AEROSPACE magazine talks to Nigel Whitehead CBE CEng FRAeS, Group Managing Director, Programmes & Support at BAE Systems on international partnerships, innovation and winning the battle for future workplace skills and talent.
Before the EU referendum last summer, BAE lined up with other OEMs to warn against the risks of Brexit. Has that panned out as expected?
Business likes certainty and launching into something which is uncertain caused us all to be wary of it. In practice, we don’t see any material effect on the business so far. The devaluation of the pound has made it interesting for us in the export market, in a positive sense. The business is in a good position. It’s well positioned with a large backlog. Our main customers are the UK, Saudi Arabia, the US and Australia so, in that sense, the obvious European trade isn’t going to have a major impact. We do, of course, look to the collaborations we have in Europe and those are essentially unaffected. Indeed, I think it is of note that almost as soon as the Brexit vote happened, Prime Minister Theresa May appeared with her French counterpart talking about the importance of the agreement that had been reached on the demonstrator for the future combat air system. Since then, we’ve heard Secretary of State Michael Fallon talking about the potential for co-operation on defence with Germany. The sense I get is that defence issues are essentially right above the EU membership issues. We will, of course, watch how the trade deals develop and influence those wherever we can, to make sure that the defence material that crosses boundaries in Europe doesn’t attract any particular taxes or tariffs.
President Trump – good (in encouraging increased defence spending in Europe and the US) or bad (in buy America) for BAE as a whole?
Irrespective of what people tend to think about the man, if you actually look at the substance of what he is committing to, then a strong commitment to defence has got to be a positive thing. The nudge to NATO, saying ... “Are you spending your notional 2% of GDP?” is, I think, a positive thing for the defence sector in general. As BAE Systems, we look at it from the point of view of how we operate in the US. We do this under a special security agreement which we’ve had in place for a number of decades and, as such, we have a separate US board and management team. We regard it very much as a US asset, providing outstanding capability, often on a single source basis to the US military, supporting jobs and the economy in the majority of states in the US.
The last SDSR saw the UK MoD opt for US platforms (P-8, AH-64E, Protector). Do you foresee this continuing or are now some decision-makers looking at wider industrial issues keeping sovereign British capability on-shore?
I think you put your finger on a current issue that everybody is thinking through. I spend most of my life empathising with the procurement executives who have to buy stuff. Looking at their immediate need, their immediate budget, looking at the trade-off between having to invest in a new product, which is potentially homegrown, versus one that they can buy off the shelf, paid for, initially, by some other country’s taxpayer. It is a mental wrestle that they have to go through on many occasions.
I would say that there is an increasing response for the need for sovereign capability and for national prosperity, right from the start of the decision-making process. It isn’t the be-all and end-all, it is just an important facet of the process. In that sense, it’s difficult to judge how any of the future procurements will go. From my perspective, it keeps me on my toes, it makes me make sure that, from my UK businesses, I offer the best possible options that I can. In general, and I would say this, because I, as prime systems integrator, compete many of the elements of my supply chain. I think competition is good for our industry.
What opportunities still exist in the UK for British industry to play a part in the programme? (avionics support, simulation, training etc)
Well, we’ve just seen the announcement that the UK will be a global repair hub for the maintenance, repair, overhaul and upgrade of avionic and aircraft components. This is a huge prize for the UK and will result in a significant amount of additional work taking place here, centred at Sealand in north Wales.
As Lockheed Martin, in concert with other UK Industry partners, we’ll be providing UK programme support for training, maintenance, supply and F-35 information systems and there’s also significant opportunities to mature some of the impressive fifth generation C4ISR capabilities and to integrate these with other UK platforms.
The Saudi Arabian order for its last batch of 48 Eurofighter Typhoons has been ‘nearly there’ for some time. Do you expect a decision this year? What happens after the Warton line goes cold?
Well, the confidence we have in Typhoon’s ability to sell means that we don’t expect that the production line will go cold. Clearly the Saudi element is part of that. We’re doing everything that we can, and should do, to make sure that we have the right relationships with the Saudis. The backdrop to this is that the Typhoon is an outstanding aircraft, performs exceptionally well and the Saudis like the aircraft. We have a strong multi-decade relationship with Saudi Arabia, where we are making great progress on the next five-year support arrangement. Our experience is that when we deliver and continue to deliver our commitments, then further work from Saudi Arabia follows. I’m not going to predict when we’ll be on contract with batch two but I’m confident that we will get there.
Demonstrators for the Anglo-French UCAS project are planned to fly by 2025 but the testing is going to take another five to ten years. Is there not a danger that, given another decade, technology may have moved on?
That is a good point and it is something which, as an industry, we’re alive to all the time. Our industry, I think, has made its mark by constantly embracing divergences and step changes in technology. The idea of being one step ahead of your military adversaries is at the heart of good strategy. So, industry has responded by heading that way and embracing disruptive technology. The way that we can make our successful platforms work is by essentially creating workhorses. Products which have the innate capacity to do A, what you wanted them to do on day one but B, beyond that, to be adapted and modified to do new things and do them in a new way.
Having more engine power than is needed on day one will result in capacity, more space on board. Capacity for additional sensors, capacity for different roles in missions, is very much part of the way we think. I see the activity on UCAS in the Anglo-French arrangement as not only creating a workhorse but understanding the trade-offs in terms of how you create that enduring capacity and capability. The truth is that there will be lots of different unmanned technologies operating in lots of different ways, probably alongside each other. We see a key component of that being the long-range strike capability with unusually high levels of low observability.
Earlier this year the PM announced £100m of design and development work for BAE on Turkey’s TF-X fighter. What expertise will you be providing?
We are very excited about this and, bearing in mind that we are a leader in designing, manufacturing and supporting fighter aircraft, it’s absolutely great to be involved in a programme which has such positive intent and funding behind it. Turkey has chosen to work with us after quite a long beauty contest and selection process. So it is a great opportunity. Clearly we have to work out making that a success but we believe that opportunities will follow from that for us and, potentially, some people who we habitually work with. The relationship between Turkey and UK is an important underpinning of that and our developing relationship with the Turkish industry team, TAI, is a very important part of that. We are off to a very good start with a significant contract but there is a whole lot of work to do. We see this as a long-term relationship and one which will potentially take our involvement in Turkey and take their products a long way.
On a related note – the UK is also to collaborate with Japan on studying a manned sixth-generation stealth fighter?
Again, a very significant customer, from the point of view that they have a very vibrant economy. They also have a very real defence need and a pattern and a history of spending serious money on major defence programmes. Japan has less of a track record of developing major fighter aircraft and, therefore, it would be quite natural for them to seek a partnership. I personally worked in Japan developing the proposition for Typhoon there and got to know the industry team and the Japanese MoD very well. I hold them in very high regard, understand quite a bit about the nature of what it is they’re trying to achieve and the nature of their defence requirement in particular. We look forward and relish the opportunity to work with them. In many ways, like the British engineering team, they are engineers who take the whole process very seriously and do it very thoroughly and there’s a great degree of cultural assimilation and understanding between the two teams.
Meanwhile, you have another international partnership with India, in the form of HAL and the Advanced Hawk, which debuted at AeroIndia earlier this year. Where would that aircraft be built?
The economics of it is that the training capabilities that you can put onto the Advanced Hawk, because of its higher performance, means that you can download some of the frontline fighter activities into the training fleet and make your pilots more prepared to perform their military missions. The economics of it are quite compelling. The performance of the aircraft is a significant improvement, especially at altitude, relative to what the existing Hawk can do. It was developed as a concept and in collaboration with Hindustan Aeronautics Limited (HAL) and we’ve worked with them for many decades. They have a good understanding of what it is that can be achieved with that aircraft. Indeed, if the Indian Air Force progresses down that line and potentially adopts the Advanced Hawk, then, yes, we would do something with the HAL team in collaboration on that aircraft. It is yet to be decided who would actually do what but it was an opportunity to put the concept out there, at AeroIndia. We are continuing to work on the development of that standard of aircraft and it is an exciting development.
About 5% of the overall (F-35) fleet currently in service. So there is 95% still to go."
BAE is also a key partner on the F-35 with the first UK jets set to arrive at RAF Marham next year. How will F-35 change the balance of your air business?
F-35 is an enormously important part of BAE’s military aircraft business. In particular, from an ongoing manufacturing point of view, but also a support point of view. As the ramp-up continues, it becomes of greater importance to us. The nature of the relationship that we have is that BAE Systems negotiated a significant share of the total programme, not just some form of industrial ‘off take’ and, as that, in that position, we are one of the principal partners in the programme. We are, therefore, working with Lockheed Martin and Northrop Grumman to secure a position on the overall support for the global fleet. Clearly the UK element of that is important and there’s a huge programme going on at RAF Marham at the moment which we are leading to set up the site for the aircraft’s arrival.
Together with Northrop Grumman, we recently won the maintenance repair and overhaul and upgrade services for F-35 avionics and components in the UK and also an equivalent of that in Australia, so that is important. We are working with the F-35 team to look at how the global fleet is set up. With aircraft deliveries that have been made, there’s about 5% of the overall fleet currently in service. So, there is 95% still to go: the massive scaling-up programme, looking at how we keep the fleet flying, keep it developed, provision of spares, repairs, all the technical support and the engineering know-how. It is at moments like these that the partners look to each other to look at the strengths and depth in each other to make sure we can meet customer expectations.
In the UK the civil Aerospace Growth Partnership has been a big success – what is your take on the UK’s Defence Growth Partnership?
I was a prime mover in getting the Defence Growth Partnership (DGP) established. Together with representatives of 15 other companies, so the top 16 companies in terms of sales value to the MoD. They got together and formed the DGP. It was announced at Farnborough 2012. So we’ve had the best part of five years getting this together. The first observation is that companies who often jockey for position in the market regard each other as competitors, sometimes as customers, sometimes as suppliers and sometimes as partners. However, we have all stayed together and seen this through. We now have, I think, a much stronger proposition into the export market than we had before. We tend to approach things from a ‘team UK’ point of view. We understand more about each other and, although we have essentially the same ingredients as we had before, we have a different recipe. We are producing better proposals into the export market than we did before. With the defence solutions centre, we’re thinking things through in a more rigorous and collaborative way and genuinely coming up with stronger propositions as a result. We are continuing to work with them and, as the Government is developing the notion of industrial strategy, we are, through the DGP, much more able to articulate all the issues around how defence supports the prosperity agenda such as exports, skills development and, in particular, early careers.
There has been some independent research too, commissioned by BAE Systems, that 51% of UK parents will now recommend a STEM-based career to their kids. Is the UK now winning the STEM skills battle?
I see a shift in it. I see an enthusiasm in the job applications that we get, as well as applications from a more diverse cross-section of British society. As a company, we recruit directly from the education system from school (GCSE or A-level), colleges and universities. We’ve put a decade and a half into inspiring people. In particular, we have worked on the gender diversity issue to great effect. We see that coming through in terms of the strength and diversity in the applications we get. We have over 2,000 apprentices in training at the moment. Part of that has been that we’ve been prepared to open our doors and let people see what we do, and to give people real work experience associated with our industry. In any one year, we have 800-900 work experience opportunities. We also have around 600 ambassadors who go into schools and talk about the nature of the work that is done. We have our school roadshow as well, which targets people in late primary school, to help them understand how science, engineering and maths translates into the world of work. All of that has helped to improve understanding. Teachers now better understand, parents now better understand. So yes, there has been an inflexion and people now crave careers in engineering. It’s a brilliant time to work in engineering.
However, we cannot relax. We have to keep on working on that. The truth is that there are literally billions of pounds worth of major engineering infrastructure projects all around the UK foreseeable for the next two or three decades and there is a war for talent. My view is that the defence and aerospace industry needs to win that war for talent.