Defence exports


Exporting security to enhance defence

Stephen Phipson is the head of UK Trade & Investment Defence & Security Organisation (UKTI DSO) and ensures that the UKTI DSO team gives support to UK defence and security companies looking to export to foreign countries. UKTI DSO exists to provide specialist export advice and practical assistance by working closely with industry and government departments, including the Ministry of Defence. UKTI DSO aims to help the UK defence and security industry achieve export success by building relationships with selected overseas governments and raising awareness of UK industry capabilities.

Counter Terror Business spoke to Stephen to find out a little more about the current state of the UK’s defence and security exports.

CTB: We’ve noticed that security exports were up this year – was this as a result of the increase in cyber exports?

SP: We report on three sectors as UKTI DSO – we report on the defence export side, we report on security, and we report on cyber security separately. Defence and security exports in 2014 were £11.9 billion, with defence exports representing £8.5 billion and security exports representing £3.4 billion. As part of the £3.4 billion security exports, £1.5 billion were UK cyber exports.

Security exports in total saw an increase of £200 million from £3.2 billion last year. The biggest increase we saw was in cyber security, but cyber security still stands as the smallest sector out of those three and that’s because it is a new sector that is maturing and growing. The security section outside of cyber security covers all protective security equipment, police equipment and border security systems, among others. That is increasing as well, at a lower rate than cyber, but it is increasing which is good. Additionally, defence exports are roughly static, which is typical of the overall defence market. Defence exports are really driven by large contracts coming in and out in any particular year, so we tend to look at a moving average for defence over the last five years or so and look at the trend rather than individual years.

CTB: That links in to our next question, which is – do you see the increase in cyber exports being a trend, and are security/cyber exports raising faster than defence exports? If so why?

SP: Yes, we’ve touched on that, but I believe it’s worth going over. We have got a lot of interest at the higher end of cyber security in overseas countries, mainly because of our legacy of how we were able to stitch together our cyber protection for the 2012 Olympic games.

The 2012 Olympics were a great example of how the UK was able to merge together what we were doing with emergency services, what we were doing with telecoms operators and what we were doing with the data operators into a complete protective security and cyber security offer, which worked extremely well. We were able to foil all of the threats that were pointed towards the infrastructure of the Olympics, particularly through the integration of cyber security systems. The UK’s expertise is really around that, and we’ve been out there promoting our very innovative cyber security sector, but particularly this idea about providing protection and cover for things like critical infrastructure, which we classified the Olympics as a part of. So the Olympics is a really good legacy to use to go out and show people what we did and what we learned.
CTB: What types of capability are countries looking for in the security sector and are some of these linked to their keenness to respond to potential acts of terrorism?

SP: Well, security is driven by lots of different things. There is quite a trend at the moment for border security protection systems, so again, our expertise there is very much about how you integrate systems together to provide a complete security network on borders. Part of that is due to terrorism, part of it is due to migration and refugees and all sorts of other issues of border security, of which terrorism is undoubtedly one of.
Really, the UK’s expertise is not just in supplying discreet bits of capability like a radar system or CCTV system, its the ability to integrate that together into a complete border security programme that’s important, and I think the UK has got a very good advantage there. For example, another advantage which is driving growth for us is our expertise in the aviation security market, where the UK is a world leader. We provide a lot of capability to the US from this country and there are around 4,000 airports around the world, with virtually every one of them using British equipment and capability.

Nowadays, of course, its not just about providing discreet systems into those pieces of infrastructure, its about how you link all that together to provide a much better view of situational awareness to help spot terrorism and terrorists trying to get through the aviation network.

The other thing to say, is that these security measures are not separate from cyber security. Very often we get to these points and, nowadays, when we’re dealing with infrastructure projects, cyber is always part of that programme, people don’t consider those to be separate exercises. So, if you’re doing a border programme or if you’re protecting a piece of national infrastructure like an energy production plant, very often an element of the project will be around cyber protection as well.

We’re very mindful that we’re able to offer a complete capability, not just bits of it, and it is that complete capability that overseas countries are looking for. We are quite mature in this area, as we’ve done a lot of this sort of work here in the UK, and it puts us in a really strong position when we’re out there talking to other governments about their protection needs, where they’ve got a lot less experience than we have in dealing with a mixture of protective security and counter terrorism type activity, as well as cyber threats in the same programme.

So it’s the ability to integrate all of that together that really sets the UK apart, and through that we’ve been able to establish consortiums of expertise, including very innovative SMEs as well as large companies, to provide a complete system to these countries and I think that’s absolutely the way forward for the UK.

CTB: Building on the information you have given us about companies in the UK, how good is the UK brand in this sector and is the government working across departments in this sector?

SP: OK, so second part first – ’is the government working across departments in this sector?’– the answer is increasingly so. It’s always difficult in any government structure to get all of the government joined up at one point. However, we have made great progress in doing that now and when I look at what we’ve been doing in terms of some of these major overseas projects you see a really good team effort by HMG nowadays, which a couple of years ago was much harder to establish.

I think with the Prime Minister’s push on prosperity it’s on everyone’s agenda to do this, and so there is a lot more willingness and assistance to support these programmes overseas. So, my point about the government is, yes it is a lot more joined up now than it was and the leadership from the top is very much about the prosperity agenda, which I think is a really good thing for the UK.

In terms of brand, we have strong brands individually, certainly in security. For example, the police brand in the UK is a very very strong brand and counter terrorism is a very strong brand. We’ve got the most advanced and comprehensive counter terrorism strategy in the world in this country which is ’Contest’ and that’s borne out of decades of dealing with our own domestic terrorism threats.

So people look at us as a country with a lot of experience of dealing with these things and look at us not just in terms of equipment and capability but also in terms of strategy and how we deal with it and how we put public policy together and those sorts of things because, again, we are quite advanced in our thinking there, certainly one of the most advanced countries in the world.

So, in terms of Contest, policing and all sorts of other areas of government activity, we have very very strong brands and we continue to train lots of senior overseas security specialists in the UK as well, which helps to maintain our relationships going forward.

And as you know, our agencies are world class and known everywhere and all of that gives the UK a very strong advantage when it comes to working with other governments and providing security and cyber protection for whatever infrastructure they need to protect.
CTB: Looking towards the future, what are your industrial aspirations for this sector and is there opportunity for joint ventures and industrial partnerships within this sector?

SP: In short, yes there is. As I said, increasingly we are seeing consortiums, in some cases parts of them are joint ventures. In the infrastructure market a lot of the activity is really all about joint ventures and that industry sector is quite used to using joint ventures as a vehicle for security, as not everyone has got the whole answer, you need to partner up with people.

I think it takes a combination of joint ventures and consortiums to address large requirements overseas, be it border protections programmes, large airport builds where they need a complete solution, or the protection of critical infrastructure in that country, its about providing a comprehensive solution.

I think the days are rapidly disappearing where people just want to buy individual bits of a system; nowadays people want a comprehensive, complete system and the way we do that is by industry in the UK forming consortiums, so that is a trend going forward no doubt about that.

In terms of industrial aspirations, the security sector in this country continues to invest and continues to be, in many respects, the world innovator in terms of security solutions. We may not be the cheapest at producing a CCTV camera, but we are certainly the most innovative country when it comes to protecting passengers getting on to planes at airports, for example. So we are very good at innovation, and that continues to be our strong suit.

What we try to do is encourage the industry to continue to innovate, encourage the industry to form consortiums to take advantage of opportunities and to leverage the brands we’ve got. If we can keep that momentum going we will continue to see double digit growth in our security exports.

CTB: There is quite a common theme emerging of integration and the understanding that cyber security can’t be considered a separate entity anymore, with the UK being at its strongest and most innovative when offering these integrated packages. Am I correct in saying that?

SP: That’s right and that’s where we are in terms of international exports. It does depend on how you think about the cyber market – in fact in many ways using the term ‘cyber’ is a bit misleading, because it covers a multitude of things. I’m talking about the high end infrastructure projects, but of course you’ve got other sectors in the cyber market.

This ranges from the anti-virus that sits on your PC at home through to the financial services sector, which has for years now been out in front in terms of cyber protection, making sure your chip and pin cards are encrypted safely and that your banking details are secure, and a lot of that kind of capability comes from UK companies.

So its not just top end, there are other areas that we are strong in, but what really interests me is the ability to join together what we’re doing in the normal traditional security sense with what we’re doing with cyber security and providing a complete solution to any requests from overseas. That is really a good strength of the UK.


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