Mike Rouse has been in the chair as BAE Systems’ Group Managing Director for over two years now, and he has a long history at the company. He started working with the former British Aerospace Dynamics (now MBDA) and has been involved in a wide range of programs since then, including a key position on what became the Al Yamamah agreement with Saudi Arabia.
As one of two UK representatives on the BAE North American Board (along with Mike Turner) he’s very clear about where BAE Systems should be paying attention. “Without a doubt it’s the United States. The U.S. is the only place where you can make money [as a defense contractor], if you’re on the inside — and we are. Also, the customer there recognizes that you need to make money to be able to reinvest and come back with the next, better mousetrap.”
BAE Systems has 30,000 employees in the U.S. and will add another 8,000 when its acquisition of UDI is completed. Ultimately, the U.S. will be responsible for 44,000 BAE staff when the company’s Global Land Systems division (including companies in Sweden, South Africa and Turkey) is run from the United States.
“We will continue to develop our UK and European business where it makes sense to do so, but given the choice of spending our hard-earned cash in a market that gives you a sensible return versus one that doesn’t, then there’s no alternative. Europe’s level of defense spending is declining, the U.S.’s is increasing — it’s all about shareholder value.”
Asked whether BAE is really an equal partner in the U.S./UK relationship, he notes, “Well, really being on the team means you’d have full, open access and that would mean we’d be able to put a bunch of British engineers in a room with American engineers and let them get on with it. So maybe I should say we are on the pitch — it’s all about technology transfer and access. Right now we have a lot of extreme figures in the U.S. Senate who are gaining mainstream influence. But when you look at the dollar values involved, it becomes clear that all the Hunter-style sentiment hurts U.S. industry just as badly. The U.S. companies that we talk to — the Lockheed Martins, the Boeings, the Raytheons — say very clearly that they want to be less encumbered by ‘Hunter legislation’.”
“Anyone with a French association is going to have greater difficulty in gaining access to the U.S. because of the current ‘tensions.’ The situation is better for, say, Saab, Finmeccanica or some of the German industries. The UK has been lucky with its relationship. The current administration in Washington doesn’t believe that we will rush off and export sensitive technology left, right and center — unlike some on the Hill. At the same time we can’t ignore the views of Congress.” — Robert Hewson
