The UK's defence industry is on shaky ground.
While long-lead times provided the industry with a buffer against the worst of the recession, the dire state of public finances and the cost of financing two, now one, war has left few new equipment orders (outside of bullets and aircraft carriers, that is).
And the future for the industry is looking bleaker. Some sort of defence review is imminent. Lord Drayson, recently reshuffled back to defence procurement, has even been tweeting about "strategic acquisition reform in defence". But any decision on defence spending needs to be part of a broader strategic security review.
One defence chief told me that MoD orders and R&D spending serve as the foundation for credibility in export markets. If its good enough for the British army, then its good enough for anybody in the world, even the US.
The Eurofighter Typhoon is case in point. Back in May, the government committed to another round of Eurofighters has given the jet a leg-up in international markets. And these markets are hotting up.
As The Times puts it:
"Defence companies are preparing for the biggest surge in orders for fighter jets since the Cold War, with nearly $100 billion (£61 billion) of business thought to be up for grabs — but the stakes are higher than ever for those manufacturers chasing the contracts.
The winners of big orders will gain entry to new markets and guarantee multibillion-dollar revenue streams for decades; the losers may be forced out of the fighter market altogether because the cost of developing new aircraft has risen so high that they might not be able to challenge in future.
BAE Systems, Europe’s largest defence company, is one of the best-placed. It is part of the consortium building the Eurofighter Typhoon, a leading contender in many of the competitions."
Because of MoD's commitment to the Eurofighter, it's in line to win lucrative contracts in India and Brazil. Meanwhile, jets like the Russian MiG, the French Rafale and the Swedish Grippen are in danger of being relegated to second-class status. Even the future for Boeing's F15 and F18 is uncertain as the US prefers the Lockheed Martin F35 and the Eurofighter.
So while cuts in the defence budget are likely, they need to be strategic, taking in to account our broader security needs as well as our long-term economic competitiveness.
Quick and dirty cuts may save money, but will only push the industry out of the UK.