TrendNorthrop adapts to U.K. business climat
Northrop follows Raytheon and Lockheed Martin in creating a U.K.-based company; having lost to BAE on a big U.K. drone deal convinced the company that a U.K. presence was necessary — and it has already yielded results in law enforcement services the company provides in England and Wales
Back in December the U.K. Ministry of Defense (MoD) issued a 146-page blueprint for the U.K. arms industry. We were glad to note MoD’s strong commitment to unmanned aircraft (UAVs) for both intelligence gathering and for operations. As Israel and the United States have shown, the use of missile-equipped drones is especially effective in hunting down terrorists. One would think that a leading UAV maker such as Los Angeles-based Northrop Grumman — developer of the Global Hawk unmanned reconnaissance aircraft — would find the blueprint welcome, especially as the growth of the U.S. defense budget is slowing down. Two things, however, would cause Northrop pause. First, last year the American company lost the competition to build the British army’s Watchkeeper reconnaissance drone, and analysts aid this was the result of Northrop’s reluctance to build important components in the United Kingdom (although Northrop did win a “650 million [$1.1 billion] deal to support and maintain the Royal Air Force’s fleet of AWACs surveillance aircraft).
The second reason is that the December document would lead one to believe that the United Kingdom was looking to prop up domestic military contractors at the expense of overseas competitors. Indeed, many see the U.K. commitment to a BAE-led drone program as a sign of creeping national championing in the British defense sector.
Northrop has responded to its experience — and to analysts’ perceptions — by establishing Northrop Grumman UK. Northrop’s U.K. presence is small — the company has just 500 employees in Britain, and although Ronald Sugar, Northrop’s CEO, says the company has ambitions to increase its presence through military and homeland security contracts for Northrop’s U.K. police biometric contract — he says he is not looking to follow rivals Raytheon and Lockheed Martin by making acquisitions in the United Kingdom. The key, says Sugar, is that Northrop must be seen as investing in British know-how to thrive. “[The MoD] have said, ‘We don’t care where the headquarters of the company is that’s helping us, and much of what we buy can come from anywhere. But we want to retain a certain amount of intellectual content and capital here in the UK no matter what the name of the company is’,” Sugar says.
-read more in Peter Spiegel’s report; at Northrop Grumman UK Web site
