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Last Updated: Tuesday, 13 September 2005, 21:36 GMT 22:36 UK
Being British aids UK defence firms
By Tim Weber
Business Editor, BBC News website, reporting from DSEI in London

Patria armoured vehicle
Desert camouflage is still 'fashionable'

A sandy brown is definitely the fashionable colour of the moment.

Well, at least in the Excel conference centre, during the four days of Defence Systems and Equipment International (DSEI), the biennial arms fair in London's Docklands.

A fair number of tanks, all-terrain vehicles and uniforms on display come in the colours of the desert - a not so subtle hint at where the world's armies are in combat right now.

This is not a traditional trade fair, though.

Digital army in action

No weapons can be wrapped up and taken away. No handshakes are made over multi-million dollar deals - at least not in public.

ammunition at the Pakistan stand

For soldiers and government officials from more than 60 countries, and the representatives of the arms industry this is a place to see and be seen with the latest in defence technology.

Gun nuts, meanwhile, will go away disappointed.

Yes, pistols and assault rifles are on display, ammunition is carefully lined up, but the two large halls of the Excel centre hold barely enough guns to equip half a battalion.

Instead there are rows upon rows of computer screens to control battle management systems, modern communications gear and surveillance equipment.

Modern armies are going high-tech in a big way. At the stand of the Israeli defence industry, Elbit Systems is giving graphic demonstrations of the "Digital Army in Action" where a rugged laptop is nearly as devastating a force as a 30mm cannon.

'Used by British forces'

For UK firms, selling weapons and related equipment to the world's modern armies is big business.

UAE officers
Delegations from 61 countries have been invited to DSEI

The industry employs about 295,000 people in the UK, says the Defence Analytical Services Agency; about 65,000 of these jobs are guaranteed by exporting weapons and other military equipment.

The industry's biggest customer is the UK's Ministry of Defence, of course.

But the UK brand is a huge bonus when it comes to finding customers abroad.

"If it is used by UK forces, that puts you ahead of the competition straight away," says Chris Pugh-Bevan of Bridgend-based Irvin-GQ, whose 350 workers make parachute systems, aerial delivery systems and search-and-rescue equipment.

The Ministry of Defence demands work to high specifications, and much of the equipment is battle tested - in places as diverse as Sierra Leone, Kosovo and Iraq.

Glasgow-based Thistle Garments recently won a 20m contract to supply waterproof clothing to UK forces, fighting off foreign competition on both quality and price.

As a direct result the company has now been approached by Saudi Arabia and Kuwait, says managing director James Hunter.

War as a selling point

This works both for small and large firms.

soldier at DSEI
The label 'used by British forces' attracts many foreign armies

Istec Services in Stanstead Abbots is a six man outfit designing gun mounts, which can be found on British army Land Rovers for example. Production is outsourced to local firms.

"Our equipment is currently undergoing some extensive and extreme field testing in Iraq," says the company's Richard Banks, who hopes for orders on the back of the deployment.

Britain's defence giant BAE Systems reaps similar benefits.

The company has developed a new turret for armoured fighting vehicles, based on feedback from British forces in Iraq.

"We work closely with the customer," says BAE engineer Colin Stephenson. "The MoD sends us 'subject matter experts' who have just returned from Iraq and they tell us exactly what works and what doesn't work in the turret."

One lesson: Warriors currently can only fire when standing still; the new turret has a stabilised gun that can be fired while the tank is moving.

Another lesson: In Iraqi cities people tend to crowd around British tanks; a turret-mounted, joystick-controlled panoramic sight allows the commander to see exactly what is happening around the vehicle and whether it is safe to move or open the back door.

Dual-use equipment

Much of what is on offer at DSEI could actually be found on any manufacturing trade fair.

It is called 'dual-use' equipment, products that help armies to win and civilians to live.

Domnick Hunter regenerative airfilter
Domnick Hunter says its NBC air filter has 'huge potential'

Hoping to diversify their customer base, defence firms are looking for civilian applications for their products, and vice versa.

Nobel Energetics is an Ayrshire-based maker of explosive charges.

They can be found in bomb fuses, rocket motors and ejector seats of fighter jets, but the tiny explosive charges in its actuators can also be used in fire protection systems and this segment is growing rapidly, says Nobel Energetics' Graham Roos.

Domnick Hunter goes in the other direction. The firm from Gateshead operates in some 25 countries, making air and liquid treatment systems.

The defence business accounts for just 2% of sales, says Domnick Hunter's director Rob Fielding, but the firm's new regenerative NBC filter - to keep the air in buildings and military vehicles free from nuclear, biological and chemical agents - has "huge potential".

Five Nato armies, including the US army, are currently testing the system.

Beru tyre pressure monitor
Beru's Formula One technology is suitable for tanks

Diversification can also smooth over the ups and downs of business cycles.

Beru supplies parts to every Formula 1 motor racing team. Outside the racing season business gets a bit slow, and managing director John Bailey hopes to sell his Formula 1 wiring harnesses, tire pressure monitors and diagnostic systems to the military.

"The motor racing environment is very similar and at times harsher than the battlefield," he says.

Beru is in the running for two contracts with big defence companies that could see Formula 1 technology in tanks and aeroplanes.

If Mr Bailey wins the contracts he plans to hire 15% more staff.

The first sale

"Especially high-tech firms find that their first sale is the most difficult to make," says Damien McDonnell, the boss of the Defence Diversification Agency (DDA), set up six years ago to facilitate the knowledge transfer between the defence and commercial sector.

With the military always interested in cutting edge technologies, it is the ideal customer to get high-tech start-ups going.

But "if you are a small company and want to talk to the MoD, it's like talking to China - it's huge and very far away," he says.

The DDA has assisted some 3,500 companies so far, both to get them help for their technical problems and to point them to the "front door" of the ministry of defence.

Know your customer

Outside Excel, well out of earshot of arms fair visitors, outnumbered by police and kept away by a four-layer security cordon, a small number of protesters wants to see DSEI banned.

It may be legal, but I don't think it's moral'
Joy Winterbottom, arms protester

Some of them want to do away with all weapons, others want the UK government to stop issuing invitations to countries with dubious human rights records like China, Indonesia and Colombia.

"There will be countries attending today who will sell to just about anybody, there's nothing to stop them making contact and setting up deals," says James O'Nions of Campaign Against the Arms Trade.

Indeed, there are plenty of companies displaying their wares at DSEI that hail from countries not known for their strict arms control regimes.

British companies, meanwhile, are subject to export controls and look mainly to Nato and Commonwealth countries to make their pitch.

Chinese generals at Irvin-GQ stand
The movements of Chinese generals were keenly watched

That does not stop them from getting excited when the delegation from the People's Republic of China makes an appearance.

The Irvin-GQ stand is suddenly the centre of interest as a gaggle of Chinese generals arrives.

"We have been working with the Chinese for 18 months now," says Mr Pugh-Bevan, "they are interested in our parachutes and aerial delivery platforms."

But what about the EU ban on arms exports to China?

"Yes," he confirms, "our products are subject to an export license... so right now we just exchange brochures, talk and drink a lot of Chinese alcohol."

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