Defence and security industry co-operation between Norway and UK

These remarks were held at a Norway-UK seminar in London by John I. Laugerud, Deputy Armaments Director at the Norwegian Ministry of Defence, May 8th 2014.

Defence and security industry co-operation between Norway and UK.

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Ladies and Gentlemen, Dear Friends,

Good Morning,

Allow me at the very outset to take this opportunity to thank the hosts for this kind invitation. It is a great pleasure and honour for me to speak at this very timely and important UK-Norway Defence and Security Industry Co-operation Seminar.  This is the second seminar of its kind, following the one conducted in Oslo in 2012.  I always enjoy visiting London; to feel its pulse and experience its diversity and dynamism. To be here on this particular day, on 8 May, Liberation Day 1945, makes me humble and grateful.  It is important to pause for a moment - and remember - both the British and Norwegian struggle, five long years to secure our freedom during the darkest hour of modern European history.

Throughout the tumultuous twentieth century we were partners and allies during two world wars and a seemingly never ending cold war, and thus became pioneers in establishing the Western Alliance.  More recently, in the wake of the cold war, as the need for new forms of bilateral and multilateral interplay arose, we entered into co-operation in a variety of areas. At the outset, it was primarily within training, exercises and operations; in the Balkans throughout the 90s, and over the last decade in Afghanistan.  All this has given way to closer bilateral co-operation, also within the field of armaments and industry. Hence, this seminar appears to be on the mark, both in time and demand.

The Norwegian defence industry may not be among the largest, but I dare to say technologically advanced and competitive within a number of areas.  Despite the fact that Norway remains a nation of five million people, and that our resources in absolute terms are fairly limited, our industry has in recent years shown both innovation and endurance. This has paid off, and resulted in significant growth, both in magnitude and scope.

New markets for our industry have developed in Asia and South America, while the more traditional ones in Europe and North America have been consolidated. This has largely been achieved through innovation, development of technology and an ability to apply persistence in seeking goals – to stay the course - giving way to competitiveness.   These are qualities that are valuable to any enterprise, particularly when clearly defined and applied, even more importantly, applied a in long-term perspective.  

Despite some promise spelled out above, there is no shortage of challenges for the European defence industry. The significant reduction in defence spending among allies and partners is already leading to structural cuts and updating of existing platforms rather than investing in new systems. We are witnessing technological developments calling for a steady price increase in procuring modern defence material. This has led to enterprises and corporations increasingly pooling their resources in acquiring new defence materiel, nationally as well as internationally; while ownership more often than not is shared across national borders. 

This has, furthermore, resulted in a more demanding market in which nations favour their own industry. Hence, we are currently forced to find new ways to secure the European defence industry. Today it is marked by considerable over-capacity. It appears that we see two trends that seem to collide; on the one hand the need for cheaper and more accessible materiel, on the other, increased protection and the need to secure national industry.   Is this really the development we are looking for? Is not really what Europe needs more co-operation and less protectionism?  

As most of you are aware, the EU Defence Directive went into force in Norway on 1 January 2014.  This introduction is certainly followed closely by both Norwegian authorities and industry. It is, nevertheless, still early to pass judgment on how this will play out. We will uphold our special demands for industrial co-operation on procurement of particular national security, in line with Article 123 in the EEA-agreement (Art. 346 in the EU-charter).  Still we are prepared, and perhaps expect, that the total volume of industrial co-operation will be reduced.

Industrial co-operation has undoubtedly served us well and remains an important vehicle for Norwegian industry and authorities.  Besides providing market access for our industry, the arrangement has also contributed to transfer of technology to Norwegian SMEs.

We have supported the directive as it will hopefully contribute to a somewhat more transparent European defence market over time. It is difficult to predict, but hopefully it will open up. The Directive is also expected to bring about more cross-border co-operation, and certainly more cost-effective solutions. These are trends and notions we should all endorse.

At the same time, we have emphasized that the directive must function in its practical application, otherwise it does not make any sense.  Hence, equal treatment of “big and small nations” must be a guiding principle; a “levelled playing field” must take center stage. Norwegian defence industry is competitive. Thus, there is reason to believe that it will be able to compete in the EU-area.  Nevertheless, it will not come by itself; it will call for an industry continuously seeking to strengthen its level of skill and competence.

UK has elegantly found its own way to deal with these matters. We certainly have read your Security through Technology White Paper of 2012 and the subsequent Industrial Engagement Policy paving the way ahead for you.  Inviting foreign industry on voluntary basis to commit and report to British industry and authorities, will more than likely provide a useful tool for you to achieve what you label as “operational advantages” and “freedom of action.”

Bilateral co-operation between the UK and Norway is developing rather well.  We have recently signed an F-35 bilateral framework agreement that will form the basis for further dialogue and concrete measures. This will likely include training of pilots, maintenance and sustainment based on best value. Our clear objective should be to make this effort as productive and concrete as possible.  Hence, it is important that we spend our time well until next March, finalizing the plans. There is certainly good reason for optimism, as we have entered into constructive dialogue both at the governmental and industrial level. This very seminar attests to that fact that we are on our way.

Our market is open and as you may be aware, Norway import approximately 70 per cent of its materiel and services. We purchase considerable amounts of armaments and services from the UK.  Recent examples are the anti-submarine torpedo system from BAe Systems, C-130 J inspection and maintenance from Marshall Aerospace, the surgical unit for field hospital from Marshall Specialist Vehicles and Counter-IEDs from TRL technology, to name a few. All of these have resulted in industrial co-operation and opportunites for Norwegian companies amounting to 270 mill. NOK (27 mill. Pounds).

Although there is not reciprocity, as more goes north-east than south-west, there are indications that things are coming along also in the opposite direction. Norwegian Prox Dynamics has paved the way for others to follow. Developing new and applicable technology, Prox has succeeded in selling its “16 gram Nano helicopter” to the UK.  Other initiatives are on its way, not the least the Marshall Export Development Programme (MEDP), a new concept in which Marshall Norway in concert with Innovation Norway, FSi and six Norwegian SMEs are positioning itself towards the export market, particularly aimed at the UK. I am sure there will be more to follow in the time to come.

Allow me in conclusion to underline the importance of a venue like this in which representatives from industry and government come together to exchange ideas and spend time together. I encourage you all to seize the moment to seek new opportunities and find ways to further develop your co-operation.  

Before closing, I would like to encourage our hosts, British authorities as well as British industry, to engage with your Norwegian counterparts.

Again, thank you for the invitation. To ADS, FSi and all participants, - the best of luck with the rest of today’s seminar.

Thank you for your attention.