Oct. 17, 2013 - By ANDREW CHUTER – Defense News

LONDON — BAE Systems will suspend production of the M777 howitzer unless it can quickly secure a long-talked about order from India for the lightweight 155mm weapon.

The company said in a statement on Thursday that it had begun consulting staff and unions ahead of the suspension of production at its Barrow, England, facility because of continuing delays in negotiations with the Indian government over the sale of 145 guns.

Up to 200 jobs are at risk at the Barrow site, where BAE also builds nuclear submarines and supports other artillery programs. Its Hattiesburg, Miss., site in the US, which undertakes final assembly and testing of the gun, is not immediately impacted, the BAE statement said.

“The [Barrow] move comes about because of ongoing delays in the US government foreign military sale of M777 howitzers to India,” the company said.

A letter of agreement (LoA) between the US and Indian governments for the sale of the towed 155mm weapons expired on Tuesday, triggering a rise in the ceiling price of the package of guns, training and support from US $647 million to $885 million. That price, though, is likely subject to some flexibility if the deal can be finalized quickly.

Nobody is holding their breath for a quick deal. The major price escalation from the US government and BAE is likely to lead to further delay. In addition, India is gearing up for a general election.

India hasn’t managed to buy any new howitzers since the 1980s’ purchase of weapons from Bofors — a deal that became embroiled in a huge corruption scandal involving financial kickbacks.

A letter of request for the M777s was received from India in late 2012, and all trials and evaluations completed in January this year. The LoA has been in place since February.

BAE ceased producing assemblies for new gun orders this year and has been investing its own cash, keeping the line alive with work on spares and various inventory items.

But the company said that after months of its own investment, it can no longer maintain staffing levels. The artillery side of the Barrow facility employs around 350 people, the majority on the M777.

The British-based defense contractor has been building the weapon since 2004, predominantly for the US Marines and Army. Over 1,000 guns have been ordered and the last of those weapons, destined for the Australian military, are being assembled at the company’s Hattiesburg.

Barrow is responsible for the welding, machining and fabrication of specialized titanium items, such as the howitzer’s saddle and cradle. Final assembly and test of the M777 is undertaken by around 50 employees at Hattiesburg.

BAE said the Hattiesburg facility is completing assembly of guns destined for the Australians and also resetting some weapons supplied to the US military.

That work is expected to take the US side of the M777 operation through to around April next year.

The announcement of the potential closure of the UK howitzer production site comes just 24 hours after BAE’s US arm said it was closing its Sealy, Texas, wheeled armored vehicle facility, with the loss of up to 325 jobs.

Apr. 9, 2012 By ANDREW CHUTER and PAUL KALLENDER-UMEZU – Defence News

LONDON and TOKYO — Just four months after Japan announced a ground-breaking relaxation of restrictions on the development of defense equipment with foreign partners, Tokyo is taking its first steps toward a deal with the British government.

Japan is expected to sign a memorandum of understanding covering future partnering in the defense and research sector with the British as part of a planned April 10 summit meeting between Japanese Prime Minister Yoshihiko Noda and his counterpart, David Cameron.

The Japanese have teamed with the U.S. for years on joint defense programs covering areas such as missile defense. But for half a century, it has banned cooperation with anybody else.

That changed last December, when the Japanese government said it would lift its ban on the joint development or production of defense equipment with international partners.

Sources in London said it may take another nine months or so before there is a firm agreement in place.

A U.S. defense industry executive, however, warned against expecting rapid progress on joint development with the Japanese if the U.S. experience is anything to go by.

“The Japanese have been discussing development for years with the U.S.,” he said. “The concrete progress has been glacial by U.S. standards, but the rules have changed, and the financial environment is such that Japanese industry knows they need to cooperate to advance, or in some cases, probably to survive.”

Ahead of the April 10 meeting, Japanese Defense Ministry spokesman Takaaki Ohno confirmed that senior ministry officials will meet British counterparts as part of the high-level diplomatic exchange between the two countries. But while defense cooperation and joint development programs are on the agenda, he said, no specific details had been decided yet.

A British Ministry of Defence spokesperson said, “The U.K. will continue to work with the Japanese MoD to identify the best opportunities for our defense industries to cooperate on equipment projects following the announcement of changes to the Japanese policy on overseas transfer of defense equipment.”

Previous media speculation in Japan said that three or four joint development programs were being discussed, including possible work in the artillery sector.

Shinichi Kiyotani, a Japan-based defense analyst, said he didn’t expect any major announcements to come from the April 10 meeting, and that any Anglo-Japanese defense cooperation would start slowly, perhaps with deals to cooperate on subsystems development.

Two areas might be mine detection and clearing, where the U.K. and Japan have complementary technology, as well as nuclear, biological and chemical (NBC) suits, he said.

Recent U.K. government export licensing applications show the British already provide components for the NBC market in Japan. There may also be cooperation in field artillery, with Japan’s Ground Self-Defense Forces interested in BAE Systems’ Global Combat Systems M777 howitzer, he said.

BAE is the world leader in lightweight 155mm howitzer systems, with customers in the U.S. and elsewhere.

Tony Ennis, president of North East Asia for BAE Systems, said, “Should such [an intergovernmental] framework be agreed to in the future, we would view it as an excellent initiative which would help us continue building on our established presence in Japan and explore new opportunities.”

The biggest British defense export to Japan in recent times was the sale of 14 AgustaWestland AW101 helicopters to the Japanese Maritime Self-Defense Force.

Local AW101 builder Kawasaki has delivered half of the order so far.

Ohno said the April 10 meeting with the British could be seen in the context of last year’s partial relaxation of Japan’s three principles on exporting arms, under which the export of weapons and related technologies had been essentially banned.

“The U.K. is a potential partner because our policy is that partner countries are ones that are able to cooperate with us as allies, and the U.K. is a member of NATO,” Ohno said.

Looking for Alternatives?

Several Japan-based sources characterized the talks as part of a growing and genuine interest in forging defense cooperation with the U.K., partly because Japan could now do it, and partly because of a feeling that Tokyo needs to compensate the British for Japan’s controversial decision to purchase Lockheed Martin F-35 Joint Strike Fighters over the Eurofighter Typhoon to replace Japan’s aging Mitsubishi F-4EJ Kai Phantoms.

Tim Huxley, the International Institute for Strategic Studies-Asia executive director, said the Japanese may have other motives for broadening their defense partnership base beyond the U.S.

“The Japanese may want alternatives to reliance on the U.S. for defense-industrial collaboration,” he said. “Partnership with the U.K., and probably also other friendly states with advanced defense-industrial capabilities, such as France and maybe Australia, offers a way of ‘keeping the Americans honest,’” he said.

The partnership approach also has benefits for the British. With government defense research and technology spending on the floor in Britain, the Ministry of Defence has been looking for foreign partnerships to offset the decline.

Late last year, Britain signed a defense research agreement with India covering advanced explosives, UAVs and other sectors.

“From the British government perspective, collaboration with Asian partners provides an opportunity to broaden defense-industrial collaboration beyond Europe, where cooperation other than at the bilateral Anglo-French level has virtually become anathema for the Conservatives,” Huxley said.

The Tokyo summit is part of Cameron’s three-country swing through Asia, which also will take him to Malaysia and Indonesia.

He is expected to emphasize Britain’s continuing commitment to support of the Eurofighter Typhoon program ahead of a decision by the Malaysians on the procurement of a new combat jet.

A number of defense deals with the Malaysians also could be announced. And the visit to Indonesia could see a defense pact signed by the two countries.

Staff writer Wendell Minnick in Taipei contributed to this report.