The Department for International Trade’s Defence and Security Organisation is ready to help exporters and potential exporters navigate the difficult waters of selling into the defence and security markets overseas, as defence writer Mark Lane discovers in conversation with DSO Head Stephen Phipson.
Stephen Phipson
As the UK seeks to redefine its economic model post-Brexit, consolidating old markets and seeking out new ones, the defence sector is bound to play a vital part.
Defence exports for 2015, the last reporting year, amounted to £7.7 billion, a reflection of the calibre and sophistication of this sector of the UK economy, particularly bearing in mind that this is a highly developed and competitive market with powerful global players.
For that and other reasons, it’s a market with demands and challenges of its own, and these have a strong political and diplomatic dimension.
Stephen Phipson, Head of the Department for International Trade’s Defence and Security Organisation (DIT DSO), explains: “What makes defence different from other sectors is that all customers are overseas governments and there is only one customer in the UK. So, at platform level at least, developing and maintaining strong bilateral relationships is key. The end customers are overseas governments and our teams in the UK and overseas work closely with the companies to identify the opportunities and the decision makers and to help promote specific capabilities and engage with the overseas governments to try and achieve success.”
To help UK exporters meet and overcome these challenges DSO offers a range of services. These include identifying opportunities, providing country briefs, military expertise, and support at trade missions and exhibitions. It also has an export support team, with experts from the Army who are able to give advice and impartially promote capabilities suitable for use by overseas armies, navies and air forces.
“We believe this capability is unique. DIT DSO also has an SME team who specifically help smaller companies and arrange events around the country to engage with those companies and to bring them together with defence primes,” says Phipson.
Government and industry are working together through the Defence Growth Partnership (DGP) to ensure the UK defence sector grows by strengthening global competitiveness. As part of this, DSO has run several events in partnership with large defence exporters to help increase supply chain sales and bring SMEs and primes closer together.
Phipson explains: “The Defence Growth Partnership is working with the whole UK value chain to maximise the opportunities for UK companies, large and small, to collaborate, access existing support mechanisms and fulfil their export potential. The Defence Solutions Centre, based at Farnborough, is a key mechanism to do this.”
Set up as an independent entity in 2015, the UK Defence Solutions Centre (UKDSC) works to make the UK defence industry more successful in exports through better alignment with government and better collaboration within the UK value chain, and through stimulating innovation and investment from a range of sources.
It was set up as part of the implementation plan for the Defence Growth Partnership and is jointly funded by government and industry. UKDSC works with the DSO, government and academia.
UK companies seeking export opportunities will find a dynamic global market in the defence and security sectors.
Phipson adds: “The Gulf, Asia and the USA are all interesting areas at the moment. More generally we work with industry, trade associations and other government departments to produce a priority list of countries where we have identified potential significant defence export opportunities. This gives us a suite of 35 core markets to focus on.”
Also, there are opportunities and openings for exporters across the full spectrum of the defence and security marketplace.
Over the last ten years, 70 per cent of UK exports have been in the air domain, and while DSO sees continued opportunities there, it is also working on opportunities in the maritime and land sectors.
“We also support the security and cyber sectors where there are significant global opportunities,’’ says Phipson. “It is worth noting that in 2015 security exports were £4 billion, of which around £1.8 billion was cyber exports, some 45 per cent.”
He describes how the security sector is growing year on year as countries concentrate on protecting their populations, borders and critical national infrastructures. The growing security threat and the growing awareness of the threat means that often security budgets grow at a faster pace than defence budgets.
He adds: “Overseas customers are also keen to protect their financial sectors, as well as defence, from cyber incursions which can have significant consequences. We have a ’cyber ambassador’ who advises governments across the world, and cyber staff in the US and Gulf who can help companies access these important specialist markets.
“Our success in arranging the 2012 Olympic and 2014 Commonwealth Games and more recently the Rugby World Cup has attracted significant interest from overseas governments who are keen to understand how the UK organised events which were ’incident free’.
“Counter-terrorism is another area where countries have expressed interest in the UK’s capabilities and expertise. We work closely with the Home Office and other government departments to support companies in this sector.”
Exporting has a clear benefit to UK companies in helping them to increase sales and profits, but there are other – often less tangible – benefits that exporting can bring to a business.
Phipson explains: “Defence, security and cyber exports can be an important part of business, especially for smaller companies. The UK has a clearly defined procurement plan and while this can be important to companies, exports can also provide a route to innovation and sustaining or increasing their business.”
This is particularly true for SMEs as exporting can transform their businesses and take them to the next level. They do, of course, face some distinct challenges, particularly when attempting to sell overseas for the first time. But, says Phipson, the DSO has made provision for this.
He explains: “It is important that in engaging internationally companies are prepared for export and the ability to supply and maintain equipment overseas, as well as supplying the appropriate training. They also need to understand overseas markets, how to do business and the customs within countries, so DSO’s desk officers and staff overseas can help SMEs in identifying how they can succeed. DSO also has structured relationships with the major defence primes where issues affecting SMEs are raised.”
Exporting is demanding and the defence and security sectors have their own particular challenges, but the DSO is ready to lend a helping hand.
Phipson says: “Our aim is to help as many companies as possible achieve export success using the expertise and knowledge of our civilian and military staff, and most importantly our staff in our embassies and high commissions overseas. We need to identify more companies in the sector who are looking to export for the first time.”
* Any company can contact DSO via the Gov.UK website to seek advice on potential export opportunities. Visit https://www.gov.uk/government/organisations/uk-trade-and-investment-defence-and-security-organisation.
To contact DSO’s export support team email trade-est-ihubmailbox@mod.uk, or to contact the DSO SME team email ditdso.smeenquiry@trade.gsi.gov.uk.
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