CTO Newsletter

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ITB Policy Annual Report : Canada to continue focusing on SMBs

Innovation, Science and Economic Development Canada (ISED), the Canadian government’s offset agency, published its Fall 2023 Industrial and Technological Benefits (ITB) Policy Annual Report on 6 December. The report highlights the economic and innovation impacts of ITB obligations that were active in 2022.

Canada picks Poseidon as CMMA winner, “disappoints” Bombardier

Boeing’s P-8A Poseidon aircraft was announced as the winner of Canada’s Multi-Mission Aircraft (CMMA) project for the Royal Canadian Air Force. A foreign military sales (FMS) letter of offer and acceptance for up to 16 aircraft was signed between the two parties on 30 November.

Peru and Rheinmetall sign offset agreement after eight-year delay

The Peruvian Ministry of Defence signed the Specific Agreement on Industrial and Social Compensation (Offset) with German prime Rheinmetall MAN Military Vehicles GesmbH on 24 November. Under the agreement, the two parties will collaborate to repower the facilities, logistics, and capabilities of the Peruvian Army’s Armored Maintenance Center (CEMABLIN).

Embraer expands presence through its C-390 aircraft

Brazilian aerospace manufacturer Embraer has secured several MoUs as part of its C-390 Millennium programme by expanding its presence and seeking collaboration with multiple partners. South Korea has selected Embraer’s C-390 Millennium as its new military transport aircraft; the Netherlands signed an MoU with the company to expand cooperation in the defence and security sector; and Saudi Arabia has established cooperation with Embraer in its aerospace industry.

TATA and Airbus establish defence supply chain partnership

India’s Tata Advanced Systems Limited (TASL) has announced a strategic partnership with Airbus S.A.S. in its attempt to strengthen the country’s defence supply chain. The partnership aims to introduce new products to the Indian market that align with the country’s defence needs.

Cranfield University joins Team Tempest for the GCAP

MBDA has announced a new partnership under Team Tempest for the Global Combat Air Programme (GCAP), which involves the UK, Italy, and Japan. MBDA will collaborate with Cranfield University to develop solutions to validate supply chain maturity. This collaboration will also be supported by Rolls-Royce.

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New act to reform Nigerian defence industry

President Bola Tinubu signed the Defence Industries Corporation of Nigeria (DICON) Bill 2023 into law on 23 November, thus paving the way for reforms in the Nigerian defence industry. While DICON still exists, it will now function in a new and reformed manner.

India picks Strykers over indigenous AFVs

The United States and India have initiated discussions to co-produce the Stryker AFVs. A joint statement noted a “mutual interest to co-develop and co-produce ground mobility systems” in India. If this deal is finalised, India will be the first country to produce Stryker vehicles outside the US.

EDGE and SIATT collaborate on missiles

EDGE Group continues to build its presence in Brazil. It has secured a contract with the Brazilian Navy for the MANSUP-ER and its shorter-range version. Apart from the Brazilian Navy, EDGE will collaborate with local smart weapons and high-tech systems specialist Sistemas Integrados de Alto Teor Tecnológico (SIATT).

Hungary to produce Turkish armoured vehicles

Turkish defence manufacturer Nurol Makina signed an agreement with Hungarian company, Rába Automotive Holding and N7 Holding for the local production of the 4x4 Gidran armoured vehicle. The parties will establish a joint venture which will manufacture the vehicles in Győr.

Navantia forges partnerships for Corvette contract

Navantia Australia, a local subsidiary of the Spanish prime, is collaborating with Australian shipyard, Austal, and shipbuilding company, Civmec, to jointly offer six corvettes for the Royal Australian Navy.

Poland to produce CAMM-ER missiles with tech transfer

The UK arm of pan-European missile producer MBDA has signed an agreement with Poland’s Polska Grupa Zbrojeniowa (PGZ) for the local production of over 1000 Common Anti-Aircraft Modular Missiles Extended Range (CAMM-ER) and iLaunchers.

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Peru struggles to establish long-term partnerships

Peru is planning to amend its offset policy to focus on developing more long-term partnerships with foreign suppliers rather than one-off transactions. The revised policy is expected to be finalised in the next six to seven months.

Oman is keen on downstreaming activities

Owing to limited capital and local infrastructure, Oman is focusing on associating itself with offsets through downstream activities. The country is open to and welcomes partnerships wherein local companies can become a part of foreign supply chains through downstreaming of systems.

Japan to partner with Australia for joint development

Mitsubishi Electric is setting up a joint development defence agreement with Australia to make equipment with “surveillance and survivability”, the Japanese company announced on 19 October. The agreement will involve a combination of Mitsubishi’s know-how in electronic and optical systems, and laser technology developed by Australia’s Defence Science and Technology Group.

Poland secures Kongsberg missiles with tech transfer

Norway’s Kongsberg Defence and Aerospace has secured two new contracts for Poland’s naval air defence systems. On 26 October, WZE and PIT-RADWAR – both part of the national conglomerate, PGZ — were selected to help manufacture and deliver Naval Strike Missiles (NSMs) and associated equipment to the Polish Navy.

Switzerland purchases PAC-3 missiles with indirect offsets

Switzerland’s local industry will benefit from indirect offsets, as part of its Patriot Advanced Capability-3 (PAC-3) Missile Segment Enhancement (MSE) guided missile purchase from the US. The Swiss Federal Office for Defence Procurement (armasuisse) signed a USD331m agreement with the US for the purchase of Lockheed Martin’s PAC-3 missiles. An offset agreement was signed as part of the contract signed on 30 October.

Raytheon and Rafael to produce Tamir missiles in the US

Raytheon will build a manufacturing facility in Arkansas, USA, with Israel’s Rafael Advanced Defense Systems to produce the Tamir missile and its US version, the SkyHunter, for the Iron Dome weapon system. The new facility is estimated to cost USD33m and will be established under the Raytheon-Rafael Area Protection Systems joint venture (JV).

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Korea broadens discharge options amid tech transfer challenges

As technology transfer becomes increasingly more complex, South Korea is warming up to alternative forms of offset, according to Kim Seok, director of the Defense Industry Promotion Bureau at the Defense Acquisition Program Administration (DAPA).

PITC lobbies for offset law despite controversy

The Philippine International Trading Corporation (PITC) is lobbying to include the industrial participation policy into its procurement law, in the next year, Emmie Liza Perez-Chiong, the undersecretary, president and CEO of PITC, said at the GICA Conference.

UAE and Turkey sign 24 defence agreements to strengthen ties

Turkey and the United Arab Emirates are developing the cooperation between their defence industries. EDGE Group announced the signing of 24 framework agreements between the two countries during a defence industry event in Ankara on 11 October, hosted jointly by SAHA and EDGE. As part of these agreements, EDGE will set up an organisation in the UAE called MALATH.

India and Tanzania elevate ties to a 'strategic partnership'

India’s Jawaharlal Nehru Port Authority signed a memorandum of understanding with the Tanzania Investment Centre to establish an industrial park in Tanzania, while Cochin Shipyard Ltd. signed an MoU with Marine Services Co. Ltd. for cooperation in the maritime industry. The two countries have officially elevated their bilateral relationship to the status of a "strategic partnership".

Boeing opens new office in Indonesia

Boeing opened a new permanent office in Jakarta, Indonesia, on 4 October. On the same day, the company also signed an MoU with the Indonesian Directorate General of Civil Aviation (DGCA) to explore collaboration initiatives. The two parties will share knowledge in the realm of aviation, focusing on flight safety, efficiency, and sustainability.

Raytheon turns to local partners to secure UK's laser contract

Raytheon’s high-energy laser (HEL) system is arriving from the US this month, and Raytheon UK is partnering with local companies in an effort to secure the UK contract for a production-ready HEL weapon system. The company will integrate its weapon system onto British Army vehicles with the help of a local team.

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Switzerland makes progress on offset law

In addition to turning its offset policy into law, Switzerland is preparing to amend its core armaments policy before 2030, armasuisse representatives announced at the DKF Conference in Zurich.

Turkey's Roketsan wins Malaysian missile contract

Turkish missile maker Roketsan was awarded Malaysia’s missile contract for 108 Karaok anti-tank guided missiles (ATGMs) on 2 October. This is the first export contract for the Karaok system, which will be produced locally in collaboration with Ketech Asia. Additional procurements of the missile systems could follow the current order.

EDGE Group expands in Latin America, acquires 50% stake in Brazil's SIATT

In its continued efforts to establish a stronger presence in Latin America, UAE’s EDGE Group has acquired a 50-percent stake in Brazil’s SIATT. This collaboration will focus on the joint development and production of smart weapons and solutions for Brazil’s MANSUP missile project. The deal was officially signed at SIATT’s headquarters in Sao Jose do Campos on 29 September.

Czech Republic's procurement of F-35s focuses on industrial cooperation

Industrial cooperation is at the core of the Czech procurement of the F-35 aircraft from US prime Lockheed Martin. The government approved the purchase of 24 F-35s from the US on 27 September. Fourteen offset projects with Czech industry are already in place following negotiations with Lockheed Martin and Pratt & Whitney.

Rheinmetall to set up JV in Ukraine for MRO and joint production

The German Bundeskartellamt approved a joint venture between Rheinmetall and Ukraine’s state-owned Ukrainian Defence Industry group (UDI) on 28 September. The JV will be based in Kyiv and will focus on the development, production, assembly, and MRO services of military vehicles.

BAE Systems to begin design phase of AUKUS submarines

BAE Systems has received funding from the UK government to begin working on the detailed design phase of the SSN-AUKUS submarines, for use by the UK and Australia. The submarines will be built at its Barrow-in-Furness shipyard in the UK, and will incorporate technology from all three member nations.

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Saudi Arabia: headquarters requirement in doubt

Contrary to formal policy, OEMs looking to operate in Saudi Arabia do not need to establish local entities to secure contracts, local advisors tell CTO.

UK social values requirement in flux

Two years after it was first unveiled, the UK’s “social values” provision featured in nearly every British-themed panel at this year’s edition of DSEI [Defence & Security Equipment International 2023]. When probed on the topic, however, no industry representative could explain the provision’s scope or implementation.

GCAP yet to untangle workshare

The Global Combat Air Programme’s (GCAP) “biggest advantage” – workshare distribution – is precisely its “biggest challenge,” says Takamasa Iba, aircraft division director at the Acquisition, Technology and Logistics Agency (ATLA). The programme’s three partners – Leonardo, BAE Systems, and Mitsubishi Heavy Industries – have not yet finalised cost-sharing arrangements or the scope for modifications.

US and Ukraine agree to joint development, joint production

Ukraine and the United States have agreed to jointly produce weapons and co-develop new technologies. President Volodymyr Zelenskyy hopes to focus on the local production of air defence capabilities and job creation.

India requests 60 percent local content for Su-30 jets

Hindustan Aeronautics Limited (HAL) has confirmed it is prepared to manufacture and assemble over 60 percent of Sukhoi-30 jets in-country if an order is finalised with Russia’s Sukhoi Aviation Corporation (SAC). In addition to the aircraft, HAL would also develop related ground systems at its facility in Nashik, Maharashtra.

Vietnam: experts call for reforms in tech transfer policies

Vietnamese officials are debating new regulations which would relax R&D restrictions and incentivise technology transfer. Despite growing offers for technology transfer, local suppliers are struggling to keep pace with collaboration and are stifled by excessive red tape, according to experts.

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Korea releases component list with “offset potential”

DAPA, the agency responsible for South Korea’s military procurements, has published this year’s “prospective list” of technologies it would like OEMs to purchase from Korean suppliers as a form of offset.

Japan: OEMs nudged towards local partners

Japan may not yet be ready to systematise industrial participation, but defence contractors are still expected to partner with local suppliers to secure contracts in the country, industry experts tell CTO.

Korea offers to buy back Polish robotics

Defense Korea partnered with Polish state-owned research institute Łukasiewicz–PIAP to showcase robotics technology and optical nano-sensor explosive detectors at MSPO 2023 (5–8 September).

Hanwha pitches production centre for Canadian submarines

Hanwha Ocean has announced that it will build its first submarine production centres in North America as part of its efforts to secure a contract for up to 12 Canadian submarines, including MRO.

Raytheon rolls out offset for first-ever export of LTAMDS

Poland’s order for 12 Lower Tier Air and Missile Defence Sensors (LTAMDS) will see Raytheon partner with five Polish industry partners to “components and subassemblies,” a spokesperson tells CTO. The collaboration will build on the industrial participation projects from Phase I of the WISŁA programme.

Thailand to review countertrade policy

Thailand’s new defence minister, Sutin Klungsang, intends to “reform” the country’s arms procurement policy to make countertrade policies more “flexible,” the official told Thai outlets. Any weapons procurement plan will have to be accompanied by a deal to import agricultural products from Thailand.

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“The misunderstood policy” Retired executive comes to the defence of offset

Why would offsets be any more taboo than other preferential economic policies? That is the question Dr Alan Colegrove, retired business development executive formerly with Boeing, Northrop Grumman, and Textron, explores in his most recent book, Offsets on the Offensive.

Babcock and PGZ announce joint venture for Miecznik frigates

Poland is one step closer to securing technology for its three Miecznik (Swordfish) multi-mission frigates. Babcock International has now signed a framework agreement with its Polish partner PGZ to launch a joint venture to “establish sovereign capability in Poland,” a spokesperson informed CTO.

Raytheon and Lockheed Martin finalise offset for Phase II of WISŁA programme

Raytheon and Lockheed Martin signed a PLN1bn (USD241.4m) agreement with Poland on 25 August to expand manufacturing and MRO facilities in-country. The American primes will partner five Polish companies for eight projects spanning “technology, training, and technical assistance.”

Brazil turns to India to co-manufacture C-390 Millennium

Brazil’s Embraer and India’s state-owned Hindustan Aeronautics Limited (HAL) are close to finalising a joint venture to supply the C-390 Millennium medium transport aircraft (MTA) to the Indian Air Force (IAF), in what could be Brazil’s largest-ever deal for the aircraft.

Chinese-Russian wide-body JV collapses under international pressure

Russia’s United Aircraft Corporation (UAC) has withdrawn from its 7-year joint venture with Commercial Aircraft Corporation of China (COMAC) to manufacture CR929 widebody aircraft, citing us-led international sanctions.

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South Korea strays from offset in FMS

The Korea Institute for Industrial Economics and Trade (KIET), a government-funded entity, has issued a warning that South Korea will fall short of the “top four global exporters” of military hardware unless it urgently reinforces its offset policy. KIET released its findings on 28 July in a 14-page report on the policy’s weaknesses and loopholes.

Senate extends “Buy American” laws to all military ships

The US Senate has passed legislation mandating that one hundred percent of components for all US Navy ships must be manufactured in the US by 2033. The legislation was passed as an amendment to the 2024 National Defense Authorization Act (NDAA) in late July.

Saudi Arabia and Brazil agree to tech transfer and buyback

In its quest to build its defence-industrial capabilities, the Kingdom of Saudi Arabia is turning to Brazil. Brazilian manufacturers Avibrás Indústria Aeroespacial and Taurus Armas have each signed agreements with SCOPA Defence. SCOPA will save Avibras from bankruptcy in exchange for support on a Saudi-made Multiple Launch Rocket System (MLRS), while Taurus will establish a joint venture for the production and export of weapons.

Azerbaijan joins turkey’s national jet programme

Turkey and Azerbaijan have signed a “cooperation protocol” to facilitate joint production of defence hardware, including the fifth-generation TF-X fighter, known in Turkey as the Milli Murharip Uçak (MMU). The two nations “will determine working procedures and principles of cooperation on joint production and development.”

Chinese telecom giant leans on tech transfer re-enter India

Three years after a blanket ban on Chinese apps in India, Chinese state-backed telecoms conglomerate ZTE has initiated talks with Indian partners for a potential joint venture on the subcontinent. The move may help ZTE circumvent the freeze on its business activities and build a “critical trust factor” with the Indian government, according to an unidentified company official.

US and Australia to kickstart missile production by 2025

Australian Defence Minister Richard Marles has confirmed that the US will help Australia develop a “missile manufacturing and exporting industry” from scratch “within two years.” As part of joint development, Australia will undertake MRO for critical US-sourced munitions, while the US will work on streamlining an acquisition process for priority munitions for Australia.

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United Kingdom: Social values weighting “haphazard and uncoordinated”

Despite the release of two new policy documents this month, the United Kingdom’s industrial participation policy has made limited progress, industry experts inform CTO. The “social values” criterion in particular, a requirement that runs parallel to IPP, has been applied inconsistently across tenders and sometimes deviates entirely from the policy’s original purpose. Industry’s confusion persists as the Ministry of Defence prepares to launch its first pilot programme under the policy.

Macron approves 100 percent ToT for AMCA engine

French President Emmanuel Macron has approved Safran’s offer to jointly design, develop, test, manufacture, and certify an engine for India’s twin-engine advanced multi-role combat aircraft (AMCA) with 100 percent transfer of technology. The process is expected to take ten years and the cost is “pretty much in the ballpark of” Safran’s competitors, explains Safran officials.

Safran pledges to “revolutionise” helicopter engine production in India

Safran is offering India its first-ever in-country helicopter engine production facility, as well as 100-percent transfer of technology linked to the Shakti engine, a mainstay of India’s helicopters across all services.

France to expand obligations for Indian Rafales

Seven years after India’s controversial purchase of 36 Rafale aircraft from Dassault Aviation, the Defence Acquisition Council (DAC) has approved the purchase of an additional 26 Rafale-M fighters for the Indian Navy. Dassault declined to comment on whether the deal would create additional offset obligations for the company, but its partner Safran, responsible for the Rafale’s engines and electronics, has confirmed that it will expand its own existing obligations.

Australia to export Boxer 8x8s back to Germany

Five years after Rheinmetall first agreed to transfer technology to Australia for a Boxer 8x8s armoured fighting vehicle (AFV), Australia is preparing to export over 100 locally-produced versions of the vehicle back to Germany, in an arrangement akin to buyback.

General Electric partners with Toshiba in bid for offshore wind power

General Electric has confirmed a new partnership with Toshiba to develop offshore wind farms in Japan. The move would support Kishida’s government’s goal to boost the domestic production of wind turbines by 2026, according to a company statement.

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South Korea reaps USD 772m in offset benefits

South Korea oversaw 42 offset projects worth USD771.8m in the last five years, according to a new report by DAPA. Of the 46 Korean offset beneficiaries, SMEs received the lion’s share of value – but next-generation technologies often remain elusive.

Saab and Dassault wrangle over offset in Colombian jet competition

Colombian President Gustavo Petro’s state visit to France has sparked commotion among contractors vying for the country’s decade-old requirement for 16 fighter aircraft. France’s Dassault Aviation and Sweden’s Saab have refined their offers for industrial cooperation while America’s Lockheed Martin has drawn attention to its cost advantages.

Airbus exports first Chinese-made A321neo to Europe

Airbus has confirmed that the A321neo aircraft, assembled at the Tianjin Final Assembly Line (FAL) since last year, will be exported and delivered to Hungary’s Wizz Air. The deal marks the first time a Chinese-assembled A321neo will be exported to a European client.

Czech Republic and Ukraine to co-produce munitions, armoured vehicles

The Czech Republic and Ukraine have finalised a memorandum of understanding to jointly research and manufacture small arms, ammunition, and armoured vehicles. The news comes as Ukroboronprom, Ukraine’s defence-industrial vehicle, undergoes a complete overhaul.

Germany to manufacture F-35 fuselages, sensor systems

Germany is set to join the F-35 supply chain with the manufacture of centre fuselages, wing skins, and sensor systems in-country. Lockheed Martin and Northrop Grumman have partnered with Rheinmetall to build a plant in Weeze, western Germany, in a move which will support supply chain gaps dating back to 2019, according to aviation experts.

Qatar eyes C2 tech in quest for American drones

Barzan Holdings, Qatar’s defence-industrial consolidation vehicle, has reportedly approved “technical and administrative arrangements” to facilitate the transfer of advanced electronic warfare (EW) technologies from at least two US companies.

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Highlights: GICA spring conference

The Global Industrial Cooperation Association (GICA) held its spring conference in Oslo, Norway, on 14–15 June. Nearly 260 delegates from 30 countries were in attendance, the largest turnout since before the pandemic emerged in 2020. CTO provides the highlights.

Malaysia renews focus on design, systems integration

Malaysia’s new industrial cooperation guidelines will renew its emphasis on technology-sharing, according to Dr Sharoul Jambari, CEO of Malaysia’s offset authority, the Technology Depository Agency (TDA). The agency is now helping local industry to better absorb these opportunities.

Swiss offset law promises “certainty and transparency”

Following several government reviews, armasuisse is preparing to ratify its offset policy into law. Speaking with CTO, Simon Hufschmid, Head of International Law & Compliance at armasuisse, explains why the government has taken this step.

India, US break deadlock over predator drones

India has finalised a USD3bn contract to acquire 31 MQ-9B (Predator B) drones from General Atomics with transfer of technology. The Indian Ministry of Defence (MoD) approved the acquisition under a government-to-government framework on 15 June, one week before Prime Minister Narendra Modi’s state visit to the United States.

Ukraine in talks with European firms, insists on co-production

Ukraine is in talks with companies in France, Germany, Italy, and Eastern Europe to manufacture critical platforms in Ukraine as the country continues to fend off the Russian invasion, according to Sergiy Boyev, Deputy Minister for Strategic Industries in Ukraine.

President Macron: EU should avoid “what’s on the shelves”

French President Emmanuel Macron is urging European nations to reduce their dependence on US-made weapons. The president’s comments come as the European Union rolls out new defence funds and select European countries envisage re-adopting offset-like policies.