BAE Systems - Growing

22/12/2005 13:24 =DJ THE SKEPTIC: Ringing Saudi Endorsement For Eurofighter

By Howard Wheeldon
A DOW JONES NEWSWIRES COLUMN

LONDON (Dow Jones)--In the hard, mean and particularly competitive world of
defense equipment, the U.K. government and its main military equipment supplier BAE Systems can be proud that Saudi Arabia has chosen to buy what could be as many as 72 EurofighterTyphoon aircraft to replace older British-made Panavia Tornados.

Of course, this latest defense understanding between the two nations isn't just about jets. It says a lot about consistency and much about continuation of support and in-country investment, which can be so important within any major military procurement plan.

That includes training, repair and maintenance, plus additional infrastructure support and, importantly in this case, assisting in further "Saudiisation" - helping the domestic Saudi industry to take on more with the eventual goal of becoming more self-sufficient.

That's why BAE has invested in several Saudi companies in recent years. There seems little doubt this will be a continuing part of its strategy.

Indeed, it's a little known fact that Saudi Arabia already has substantial industrial capability within the aerospace and defense sector, repair and maintenance companies as well as many other related activities.

In short, this is already a nation well-placed to take on an increasing industrial role within military deals such as the one signed Wednesday.

Examples of the growing Saudi industrial base include the Alsalam Aircraft
Company, which employs over 2,000 and handles airframe overhaul and deep strip
maintenance. Riyadh-basesd Advanced Electronics focuses on electronic and avionics component repair, while Jeddah-based Aircraft Accessories is responsible for mechanical engineering.

International Systems Engineering focuses on IT and computerization, while Saudi Development and Training focuses on manpower issues and the development of skills for the domestic workforce.

It's a growing list, but clearly a lot more work and investment will be needed to achieve independence in component design, manufacturing and aircraft assembly.

And with such an illustrious Saudi-based operational history stretching back to 1973, BAE Systems has established trust and goodwill that will be hugely important in the years ahead.

This MOU is also fantastic news for other aerospace companies in Britain like
Rolls Royce, and it's particularly heartening for the four-nation EurofighterTyphoon consortium, comprising EADS, Finmeccanica and a vast range of other European component suppliers such as Smiths Group, Cobham and Thales.

And it's worth remembering the two separate Al Yamamah MOUs between Britain and Saudi Arabia, signed in 1986 and 1992, are still operational. These eventually included far more than just the supply of 92 Panavia Tornados.

Expectations are that this latest MOU could be formalized into contractual agreements quite soon, and it may just be the first of more to come.

To top it off, though a government-to-government agreement means much contractual detail will inevitably remain private, one thing's certain: with
EurofighterTyphoon, Saudi Arabia's buying a truly fantastic aircraft.