As Trump prepares to enter the White House and NATO reiterates its intention to spend more, what does this mean for aerospace and defence (A&D) Procurement in the UK?
Despite uncertainty around how Trump plans to end the Ukraine war and the possibility that he could push Ukraine into a grim settlement, NATO is clear: it must spend more on defence. Its European Allies are expected to participate. In the UK, then, CPOs should prepare to help their peers achieve the smoothest, most robust operations possible.
This includes ensuring strong supplier relationships. In doing so, CPOs will be wise to bring small suppliers, and their promise of innovation, into the fold. In practice, though, small suppliers are hard to get because trade barriers can push them out of bidding or negotiation processes early.
To help A&D production in the UK, then, CPOs must prepare to welcome fresh thinking and smooth the way for small suppliers.
Europe’s conundrum
NATO’s declaration to spend more on European defence follows its recent call for a significant boost in defence industrial production and improved standardisation. Increased spending seems the only option, as Trump keeps the world guessing how much – or how little – the US will support the alliance when he takes power. And when this day comes, he says, he will end the Ukraine war.
Exactly how he has yet to reveal.
One prediction is that the US will pull military assistance for Ukraine. This will force NATO to protect Ukraine and itself, demanding much spending and effort.
Another possibility is that he’ll force Ukraine into a grim settlement, the prospect of which might have the Allies pondering whether investing in defence production is worthwhile.
Whichever way it goes, NATO should empower itself. As the heart of Europe’s security, it’s time for the alliance to look after its interests: boost defence production and prepare to protect Europe from potential threats. UK A&D, meanwhile, must prepare to pivot and produce.
Meet uncertainty with resilience
The need to pivot has become familiar this decade. We now have the acronym VUCA (volatility, uncertainty, complexity, and ambiguity) to describe the environment caused by unprecedented events – such as the COVID-19 pandemic, wars and climate change. If there’s one thing external factors have taught manufacturers in recent years, it’s to ensure supply chain resilience as a major priority.
If A&D in the UK applies the same principle, it will be best positioned to meet NATO’s call. CPOs, therefore, have a crucial role: enable resilient operations by keeping supplier relationships as strong as possible.
The real opportunity in these relationships lies with small suppliers. Too often, A&D directs attention to strategic suppliers while neglecting to meet the unique needs of up-and-coming businesses. This is a major blind spot. Leaving small suppliers to fend for themselves risks losing them – and their potential to innovate.
Small suppliers often come from flexible environments where ideas to save money and create helpful products are fostered. For CPOs to successfully contribute towards smooth operations, focusing on these businesses – and guiding them through barriers to entry – is crucial.
Mindsets are key
Therefore, for the industry to keep operations agile and robust, CPOs must remove entry barriers for innovative suppliers. Presently, small businesses struggle to bid and negotiate because they face multiple challenges, for example long-winded assessments, arduous application forms and expensive clearances. With red tape weighing on their limited resources, it’s understandable that many fall out early.
It’s time for CPOs to smooth the way. The UK Ministry of Defence is aware that small suppliers struggle, which it’s taking steps to solve. Understandably, though, progress is slow. Given that national security is impacted by the quality of suppliers, checks are very necessary. The challenge then becomes how to guide small suppliers through these processes.
There are practical steps to follow, such as providing relevant data during due diligence, managing suppliers’ time, helping with contract drafts and more. At the end of the day, however, what matters most are mindsets. CEOs who sympathise with what suppliers experience and respond accordingly can drive the best outcome.
So, as Trump prepares to become the 47th president of America, as NATO pivots to spend more, and as the Allies start boosting production, CPOs in the UK will play a crucial role: boost resilience, attract and keep small suppliers and augment innovation. This is essential to escalating production, and the time to take action is now.