The annual Outlook Report published by Trade Association ADS shows that the UK’s security sector continues to demonstrate growth, almost doubling in size in the last five years with 2014 figures highlighting turnover at £8.5 billion and exports increasing to a total value of £3.4 billion.
Productivity across the sector is up 24% across the past five years, with more than half of those companies surveyed anticipating future growth of more than 10%. Around 40% of turnover within the UK’s security sector is generated by exports, with Europe, North America and the Middle East cited by firms as growing markets.
Companies named Latin America, Africa and the Middle East as the regions in which they’re most likely to focus their export efforts over the next three years.
Figures for the UK’s defence sector outline that productivity has grown by 17% over the past four years compared with just 6% for the rest of the economy. The past five years have witnessed the sector burgeon by 12.5%. Turnover rests at £22 billion, while exports have generated a substantial £8.5 billion.
Paul Everitt, CEO at the ADS Group, commented: “The defence and security industries are of strategic importance, helping to protect the UK and its citizens and contributing to national prosperity by sustaining high value, longer term jobs. Succeeding in increasingly competitive export markets is a priority for industry and Government. The work of the Defence Growth Partnership and the Security and Resilience Growth Partnership is designed to help build stronger relationships with international partners, boost investment in innovation and strengthen UK skills. These all contribute to higher productivity and more competitive offerings for customers at home and, indeed, around the world.”
The defence industry directly employs 146,000 individuals earning an average salary of £37,400, with 32,000 of those jobs resident in the design and engineering sphere. Nearly 70% of defence companies employ apprentices or trainees, with 4,400 apprentices working in the industry.
Approximately half of those defence companies surveyed as part of the Outlook Report stated that they expect to see growth of 10% or more in the next 12 months, with 55% of companies identifying exports as a driver of growth.
More companies than in the previous year exported to North America, and there are growing export levels in the Middle East and Asia. Minimal supply chain presence in Latin America, the Middle East, Africa and Asia creates opportunities for export growth.
Leading products and services exported by UK security companies include those used in situational awareness, closely followed by system recovery and data cleansing. The industry also provides emergency response support and products and services used to assist with humanitarian crises.
Meanwhile, UK companies continue to build on their excellent reputation for providing major event security solutions gained during the London 2012 Olympic and Paralympic Games.
However, both the defence and security sectors have identified concerns over gaining access to skills, particularly in R&D and engineering. Within defence, ADS believes that a decline in plans for investment in R&D, production and assembly compared with the previous year reinforces the need for the Government’s 2015 Strategic Defence and Security Review to “encourage support and investment” in these areas.
Industry and Government partnership boosts UK’s defence sector
The Defence Growth Partnership has just published ‘Customer Ready’ – a comprehensive overview of the joint work undertaken between Government and industry to increase exports, boost productivity, encourage innovation and develop skills in the UK’s defence sector.
The publication is backed by Defence Secretary Michael Fallon and Business Secretary Sajid Javid as well as companies at all levels of the industrial value chain in the UK.
The Defence Growth Partnership has also made the following associated announcements:
*A new £10 million jointly-funded project between Government and industry will back the best new technologies and research that can have a ‘dual use’ in defence and civil sector businesses. The Dual Use Technology Exploitation Innovation Cluster will help boost growth by linking UK manufacturers (and particularly SMEs) from the civil and defence sectors to draw on the best technologies of both in delivering ‘game-changing’ solutions for customers. The move is expected to create 140 jobs across 15 partners up to 2019.
*90 students from 20 organisations have now signed up to begin studying for the new Systems Engineering Master’s Apprenticeship Programme (SEMAP) which will begin in January 2016. As the first ever Master’s-level standard apprenticeship in the UK, SEMAP is specifically designed to attract new graduates to the industry while at the same time upskilling those existing members of the workforce.
Business Minister Anna Soubry, co-chair of the Defence Growth Partnership, stated: “The UK’s defence industry is a world leader. It’s essential to our national security and makes a big contribution to the economy, employing thousands of scientists, engineers, apprentices and manufacturers. The Government is continuing to work alongside industry through the Defence Growth Partnership to keep the UK at the forefront of what is an extremely competitive market. Supporting skills, innovation and new technology will undoubtedly help in maximising opportunities for British businesses of all sizes.”
Philip Dunne, the Minister for Defence Procurement, added: “The launch of ‘Customer Ready’ absolutely demonstrates that the UK’s defence industry is open for business. The UK operates a highly competitive and innovative defence supply chain underpinned by world-leading suppliers both large and small who, through the Defence Growth Partnership, are working together to respond to the defence challenges we face both now and into the future. I’m extremely pleased at the progress the Defence Growth Partnership has made to ensure the UK retains a vibrant, competitive and strong defence sector able to respond to customer needs both here at home and overseas.”
Steve Wadey, co-chair of the Defence Growth Partnership, said: “As is clear from the announcements being made and the successes outlined in ‘Customer Ready,’ the Defence Growth Partnership has moved from strategy to implementation and now on again to delivery. Through this partnership, Government and industry are working together in the international marketplace to meet the needs of customers around the globe and, importantly, to deliver a competitive and sustainable future for the UK’s defence sector.”