) trade show, in which ELVO, Plasan, and SK are all scheduled to participate. Already a Janes customer? Read more HERE.

Defence Oversight

India's DRDO develops system to counter micro and mini UAVs – 30 Jul

Indian Minister of State for Defence Ajay Bhatt confirmed on 28 July that the government-run Defence Research and Development Organisation (DRDO) has developed a system designed to detect, track, and neutralise micro and mini unmanned aerial vehicles (UAVs). Janes Analysis: India's DRDO has been collaborating for years with public and private-sector companies as well as technical institutions to develop DEWs, including a 100 kW laser, to meet emerging security challenges in the region.

China passes ‘anti-sanctions' legislation – 11 Jun 2021

China's National People's Congress (NPC) has passed legislation to counter foreign sanctions including those recently introduced by Washington to stem the flow of US technologies and investments to the Chinese military-industrial complex. The move is the latest milestone in China's ‘decoupling' from the United States and its associated efforts to achieve self reliance in military technologies. The NPC said in a statement on 10 June that the new Anti Foreign Sanctions Law will “safeguard national sovereignty, security, and development interests, and protect the legitimate rights and interests of citizens and organisations of our country”.

Japan looks to enhance scrutiny of defence FDI – 23 Jun 2021

Japan is considering a move to further tighten regulations on foreign direct investment (FDI) in strategic-technology areas including defence. The potential move, which could be introduced within the next few months, is aimed at strengthening the protection of indigenous technologies. According to a government proposal, the new regulations would address loopholes in current FDI rules through which foreign investors can place technology-transfer demands on Japanese firms. Local news reports suggest that the proposal would enable the government to scrutinise any potential technology-transfer activity even after foreign firms have completed their investments. Countermeasures for non-compliance could include forcing foreign investors to sell off shares in Japanese companies.

International Affairs

Indonesia reveals USD125 billion military modernisation plan – 1 Jun 2021

A draft regulation from Indonesia’s presidential office has outlined the requirement for investment of USD125 billion in military modernisation through to the mid-2040s. The funding proposal is indicative of Indonesia’s military ambitions and its growing concerns about regional security. The draft regulation – entitled ‘Fulfilling the Defence and Security Equipment Needs of the Ministry of Defence and Indonesian Armed Forces (TNI) 2020-24’ – was issued recently but requires various approvals from ministries and the House of Representatives before enactment. The investment plan also highlights Indonesia’s continuing dependency on foreign loans.

Japan, Ukraine move towards defence equipment agreement – 3 Jun 2021

Japan and Ukraine are moving closer to finalising a defence equipment and technology agreement that will facilitate closer co-operation between the two countries, Janes understands. The potential alliance is regarded in Tokyo as part of wider efforts to expand defence industrial ties with a view to exports and joint research projects. Ukraine also views the arrangement as an export opportunity. The latest round of bilateral talks towards the defence agreement were held in Kiev on 1 June, led by Roman Mashovets, the deputy head of the Ukrainian presidential office, and Takashi Kurai, Japan's ambassador to Ukraine.

China, Russia outspend US on defence, US general says – 11 Jun 2021

The US Department of Defense (DoD) and the US Intelligence Community (IC) have concluded that China and Russia collectively spend more on defence than the United States does, according to Army General Mark Milley, chairman of the Joint Chiefs of Staff. “At an unclassified level, I would tell you that combined, the Russian and Chinese budgets exceed our budgets if all the cards are put on the table,” said Gen Milley. “Both governments do not put all their cards on the table when it comes to their budget. It's a very difficult thing to discern that which is being spent on their defence versus other priorities.”

Technology Updates

Thailand takes delivery of Norinco VN-16 AAVs – 2 Jun 2021

The Royal Thai Navy (RTN) has confirmed that it has taken delivery of an initial three Norinco-produced VN-16 amphibious assault vehicles (AAVs) from China. An RTN spokesperson confirmed the procurement on 1 June, stating that the three vehicles, which will be operated by the Royal Thai Marine Corps (RTMC), cost THB398.14 million (USD13 million). The spokesperson also said that the acquisition constituted the first phase of the RTMC's AAV procurement programme, indicating additional purchases of the VN-16.

Saab to integrate Varjo mixed-reality technology into Gripen E/F simulators – 8 Jun 2021

Saab's Head of Tactical Environment Simulation and Visualisation Stefan Furenbäck said in a statement, “We are finalising the basic functionalities in our own simulator so that we can use Varjo's XR-3 headsets in all our flight simulators. We've previously carried out smaller, independent prototype-like projects but now we're integrating them into our actual flight simulators.” A key aspect of this, according to Furenbäck, is that Varjo's technology had allowed pilots to be able to read text and see small details when using the technology, which had been a common concern with other simulator systems.

Japan reveals digital development plan for F-X fighter – 21 Jun 2021

The Japanese Ministry of Defense (MoD) has outlined a commitment to apply digital engineering techniques and technologies in the development of the country's next-generation F-X fighter aircraft. The MoD told Janes that the move to introduce such digital methods is part of a wider effort on the F-X programme to achieve enhancement in quality and efficiency across the design, development, production, and sustainment of the aircraft. The MoD said the effort is also aligned with modern fighter aircraft practices in countries such as the United States and the United Kingdom, from companies which are expected to be involved in the development of the F-X fighter.

Industry Movements

Thales, Atos form JV for big data, AI – 2 Jun 2021

French technology companies Atos and Thales have created a joint venture (JV) called Athea to provide big data and artificial intelligence (AI) capabilities to public and private sector clients in the defence, intelligence, and security communities, according to an Atos announcement. “The joint venture will pool the companies’ investments, expertise, and experience to respond quickly and efficiently to demand for innovation,” Atos said on 27 May. The JV will build on the work that Atos and Thales have done on the Artemis big data programme since 2017 for the French Ministry of Armed Forces. Applications already developed by Artemis perform tasks such as exploiting massive amounts of heterogeneous intelligence data and monitoring soldier health.

Chemring buys AI firm Cubica – 4 Jun 2021

UK-based Chemring Group has acquired artificial intelligence (AI) and data fusion company Cubica Technology, bolstering the capabilities of its Roke engineering business, Chemring announced on 3 June. Cubica “complements Roke's existing capabilities in cyber security, intelligence, and electronic warfare, offering customers a force multiplier for their missions”, Chemring said. Cubica's products include TensorGrid, which rapidly searches large amounts of imagery, and Omniscient, which fuses information from multiple sensors in real time. The small company mainly serves the defence and security sectors, and its clients include BAE Systems, Leonardo, and the UK Defence Science and Technology Laboratory (Dstl).

CAE forms joint venture with Indian tribal firm – 17 Jun 2021

CAE USA, a subsidiary of Canada-based simulation and training provider CAE, has partnered with American Indian tribally owned company Potawatomi Training to pursue contracts from the US Department of Defense and other US federal agencies, according to a recent announcement. CAE USA and Potawatomi Training, which is owned by the Wisconsin-based Forest County Potawatomi tribe, will co-ordinate their activities through a new joint venture (JV) called PTC Solutions JV, the 25 May announcement says. Potawatomi Training's small-business status will allow the JV to compete for contracts set aside for small businesses.

Cobham spins off electronics unit – 18 Jun 2021

UK-based defence and aerospace company Cobham Group has turned its electronics business, Cobham Advanced Electronic Solutions, into a standalone entity called CAES. “This new structure has empowered CAES's board and management team to implement a strategy to deliver improved operational performance and programme execution throughout the business,” CAES said on 17 June while announcing that former US Defense Secretary Mark Esper has joined its new board of directors. CAES (pronounced ‘Case‘) remains owned by US private equity firm Advent International, which acquired Cobham in January 2020.

Patria unveils reorganization – 18 Jun 2021

Patria Group is replacing five business units with four new ones to achieve efficiency and better serve its customers, the Finnish defence and aerospace company announced on17 June. Under the new structure, the Finland Division will focus on managing accounts for the Finnish Defence Forces, while the Global Division will do the same for non-Finland customers. The Operations unit will oversee the Air, Land, and System & Integration production lines. The Portfolio unit will be responsible for six product and service lines – C5ISTAR, Fleet Availability, Life Cycle Management, Mission Capability, New Products and Services, and Training & User Support.

Defence Oversight

Australia reviews definition of local defence company 

07th June: The Australian Department of Defence (DoD) is reviewing the definition of the term ‘Australian defence company' as part of wider efforts to strengthen the way it engages with local industry. The move is a reflection of local industry concerns about the continuing dominance of foreign-owned subsidiaries amid a military modernisation programme budgeted by the government at AUD270 billion (USD209 billion). A spokesperson from the DoD told Janes that the review of the definition is intended to enhance the country's defence industrial participation policy, the Australian Industry Capability (AIC) programme, and related moves to update defence contracting guidelines. 

China passes ‘anti-sanctions' legislation 

11th June: China's National People's Congress (NPC) has passed legislation to counter foreign sanctions including those recently introduced by Washington to stem the flow of US technologies and investments to the Chinese military-industrial complex. The move is the latest milestone in China's ‘decoupling' from the United States and its associated efforts to achieve self reliance in military technologies. The NPC said in a statement on 10 June that the new Anti Foreign Sanctions Law will “safeguard national sovereignty, security, and development interests, and protect the legitimate rights and interests of citizens and organisations of our country”. 

Japan looks to enhance scrutiny of defence FDI 

23rd June: Japan is considering a move to further tighten regulations on foreign direct investment (FDI) in strategic-technology areas including defence. The potential move, which could be introduced within the next few months, is aimed at strengthening the protection of indigenous technologies. According to a government proposal, the new regulations would address loopholes in current FDI rules through which foreign investors can place technology-transfer demands on Japanese firms. Local news reports suggest that the proposal would enable the government to scrutinise any potential technology-transfer activity even after foreign firms have completed their investments. Countermeasures for non-compliance could include forcing foreign investors to sell off shares in Japanese companies. 

International Affairs

Indonesia reveals USD125 billion military modernisation plan 

01st June: A draft regulation from Indonesia’s presidential office has outlined the requirement for investment of USD125 billion in military modernisation through to the mid-2040s. The funding proposal is indicative of Indonesia’s military ambitions and its growing concerns about regional security. The draft regulation – entitled ‘Fulfilling the Defence and Security Equipment Needs of the Ministry of Defence and Indonesian Armed Forces (TNI) 2020-24’ – was issued recently but requires various approvals from ministries and the House of Representatives before enactment. The investment plan also highlights Indonesia’s continuing dependency on foreign loans. 

Japan, Ukraine move towards defence equipment agreement 

03rd June: Japan and Ukraine are moving closer to finalising a defence equipment and technology agreement that will facilitate closer co-operation between the two countries, Janes understands. The potential alliance is regarded in Tokyo as part of wider efforts to expand defence industrial ties with a view to exports and joint research projects. Ukraine also views the arrangement as an export opportunity. The latest round of bilateral talks towards the defence agreement were held in Kiev on 1 June, led by Roman Mashovets, the deputy head of the Ukrainian presidential office, and Takashi Kurai, Japan's ambassador to Ukraine. 

China, Russia outspend US on defence, US general says 

11th June: The US Department of Defense (DoD) and the US Intelligence Community (IC) have concluded that China and Russia collectively spend more on defence than the United States does, according to Army General Mark Milley, chairman of the Joint Chiefs of Staff. “At an unclassified level, I would tell you that combined, the Russian and Chinese budgets exceed our budgets if all the cards are put on the table,” said Gen Milley. “Both governments do not put all their cards on the table when it comes to their budget. It's a very difficult thing to discern that which is being spent on their defence versus other priorities.” 

Technology Updates

Thailand takes delivery of Norinco VN-16 AAVs 

02nd June: The Royal Thai Navy (RTN) has confirmed that it has taken delivery of an initial three Norinco-produced VN-16 amphibious assault vehicles (AAVs) from China. An RTN spokesperson confirmed the procurement on 1 June, stating that the three vehicles, which will be operated by the Royal Thai Marine Corps (RTMC), cost THB398.14 million (USD13 million). The spokesperson also said that the acquisition constituted the first phase of the RTMC's AAV procurement programme, indicating additional purchases of the VN-16.

Saab to integrate Varjo mixed-reality technology into Gripen E/F simulators 

08th June: Saab's Head of Tactical Environment Simulation and Visualisation Stefan Furenbäck said in a statement, “We are finalising the basic functionalities in our own simulator so that we can use Varjo's XR-3 headsets in all our flight simulators. We've previously carried out smaller, independent prototype-like projects but now we're integrating them into our actual flight simulators.” A key aspect of this, according to Furenbäck, is that Varjo's technology had allowed pilots to be able to read text and see small details when using the technology, which had been a common concern with other simulator systems. 

Japan reveals digital development plan for F-X fighter 

21st June: The Japanese Ministry of Defense (MoD) has outlined a commitment to apply digital engineering techniques and technologies in the development of the country's next-generation F-X fighter aircraft. The MoD told Janes that the move to introduce such digital methods is part of a wider effort on the F-X programme to achieve enhancement in quality and efficiency across the design, development, production, and sustainment of the aircraft. The MoD said the effort is also aligned with modern fighter aircraft practices in countries such as the United States and the United Kingdom, from companies which are expected to be involved in the development of the F-X fighter.

Industry Movements

Thales, Atos form JV for big data, AI 

02nd June: French technology companies Atos and Thales have created a joint venture (JV) called Athea to provide big data and artificial intelligence (AI) capabilities to public and private sector clients in the defence, intelligence, and security communities, according to an Atos announcement. “The joint venture will pool the companies’ investments, expertise, and experience to respond quickly and efficiently to demand for innovation,” Atos said on 27 May. The JV will build on the work that Atos and Thales have done on the Artemis big data programme since 2017 for the French Ministry of Armed Forces. Applications already developed by Artemis perform tasks such as exploiting massive amounts of heterogeneous intelligence data and monitoring soldier health. 

Chemring buys AI firm Cubica 

04th June: UK-based Chemring Group has acquired artificial intelligence (AI) and data fusion company Cubica Technology, bolstering the capabilities of its Roke engineering business, Chemring announced on 3 June. Cubica “complements Roke's existing capabilities in cyber security, intelligence, and electronic warfare, offering customers a force multiplier for their missions”, Chemring said. Cubica's products include TensorGrid, which rapidly searches large amounts of imagery, and Omniscient, which fuses information from multiple sensors in real time. The small company mainly serves the defence and security sectors, and its clients include BAE Systems, Leonardo, and the UK Defence Science and Technology Laboratory (Dstl). 

CAE forms joint venture with Indian tribal firm 

17th June: CAE USA, a subsidiary of Canada-based simulation and training provider CAE, has partnered with American Indian tribally owned company Potawatomi Training to pursue contracts from the US Department of Defense and other US federal agencies, according to a recent announcement. CAE USA and Potawatomi Training, which is owned by the Wisconsin-based Forest County Potawatomi tribe, will co-ordinate their activities through a new joint venture (JV) called PTC Solutions JV, the 25 May announcement says. Potawatomi Training's small-business status will allow the JV to compete for contracts set aside for small businesses. 

Cobham spins off electronics unit 

18th June: UK-based defence and aerospace company Cobham Group has turned its electronics business, Cobham Advanced Electronic Solutions, into a standalone entity called CAES. “This new structure has empowered CAES's board and management team to implement a strategy to deliver improved operational performance and programme execution throughout the business,” CAES said on 17 June while announcing that former US Defense Secretary Mark Esper has joined its new board of directors. CAES (pronounced ‘Case‘) remains owned by US private equity firm Advent International, which acquired Cobham in January 2020. 

Patria unveils reorganization 

18th June: Patria Group is replacing five business units with four new ones to achieve efficiency and better serve its customers, the Finnish defence and aerospace company announced on17 June. Under the new structure, the Finland Division will focus on managing accounts for the Finnish Defence Forces, while the Global Division will do the same for non-Finland customers. The Operations unit will oversee the Air, Land, and System & Integration production lines. The Portfolio unit will be responsible for six product and service lines – C5ISTAR, Fleet Availability, Life Cycle Management, Mission Capability, New Products and Services, and Training & User Support. 

Defence Budgets:

Support in Japan grows for shift in defence budget strategy

26th May: Political support in Japan appears to be growing in favour of ramping up the country’s defence budget amid mounting concerns over China’s regional assertiveness and military modernisation. Japan’s ruling Liberal Democratic Party (LPD) and Defence Minister Nobuo Kishi have given strong indications recently that they are prepared to support a shift in the country’s defence budget strategy. Prime Minister Suga Yoshihide has also pledged a commitment to support enhancements in the country’s defence capability.

New Zealand’s defence budget returns to growth

24th May: New Zealand has announced a strong increase in its defence budget for 2021–22, reflecting the country’s robust economic recovery to the Covid-19 pandemic. Budgetary documents issued by the New Zealand Treasury on 20 May show that the total military expenditure for 2021–22 will be NZD5.18 billion (USD3.7 billion), a year-on-year increase of nearly 11% over the ‘estimated actual’ defence budget for 2020–21, which was NZD4.68 billion.

Australia on track with defence funding plans

13th May: Australia’s defence budget for fiscal year (FY) 2021/22 will climb year on year by more than 5% in nominal terms to AUD44.61 billion (USD34.5 billion), according to Janes analysis. The increase is broadly aligned with forecasts previously announced by Canberra and is indicative of the country’s strong economic response to the Covid-19 pandemic. Budgetary documents issued by the government on 11 May show that the 2021/22 defence expenditure includes capability acquisition funds of AUD15.76 billion, an increase of nearly 25% over the AUD12.65 billion allocation in 2020/21. Capability sustainment funding in 2021/22 climbs 6% to AUD12.95 billion and the workforce allocation increases 3% to AUD13.85 billion.

Exports and Offsets:

Australian defence exports fall amid Covid-19 challenges

25th May: The value of permits issued to Australian defence exporters declined sharply during the first half of financial year (FY) 2020–21: a trend almost certainly caused by challenges related to the Covid-19 pandemic. Recently updated data published by the Australian Department of Defence’s (DoD’s) Defence Export Controls (DEC) branch shows that by the end of the first half of 2020–21 – or the end of calendar year 2020 – the estimated value of export permits was AUD1.33 billion (USD1 billion).

Japan looks to introduce finance system for defence exports

18th May: The government of Japan is reportedly looking into the possibility of supporting defence exports through the provision of low-interest loans. The plan would involve the state-owned Japan Bank for International Cooperation (JBIC) providing credit to potential customers. Government sources cited by Japanese media said the loans would enable developing countries with a shortfall in funding to procure defence equipment from Japan.

Honeywell to pay USD13 million to settle alleged export violations

4th May: US-based Honeywell International has agreed to pay USD13 million to settle allegations that it illegally sent technical defence drawings to China, which is barred from receiving such sensitive information, according to the US State Department. The exported material “contained engineering prints showing dimensions, geometries, and layouts for manufacturing castings and finished parts for multiple aircraft, gas turbine engines, and military electronics”, the department said on 3 May. The drawings, whose transfer “harmed US national security”, showed engine parts for the F-22 and F-35 fighters, the B-1B bomber, and the CTS800 helicopter engine.

Boeing outlines offset commitment on Indian P-8I programme

7th May: Boeing has confirmed that its anticipated sale of additional Boeing P-8I Neptune maritime multimission aircraft (MMA) to India will be accompanied by an offset obligation worth 30% of the value of the sale. The P-8I sale was announced by the US Defense Security Cooperation Agency (DSCA) in late April. The deal, which has been approved by the US State Department and will proceed through the US government’s Foreign Military Sale (FMS) mechanism, covers six aircraft, equipment, spares, and support for an estimated USD2.42 billion.

Indonesia looks to enhance enforcement of offsets 

24th May: Indonesia has pledged to enhance the enforcement of defence-industrial co-operation guidelines, with the aim to strengthen local manufacturing and boost the country’s economic response to the Covid-19 pandemic. The Ministry of Defence (MoD) in Jakarta said that the requirement is also aligned with President Joko Widodo’s stated intention to ensure that the country’s “defence budget supports investment” in Indonesia.

Market Strategy:

Japan, Poland look to expand defence equipment ties

20th May: Japan and Poland have pledged to expand defence co-operation including potential joint work on defence equipment and technologies, the Ministry of Defense (MoD) in Tokyo has told Janes. A spokesperson said on 19 May that expanded co-operation will be framed around an ‘action plan’ for 2021–25 signed recently by the two governments that calls for deeper bilateral dialogue on defence. “Japan and Poland will make efforts to foster dialogue [between] high-level officials about matters of national security and defence co-operation, including defence equipment and technology,” said the spokesperson, adding that the action plan also provides a framework for the two countries to sign a formal defence co-operation accord. However, the spokesperson declined to comment on potential areas of co-operation on defence equipment and technologies.

Spanish companies join forces in missile systems initiative

12th May: Three Spanish companies are joining forces to work on developing missile systems and other high-performance guided munitions for home and export markets. The partnership, announced on 10 May, will involve Escribano Mechanical & Engineering and GMV linking up with Sener Aeroespacial, which created its own specialist missile division, SMS, earlier this year. “The combined capabilities of the three companies will result in a relevant industrial player in the missile systems sector that can address the needs of the Ministry of Defence and the Armed Forces, and represent national interests in international co-operation projects,” said Escribano in a statement.

Saudi Arabia revises Saudisation regulation

26th May: Saudi Arabia's Ministry of Human Resources and Social Development (MHRSD) has released a revised version of the Nitaqat, or Saudisation, regulations designed to increase the participation of Saudi nationals in the workforce. Under the newly revised regulations, the country is aiming to provide 340,000 more jobs by 2024. New features of the programme include merging some similar work activity types together to simplify navigation of the administration process; using a linear formula to calculate a company's obligation under the programme; and providing a clear and transparent vision for the next three years to assist in stabilising the country's private sector institutions.

Industry Movements:

China’s Chengdu Aircraft to build UAV industry park

10th May: China’s Chengdu Aircraft Industry Group (CAIG) – a subsidiary of the state-owned Aviation Industry Corporation of China (AVIC) – has signed a deal with the provincial government of Sichuan to develop an industrial park in the region, dedicated to unmanned aerial vehicles (UAVs). A statement by the Sichuan government said the new facility will be located in Zigong, in the centre of the province, and will focus on both military and commercial UAVs. “We will develop a world-class manufacturing industry cluster,” said the statement.

Leidos to finish buying ship design firm Gibbs & Cox in May

6th May: US-based government services provider Leidos expects to complete its acquisition of naval ship design business Gibbs & Cox later this month, now that the USD380 million deal has cleared the US anti-trust regulatory process, Leidos chairman and CEO Roger Krone confirmed on 4 May. Leidos had previously indicated that the transaction would close sometime in the April to early July fiscal quarter. It has said the purchase, disclosed in February, would enhance its existing maritime capabilities, position it to participate in the growing unmanned maritime market, and enable Gibbs & Cox to accelerate its expansion in the undersea domain.

Triumph finishes sale of three aircraft structure sites

11th May: US-based Triumph Group has completed its previously announced sale of three aircraft structure facilities to US private equity firm Arlington Capital Partners, Triumph announced on 10 May. The facilities in Red Oak, Texas; Milledgeville, Georgia; and Rayong, Thailand, cover 1.8 million sq ft (167,225 m 2 ) of factory space and employ about 900 people. Arlington has combined the three facilities into a new business called Qarbon Aerospace, which will be led by former Triumph executive vice-president Pete Wick.

Teledyne finishes buying FLIR Systems

18th May: Industrial conglomerate Teledyne Technologies has completed its previously announced acquisition of sensor manufacturer FLIR Systems for USD8.2 billion, according to the two US-based businesses. The 14 May closing came a day after the shareholders of both the companies endorsed the transaction. “We appreciate the support from our stockholders, and I am delighted to welcome FLIR to the Teledyne family,” said Robert Mehrabian, Teledyne’s executive chairman. The deal also received approval from anti-trust regulators in six countries: Canada, China, Germany, Poland, South Korea, and the United States.

Airpower:

Indonesia looks to restart work on KF-21 project

KAI prepares smart factory for KF-21 fighter

Defence Industry Strategy:

QinetiQ reports ‘strong’ performance in Q4

Turkey to give credit support for investments in defence sector

14 Apr: Turkey’s Presidency of Defence Industries (SSB) will continue giving credit support for investments in the defence sector this year, according to a statement released by the procurement agency on its website on 10 April. The size of the credit support that has been given to companies and projects for investments and development activities carried out by the SSB and initiated in 2020 will reach TRY300 million (USD36.8 million). 

BAE Systems plans no major revamp after US acquisitions

US eyes distant contractor support for Afghan forces

23 Apr: The US military intends to withdraw its contractors from Afghanistan as part of its planned troop pullout. However, it is looking at how private sector personnel could continue to support Afghan forces from afar, said Marine Corps General Kenneth “Frank” McKenzie, the commander of US Central Command, on 22 April. For example, there could be “a remote, televised way” for contractors to help Afghans perform aircraft maintenance, he added. 

UK-India council pursues carrier opportunities

13 Apr: The UK-India Business Council (UKIBC) has stated an intention to support efforts towards bilateral co-operation on submarines and aircraft carriers with the aim to meet future capability requirements in the Indian Navy (IN). The UKIBC’s 2021 advocacy report – published on 12 April – said the council intends to collaborate with private-sector and state-owned defence shipyards in India during the coming year to pursue such opportunities. 

US committee proposes co-ordinated exports controls on China

12 Apr: Leaders of the United States Senate Foreign Relations Committee have proposed legislation seeking to counter China’s efforts to develop advanced military technologies. Among a range of proposed diplomatic and strategic initiatives, the new law – entitled the Strategic Competition Act of 2021 – looks to impede China’s military-technology progression through greater co-operation between the US and its allies. 

US adds Chinese supercomputing groups to its Entity List

12 Apr: The United States has added seven Chinese supercomputing enterprises to its trading blacklist over their alleged involvement in developing military systems for People’s Liberation Army (PLA). The move is the first by the Joe Biden administration to restrict China’s efforts to modernise its military through its military civil fusion (MCF) strategy. 

Industry Movements

US government widens probe of Raytheon pricing

28 Apr: The US Department of Justice (DoJ) has expanded its investigation into pricing practices at Raytheon Technologies Corporation’s Missiles & Defense (RMD) business, according to the US-based parent company. The DoJ, which has been looking into “defective pricing” for three contracts that RMD entered into from 2011 to 2013, recently widened its review to include a 2017 RMD contract, company officials said on 27 April. 

Leonardo to buy stake in Hensoldt

27 Apr: Italian defence and aerospace company Leonardo has agreed to acquire a 25.1% stake in German defence sensor manufacturer Hensoldt, saying the transaction will enhance co-operation between the two companies. Leonardo will pay EUR606 million (USD732 million) in cash to become Hensoldt’s largest shareholder alongside German state-owned development bank Kreditanstalt für Wiederaufbau (KfW), which agreed in March to buy a 25.1% stake for EUR450 million. KfW and Leonardo will each get to propose two candidates to Hensoldt’s supervisory board. 

Honeywell eyes more acquisitions

26 Apr: Honeywell International, which has purchased several companies recently, including two with defence applications, is not done with its shopping spree, the head of the US-based industrial conglomerate said on 23 April. While company valuations are “not exactly low”, sensible acquisition opportunities remain plentiful, said Darius Adamczyk, Honeywell’s chairman and CEO. 

KDB agrees sale of Hanjin Heavy Industries

16 Apr: The Korea Development Bank (KDB) has reached a deal to sell off its controlling stake in Hanjin Heavy Industries and Construction (HHIC), one of the country’s most prominent naval shipbuilders. KDB said on 15 April that it will sell its 66.85% shareholding in HHIC to a consortium led by the Dongbu Corporation, a civil engineering and construction group. It did not reveal the value of the transaction. 

Babcock to divest non-core businesses

14 Apr: Babcock International plans to streamline itself by divesting several businesses that are not central to its strategy, the UK-based engineering company announced on 13 April. Babcock said it expects to conduct the divestitures over the next year and generate net proceeds of at least GBP400 million (USD550 million). The company has already agreed to sell its oil and gas aviation business to offshore helicopter operator CHC Group. 

China prioritises defence reforms

22 Mar: The Communist Party of China (CPC) has outlined the requirement for deepened reforms in the country’s defence sector. The CPC said on 21 March through its official mouthpiece – the People’s Daily - that reforms during the 13th Five Year Plan (FYP), which ended in 2020, were successful in strengthening national defence but that such efforts needed to intensify during the new 14th FYP, which starts this year.

Thailand, China progress plan to establish joint MRO facility

18 Mar: Thailand and China are progressing plans to establish a maintenance, repair, and overhaul (MRO) facility that would support the Royal Thai Armed Forces’ expanding inventories of Chinese-produced military equipment. The Thai government said in a statement that the plan was the subject of talks in Bangkok on 16 March between Thailand’s permanent defence secretary General Nat Intaracharoen and China’s military attache to Thailand Major General Wu Xiaoyi. It added that the proposed facility would be intended to provide “efficient and comprehensive maintenance support” for a range of military platforms in operation in Thailand.

Seoul reveals ‘Buy Korea Defense’ plan

12 Mar: South Korea’s Defense Acquisition Program Administration (DAPA) has revealed plans to introduce a defence procurement policy that formally prioritises local sourcing over imports. DAPA said that the ‘Buy Korea Defense’ (BKD) scheme was consistent with the objectives of the recently introduced Defense Industry Development Act. Details of the BKD, it said, were presented at an 11 March meeting of a new DAPA council set up to push through reforms under the legislation.

Thailand, Pakistan sign defence MOU

09 Mar: Thailand and Pakistan have signed an agreement to support expanded collaboration on defence trade and related defence industrial activity. The memorandum of understanding (MOU) on defence co-operation was signed on 5 March in Bangkok by Gen Nat Intaracharoen, Thailand’s permanent secretary of defence, and Asim Iftikhar Ahmad, Pakistan’s ambassador to Thailand, who represented Pakistan’s Ministry of Defence (MoD).

Australia launches enterprise initiative for OPV programme

08 Mar: Australia has launched initiatives to support enhanced industrial collaboration in the programme to build Arafura-class offshore patrol vessels (OPVs) for the Royal Australian Navy (RAN).

The Department of Defence (DoD) in Canberra said on 5 March that it had established an OPV Enterprise initiative and a related systems programme office at the Henderson maritime precinct in Western Australia, where the majority of the vessels were being constructed. The DoD said that the OPV Enterprise “brings together Commonwealth and defence industry teams under one roof, to build and sustain the RAN’s new Arafura-class OPVs”.

Malaysia prepares new defence industry policy

04 Mar: Malaysia is preparing to launch a national defence industry policy to boost efforts towards self-reliance, the country’s defence minister Ismail Sabri Yaakob has stated. The new ‘National Defence and Security Industry Policy’ is currently being drawn up, he said, to position Malaysia as producer of military platforms, with the aim to reduce reliance on imports and spur the national economy. However, the minister indicated that the plan is reliant on partnerships with foreign industry, who would be expected to transfer technologies and knowhow.

UK signals tilt towards Asia-Pacific

02 Mar: The United Kingdom is aiming to further expand its presence in the Asia-Pacific over the coming few years by deepening its relationships with regional countries. The commitment is a response to growing Asian security concerns and is intended to support increased efforts to expand defence and security trade links in the region and related industrial collaboration activity. Such expansion is also being targeted on the back of recent growth in UK defence sales to the Asia-Pacific.

UK releases Defence and Security Industrial Strategy

23 Mar: The UK has published its Defence and Security Industrial Strategy DSIS, heralding the document as “an ambitious plan to re-energise defence and security sectors” by “establishing a more productive and strategic relationship between government and industry”. The review leading to the DSIS commenced in March 2020 and the document was published on 23 March.

Swedish defence exports remain robust in 2020

22 Mar: Swedish exports of military equipment totalled SEK16.3 billion (USD1.9 billion) in 2020, which was unchanged from the previous year but was still at a historically high level, according to Sweden’s Inspectorate for Strategic Products (ISP). The initial delivery of Saab GlobalEye surveillance planes to the United Arab Emirates (UAE) helped drive last year’s results, the ISP said on 18 March, according to a Google translation. Other major contributors included the sale of Saab Gripen fighters to Brazil, Saab’s collaboration with Boeing on the US Air Force’s new T-7A Red Hawk trainer jet, and the delivery of an airborne radar system to Pakistan.

UK Defence Command Paper: UK sheds light on industrial strategy objectives

22 Mar: The UK has cast more light on its future approach to defence and security procurement, industrial co-operation, exports and the defence of supply chains in the Defence Command Paper (Defence in a Competitive Age) of 22 March. The Ministry of Defence policy document outlined specific measures – ranging from programme decisions to force structures – following the publication of the UK government’s Integrated Review of Security, Defence, Development and Foreign Policy on 16 March.

UK Integrated Review: UK abandons ‘competition by default’ stance

16 Mar: The United Kingdom will move away from a long-standing position of “open competition by default” when procuring defence and security materiel and will instead prioritise local solutions, the UK government announced in the long-awaited Integrated Review of Security, Defence, Development and Foreign Policy published on 16 March. The strategy document – which aims to chart the course the UK intends to take in the world following its departure from the European Union at the start of 2020 and the completion of an exit transition period at the start of 2021 – states that the country will shift its approach to defence and security collaboration with foreign partners as well as its approach to acquisition and export.

US lawmakers to scrutinise threats to defence supply chain

11 Mar: The US House Armed Services Committee (HASC) has formed a special panel to identify threats to the US defence industry’s supply chain and recommend legislation to minimise those vulnerabilities. The creation of the bipartisan Defense Critical Supply Chain Task Force comes in response to congressional concerns that the US defence industry is too dependent on foreign countries, especially China, for key parts and materials. Those worries intensified early in the coronavirus pandemic last year, when the United States had trouble obtaining urgently needed Chinese-made medical supplies. Lawmakers fear another pandemic-like emergency, or a heated conflict with China could cut off vital supplies to the US defence industry.

Saab revamps business structure

19 Mar: Saab is eliminating its two service-oriented business areas and moving their activities into its four remaining business areas as part of a reorganisation that takes effect on 1 July, the Swedish defence and aerospace company announced on 18 March. The Industrial Products & Services (IPS) and Support & Services (S&S) business areas will be integrated into the Aeronautics, Dynamics, Kockums, and Surveillance business areas. Saab said the consolidation will simplify interaction with customers and remove barriers to internal collaboration.

Rolls-Royce advances one potential divestiture, pauses another

15 Mar: Rolls-Royce is making progress on the potential sale of Spanish subsidiary Industria de Turbo Propulsores (ITP Aero), but has hit a snag with its proposed divestiture of Norway-based Bergen Engines, according to the British engine manufacturer. Rolls-Royce, which announced the Bergen sale in early February, said on 11 March that it has “temporarily paused” the transaction at the request of the Norwegian government, which is considering blocking the proposed EUR150 million (USD179.7 million) deal due to national security concerns.

Lumibird to buy Saab laser rangefinder unit

05 Mar: Power management company Eaton has agreed to acquire Cobham Group’s Cobham Mission Systems (CMS) business for USD2.8 billion, expanding its defence portfolio, Eaton announced on 1 February 2021. CMS makes air-to-air refuelling systems and has delivered more than 2,000 of them to defence customers for fixed-wing and rotary-wing aircraft. Its other military products include actuation devices and environmental control systems. 

BAE buys electronics firm PPM

05 Mar: BAE Systems has acquired electronics developer Pulse Power and Measurement Limited (PPM), whose technology could benefit military and security customers by increasing the speed and ease of sharing large volumes of data over networks, the two British companies said on 4 March. According to a joint BAE-PPM news release, PPM’s radio frequency technology converts data-carrying radio waves into light so they can be sent over fibre optics. This makes data immune to magnetic or radio interference and delivers stronger signals than transmissions over traditional cables, the release says.

Tethered drone firm Sky Sapience gets new owner

03 Mar: US-based communications technology business COMSovereign has acquired Israel’s Sky Sapience, which makes tethered unmanned rotorcraft for intelligence, surveillance, and reconnaissance (ISR) missions, COMSovereign announced on 1 March. COMSovereign said that combining its 4G and 5G wireless communications technology with Sky Sapience’s HoverMast family of quadcopters will create a dual-purpose platform that can enable high-capacity, wireless communications networks in addition to performing ISR.

L3Harris to sell businesses to CAE, RENK for USD1.45 billion

02 Mar: US-based L3Harris Technologies has agreed to sell its Military Training business to Canadian simulation and training company CAE for USD1.05 billion, and its Combat Propulsion Systems (CPS) business and related entities to German transmission manufacturer RENK for USD400 million, L3Harris announced on 1 March. The divestitures are part of an effort to unload businesses that L3Harris does not deem a good fit for the company, which was formed through the merger of L3 Technologies and Harris Corporation in 2019.

Kratos explores ‘larger’ acquisitions

01 Mar: Kratos Defense & Security Solutions, whose acquisitions have tended to involve small businesses, is considering a “larger” purchase because of newly available opportunities, according to the US-based company’s president and CEO Eric DeMarco. In recent months, “a number of interesting potential acquisition opportunities have arisen that we believe could uniquely and significantly benefit us, which we're going to be investigating”, said DeMarco on 25 February. “I'm not sure if anything will come out of them, but we're going to be looking at them.”