Welsh Affairs Committee
Oral evidence: Defence Industry in Wales, HC 102
Wednesday 29 November 2023
Ordered by the House of Commons to be published on 29 November 2023.
Members present: Stephen Crabb (Chair); Simon Baynes; Ben Lake; Robin Millar; Mr Rob Roberts.
Defence Committee Member present: Sarah Atherton.
Questions 82 - 130
Witnesses
I: Peter White, Managing Director, Qioptiq; Russ Wardle OBE DL, Managing Director, Arcanum Information Security; and Kimberly Northover, Business Development Manager, Tritech.
Witnesses: Peter White, Russ Wardle OBE DL and Kimberly Northover.
Q82 Chair: Good morning and welcome to this session of the Welsh Affairs Committee, where we are continuing our inquiry into the defence industry in Wales. I am very pleased that, for this session, we have representatives from three excellent companies based in Wales who can give us a bit of insight into the way that SMEs, in particular, form part of the defence supply chain in Wales. We are joined by Kimberly Northover, business development manager at Tritech; Russ Wardle OBE DL, managing director of Arcanum Information Security; and Peter White, managing director of Qioptiq.
To begin our discussion this morning, can I ask each of you to briefly introduce your company and say what its specialism is and where your operation in Wales fits into the wider corporation that you might be part of?
Kimberly Northover: Tritech Group encompasses eight manufacturing facilities across the globe. Four of them are in Wrexham in north Wales, and we employ 460 people there. We are providers of machined investment castings to the aerospace and defence sector.
Russ Wardle: I am the managing director of Arcanum Information Security. We are a specialist cyber-security consultancy. We probably do 70% of our work into the MOD, the defence primes and the defence supply chain. In the early days, all our work was into MOD. Most of us have come from an MOD-type background initially.
We employ just over 60 people, with a proportion of them in Wales and the headquarters functions in Wales, and the remainder scattered across the UK. We do not make a clever box or product or anything like that. We concentrate on people and process, so it is a matter of proper consultancy, dealing with people and, therefore, getting the consultants out to the sites. We spend a lot of time on MOD sites, whether it is defence work or defence primes and supply chains.
Peter White: I work for Qioptiq in north Wales, based in St Asaph. We employ 700 people there. We are an electro-optic engineering company. We design, develop, supply and support products for the military and the aerospace industry across the globe. In simple ways, we put lenses into tubes, but very complex tubes, which are then used by the Army, the Navy and the Air Force. Most fast jets in the western world fly with our product; most commercial airliners fly with our product. We also supply the space industry, so most satellites made in the western world have products made in Bodelwyddan, north Wales.
Chair: Thank you very much. That is very helpful. I am going to ask my colleague, Ben Lake, to follow up, but I should have said right at the start that we are also very pleased that Sarah Atherton, the MP for Wrexham, who is a member of the Defence Select Committee, is guesting with the Welsh Affairs Committee for the duration of this inquiry. Welcome again, Sarah.
Q83 Ben Lake: You have all detailed how you have operations in Wales in various forms. I am interested to understand how you came to be based in Wales. Perhaps you could comment as well on a few of the advantages and perhaps challenges of having a presence in Wales as far as the defence industry is concerned.
Peter White: Our heritage goes back to a company called Pilkington, one of the world’s largest glass-making companies. Mr Pilkington’s mother lived in St Asaph in north Wales. When he was looking for a site to put a factory many years ago, he wanted clean air, clean water and a site somewhere near his mother—nothing more strategic than that. He put a factory into north Wales, and that factory was our parent. We spun out of there 60 years ago, and we are proud to have been there. We have developed a cluster of optical excellence in the area, which I am sure we can talk about as we go further.
Q84 Ben Lake: We have Mr Pilkington’s mother to thank, then.
Peter White: We do indeed.
Ben Lake: Ms Northover?
Kimberly Northover: Tritech were founded in 1982, as a centre of excellence for investment castings to support, regionally, the aerospace and defence companies that were established here. We have grown predominantly through acquisition over the last 40 years. Our headquarters remains firmly in Wales. There is good infrastructure there, good proximity to, particularly, Airbus, which we are a key supplier to. Also, the area is renowned for its engineering and manufacturing skills. One of the drawbacks of that, though, is resourcing labour, which is drawn from the same pool. We are often competing for skilled workers with both customers—with Airbus—and also with our competitors, such as Magellan. To sustain the growth of the defence sector in the region, we would welcome more collaboration between Government and industry to lead initiatives to attract more talent to the area.
Ben Lake: Thank you. Again, that is very useful. Mr Wardle?
Russ Wardle: We were formed about 15 or 16 years ago. In truth, we found ourselves in Wales inasmuch as the first administrator employed was in Wales and Wales became the company address. Since I arrived as MD, we have built up our headquarters function locally.
We do find advantages from being in Wales. The collaboration with Aerospace Wales and various other Welsh Government sponsored partners works well. I cannot say that it is better or worse than it would be if we were based in England, because I do not know, but it is good and it does help us. It enables us in some areas where a smaller company may find some difficulty in breaking into things.
In terms of attracting talent, we have a relatively unusual strategy, which is that, wherever possible, we are working hard to attract veterans, and we employ a lot of people straight out of the armed forces. That plays into the fact that we cover the whole of the UK, and that is where we get people from. Of the 60-odd people in the company, well over 80% are former members of the armed forces.
Q85 Chair: Thank you, Ben. Mr Wardle, could I follow up on that answer? You particularly welcome applications from veterans. Is that because there are specific skills that you want those veterans to bring or is it because of their flexibility and their rounded—
Russ Wardle: Can I just say briefly—because others will ask questions as well—that I have appeared here before and last time I could not hear anybody? This clever little box I am wearing is not doing very much. I can hear you perfectly well so far, but I do respond well to being shouted at.
The straight answer to that question is that, initially, and for a long time, we were recruiting mainly people who were finishing a full career. Therefore, as well as the things that you would all understand, which we value from our veterans and reservists—such as self-reliance, reliability and, I have to say, the fact that they act like grown-ups the vast majority of the time—they can be trusted, and we can send them off to do jobs on their own. My job is made easier. I have very few problems with them.
Over time and as we have grown, we have started to pick up some younger people as well. Yes, it is true that it is to our advantage if staff already have some technical skills that are applicable to us. As a result, quite a proportion of our staff come from all three services but from what I, from an Army perspective, would call their Intelligence Corps and Royal Signals sort of backgrounds. The Intelligence Corps are very analytic and very quick to pick up on a situation and analyse it well, and the Royal Signals have technical skills to go along with that.
We do have people from other areas as well, and we have found recently that we have to provide more training for them. Interestingly, from our perspective, it is soft skills training: it is the people skills, it is being the consultant. In the sort of work we do, we do not deal with the technical box; we deal with the people and work out what their problems are and come up with a solution for them.
Chair: That is interesting. Thank you very much.
Q86 Simon Baynes: Thank you very much for coming to see us in person. That is much appreciated. I want to move on to future opportunities and skills and to ask Ms Northover first, how important to market the space sector is becoming for you.
Kimberly Northover: Sector diversification has certainly grown. The products manufactured at Tritech, and certainly our technologies, lend themselves to defence, and we also see increased demand for space-application products. Those are growing through our existing customer base; we are working closely with Airbus to develop satellite technologies, and that will be a key part of our future growth.
Simon Baynes: Excellent. Mr White, the same question to you.
Peter White: As I mentioned at the beginning, we have a position in space already. We make a very specialised glass product that is used on all satellites. It is used to protect the solar arrays from the radiation in space. We have a unique formulation, a unique process, and we are seeing significant growth in that area at the moment.
We have grown that particular business by 25% this year and will grow it a further 25% next year. That means we are recruiting. We have almost doubled the staff on that particular facility this year. We took 40 heads on and grew the population from 60 to 100. We have to invest in that business going forward.
There is a massive and increasing demand for satellites to support global communications and the internet—all sorts of things—and all satellites have our products. At the moment, we are struggling to keep up with demand. It is a capital investment-type challenge that we have at the moment.
Q87 Simon Baynes: Mr Wardle, is being part of the wider cyber cluster in south Wales helpful for individual SMEs like Arcanum?
Russ Wardle: Yes, it is helpful and of course the Welsh cyber ecosystem is a very supportive group. It is very interesting from that point of view.
The reality, of course, is that we are all in business, so we are very friendly and work together very well when we can, but we are all bidding against each other for the work at the same time, I suspect. However, we are slightly different, because we are the only NCSC-assured cyber-security consultancy in Wales, so we are not quite fishing in the same pool.
But, yes, it is useful, it is supportive and it gives us access to opportunities such as the more expensive, larger trade shows, where we may share a stand, for instance, and things like that. That is all useful.
If I may briefly go back to your comment about space, we are also picking up more space customers now. We are working with two companies at the moment. Clearly, most space companies have an affinity with aerospace and defence as well.
Of course, from our point of view, particularly with a great focus on MOD work, UK Space Command is an interesting opportunity for us. We are certainly looking with interest for when they start letting contracts that will be applicable to SMEs such as us.
Q88 Simon Baynes: To follow up on that—I want to ask all three of you the same question, but I will start with you, Mr Wardle—what are some of the key challenges you anticipate in achieving your ambitions for growth, just in general?
Russ Wardle: There is always a slight challenge about people, notwithstanding my answer to an earlier question. Currently, we are doing well, and I do not think that this is a major problem at the moment. It may become one at some stage.
Our bigger, key problem—because of the way we are structured and where our real interests are—is that despite an avowed interest in and desire to work with SMEs, a lot of the Ministry of Defence acquisition frameworks are now very large, and it is sometimes quite difficult for SMEs to pick up and get full visibility of the work that is available there. These things are being run by much larger conglomerates, and they seem to be scooping quite a lot of the work. We have a lot of work to do to keep the visibility of the SMEs up there.
In particular, we find access a little more difficult. I will be completely honest and say that, having come from a quite senior position in the military, it still galls me sometimes that I am now an exceptionally small fish in a big pond, and I have very little access, whereas the primes have a huge amount of access; we do not.
Simon Baynes: That is really interesting. That sort of straightforward view is exactly what we are looking for in these discussions. Ms Northover, the same question to you.
Kimberly Northover: To date, the growth of Tritech has been self-funded. We require support to continue to grow and develop technologies. Without those advancements, customers will turn to other countries that show readiness to supply in line with their demands. That is a risk to jobs in the region and also to the positioning of Wales as a key contributor to the defence sector.
Also, there is access to research and development. We have engaged with HVMC, and these catapult centres are excellent at supporting R&D and supply chain development, but they are incredibly costly to access. The latest case study is based on the enablement of Jaguar Land Rover’s successful transition to electric vehicles, which is a phenomenal achievement but one that has required a multimillion-pound investment, and, unfortunately, SMEs are not positioned to finance such advancements.
Simon Baynes: That is again a very helpful answer. Finally, Mr White.
Peter White: As my colleagues have just said, the challenge of an SME—and we are a relatively large SME—is to try to do everything. We compete on a global stage, and to be competitive, we have to drive productivity. That requires the latest machines and the latest machine tools, and they are expensive. We need to invest in process and technology, and that is a demand.
As a company, you are always looking for a return on investment, and some of our competitor nations have a different business model, where they can be assured of a production output if they invest in the R&D. As a company, we speculate to develop technology and product and then aspire to sell it to our home nation. There is no guarantee. I can think of at least three competitor nations where they get contracts for the production, but they have to do the development. They pool the technology, but they have an assured return. We do not have that.
We are not looking for handouts. We are not looking for charity. We are looking to compete equally on a global stage. We have a philosophy in the nation that we have to be transparent and spend taxpayers’ money wisely and carefully, and I agree with that wholeheartedly, but other nations do not interpret the rules quite as strictly as we do.
Simon Baynes: Again, thank you very much. Those are fascinating answers.
Q89 Chair: Can I follow up, Mr White, on that point, so that I am clear myself? You are saying there is much greater risk for a company like Qioptiq working in the UK, compared with competitors in the other countries you referred to, because they have the assurance of a contract from their host Government?
Peter White: Yes. Precisely. I can think of one really good example where a competitor has the production guarantee. There will be a contract for 4,000, or whatever the number is, so there is a guaranteed return. If they hit the development milestones—which they will—they can see an output that gets them the return. We do the development and then hope to take the product to market, to a competition; if we lose, there is no return. It is hard to keep investing if you do not get the returns to fund the investment.
Q90 Chair: I know a little about your company; I had the pleasure of visiting your site some years ago, so I have a bit of an understanding of some of the elite kit that you provide to different armed forces around the world and of some of the products that you have put into space. Would a company like yours—you have described yourself as a fairly large SME—have a dedicated relationship manager in the MOD? What is your experience of accessing the central teams in the UK Government that you need to be speaking to?
Peter White: We have a great relationship with the MOD, predominantly the Army, because in that domain we supply direct to the armed forces of the world. Just as a by the bye, we are the No. 1 supplier to the New Zealand Defence Force. We won the competition. We are a little company in Wales, and we are the No. 1 supplier to the whole New Zealand Defence Force, so we have done something to excel there.
We know our customers very well, but they are running by very good rules—protocols—and they will have competitions. They will follow the doctrine of having a competition and buying the best equipment for the UK armed forces, and I would support that. I see other nations where they are more protective of their sovereign capability—that might be the politer way of saying it. If we do not win, the sovereign capability that we provide to the UK—and we are proud to do that—might dwindle.
Chair: Thank you very much.
Q91 Mr Roberts: I want to follow on from what Simon and the Chair were saying. I think I am right in saying that Qioptiq has been owned by a US firm since 2013 and that Tritech has been owned by an Indian firm since 2011. I am trying to get an idea of two things in terms of business growth. Are they large investors? Do they back you very heavily and put money into the UK operation? From a risk point of view—because we are talking about very sensitive defence equipment here—are there any security risks or any issues as a result of being owned by third-party organisations overseas?
Kimberly Northover: Tritech Group are part of the Neterwala Group. Neterwala are an Indian organisation specialising in metallurgy, and they do heavily support the growth within the UK.
With regard to any hindrance that might result in with military contacts, for example, we are an ITAR-regulated organisation. Sixty-five per cent of defence products that are manufactured within Tritech through the supply chain go to the US, part of the GMLRS programmes and the SM programmes. Very little of what we manufacture is sovereignty work within the UK. This may be down to Tritech not being a design authority—we are a build-to-print—so our engagement with the MOD for contracts is quite limited. Certainly, however, we have not recognised any drawbacks from being part of ownership from another country.
Peter White: I understand the question. I have been in the company long enough to have seen a variety of ownerships. In 1991, we were fully owned by Pilkington. From 1991 to 2000, we were bought by the French company Thales, so we became French for a little while. We were then sold to a private equity company in 2005, when Qioptiq was born. In 2013, we were bought by Excelitas, which as you say is headquartered in the US.
In all that time, I can say that the most significant investments have been when we have been owned by private equity. We are owned by a private equity company at the moment, and their raison d’être is to grow the business. This year ending, we will have invested 5% of our turnover in capital equipment, and another 5% in R&D, so we are investing 10% of our turnover in the future and in the growth of the business.
We are a UK limited company wholly owned by an American parent. In terms of the board, I have the casting vote as MD of the company, so we are controlled as a UK independent company. If I thought there was something of sovereign need that we would have to do, I can override the board in America.
Mr Roberts: Thank you.
Q92 Sarah Atherton: It is good to see you all, and it is good to see you again Kimberly. You have all mentioned space within your businesses. The space sector has been growing 21% year on year from 2012. Last year, the Defence Committee produced its report “Defence Space”, which identified having a talent pipeline as a critical enabler in developing defence policy. Can you each tell me how, within your respective businesses, you are acquiring and developing skills, and whether you have a skills shortage?
Actually, Chair, I should register an interest. My son did—let me get this right now—a university intern development engineer stint with Qioptiq in St Asaph about 10 years ago. Peter, you were his boss’s boss, apparently, so I will register that. You are world-leading, so I was very pleased that he got that place with you. So, Peter, skills.
Peter White: I did not realise, Sarah, but I am delighted. We like to give interns opportunities. We do it for a number, and we have recruited from those interns. It is a great way of getting youngsters involved in the business, and we get to see talent as well. It is fantastic.
On space, we have grown, as I said earlier. We are continuing to grow that particular business, and it is a specialism that we have. In the last week, I think, Aberystwyth University announced their programme on the Mars Rover. They have a programme, and we are supporting Aberystwyth on that. I think we got a small mention, because we play supporting role to them, and we are delighted to do that.
That is a growth area for our business—to take our optical engineering skills and apply them to space solutions. To do that, we will need more of what we have—more optical, more mechanical. It is a specialism. We have been lucky so far to be able to recruit, but our recruitment on space has been more of the operative rather than the design. We announced 40 vacancies on a Friday, and by the following Monday, we had about 80 applicants.
We are an employer of choice in north Wales. Our average salary is about 20% higher than the Welsh average, so I would like to think we are a quality employer. I think we have, I think, very beneficial terms for our employees, so that helps when we are trying to recruit.
What would also help us is better infrastructure in north Wales. It is a lovely rural location, but it is a rural location, and the wi-fi is not as good as we might desire. The links—the road links, the air links—have degraded. Manchester has become less of an international airport than it was. All of that has a disadvantage when we are recruiting people. When we are trying to persuade people to join, it is a lifestyle choice. If you move from the south-east of England to north Wales, it is fantastic when you get there, but we need that infrastructure. That is one thing I would love to see support on.
Q93 Sarah Atherton: That is very interesting, because one of my other questions was going to be what challenges you have. Kimberly, your business is slightly different. You do a lot with apprentices.
Kimberly Northover: We do. We are avid supporters of the development of young people. We work closely with Coleg Cambria to offer apprenticeships in engineering, technical and CNC machining positions, and we have had incredible success with this partnership. We have a forecast now to double our intake to 10 placements for next year. We have a retention rate of over 90% of our qualified apprentices. We have seen them move up through the business to the most senior engineering and technical positions.
As well as attracting talent to the area, we also need to attract young people to STEM careers, where there is a national shortage at the moment. We have discussed this with Aerospace Wales. I know Airbus is promoting STEM as well, with STEM days and careers days, but it needs to flow down through the supply chain.
Q94 Sarah Atherton: Are there any gaps in your business at the moment?
Kimberly Northover: There are, yes, mainly for skilled workers. This comes down to the earlier point that we are competing in the same pool, even with Airbus, our customer. They have a very aggressive growth strategy plan as well. They are just 10 miles from us. Within the region, it can often be quite difficult to bring people in when we are competing with the likes of Airbus.
Q95 Sarah Atherton: How do you overcome that?
Kimberly Northover: By offering development and trying to make the employment packages as favourable as we possibly can. That is it, really.
Sarah Atherton: Russ?
Russ Wardle: Our situation is slightly different. As I have described, we do not make a product and we are not looking for the same sort of geographical workforce as perhaps others are, so that is not particularly an issue for us.
If there is an issue that ties into the same sort of thing, it is that cyber-skills are increasingly in demand. While we have a good, strong record of recruiting appropriate people, we also spend a lot of time and money on training them further. Our big issue, always, is trying to retain them. There is a lot of demand for them.
It is a double-edged sword for us and, I am sure, everybody else as well: we celebrate the success of our people—if somebody in the company passes an important course or something, it is on the website, on LinkedIn and on all those sorts of things—but, within moments, they start getting emails from recruiters offering them a job at better than what we are paying them. Sometimes we wonder why we are bothering to push it out there. That said, we have incredibly low turnover, because it is the culture that keeps people, rather than just the salary. That said, the salaries that we pay are high.
If I could briefly touch on the skills part from the start of your question, which was about space. It may be interesting if I briefly explain what cyber-security is about in the context I am talking about. I keep saying that we do not make something. We are either acting as the customer friend, working for the MOD, or the supplier’s friend. In terms of working as the customer friend, any piece of equipment coming into use by the British armed forces, if it will connect to the internet in any way whatsoever, needs to be, in old language, “accredited”—now, it would probably be more accurate to say “assured”—so we know that it is safe to use. The equipment is being produced by my colleagues here on the panel and being sold at the MOD. There will be a stringent programme to ensure that they meet all relevant policies, that they can be connected to UK systems, and that it is safe to do so. If we are working for the supplier, we are helping them to get to the point where their stuff will be assured to be taken in service.
That sounds simple, and you will probably all think, “Well, that’s obvious,” in terms of computer systems, communication systems, mobile phones and all that sort of thing. But it gets more complicated, because it applies to platforms as well. Armoured vehicles, submarines, ships, aircraft and spacecraft have a multitude of systems on them that fall into that. For instance, in terms of accrediting the A400M transport aircraft at the time, it had British systems—some up to above secret level—on board, as well as European systems and American systems. They all have to be kept apart. They all have to be assured that they will be operating. That is what we are actually doing.
Q96 Sarah Atherton: I notice your veteran’s badge: how do you attract veterans? Are you all signatories of the covenant?
Russ Wardle: How do we attract them?
Sarah Atherton: Yes.
Russ Wardle: Our strategy is that we are becoming increasingly well-known in those areas that will most likely produce people anyway. We are very active in the veteran recruiting areas. We get our name out there like that, and people tend to beat their way to our door quite early. We have a good network for that. Again, we are helped a little bit, in that we are big, now that we are over 60 staff—we are probably one of the largest pure-play cyber companies around—but that is still relatively small. It is not that I am looking for vast quantities of people; I am looking for a steady trickle.
We are also in the lucky position that I can map demand to the work that we have coming in. I cannot do that exactly, and if a contract drops tomorrow, there is no point going out and looking for people, but we are able to grow relatively steadily. So this is not currently a massive problem for us.
Q97 Sarah Atherton: Lastly, the UK Government have their cyber-security strategy and defence space strategy, which talk eloquently of encouraging, upskilling and nurturing workforces. Can the UK Government, and therefore the Welsh Government, do more to support you with getting the right people to do the jobs that are so important for our defence sector?
Peter White: Yes, I think that we can always do more. We have a close relationship with the different parts of the Welsh Government, but one of the comments from my HR team is around degree apprenticeships—we have apprentices and we are moving into degree apprenticeships. The courses that are available in Wales for degree apprenticeships are limited, and the Welsh Government do things in a different way than the English Government—I will not comment which is right or wrong, but they do it differently—and we find that restrictive. We would like to recruit degree apprentices and have them study, but degree apprenticeships are not on the list of courses that are available and supported. That holds us back.
Kimberly Northover: For Tritech, the focus needs to be on the development of our technologies, which in turn will attract new people. That is about focusing on future materials, powder metallurgy, 3D printing, AM, and upskilling people through that with degree apprenticeships. We find that, within north Wales particularly, the engineering degrees are focused around aeronautical, and not so much on mechanical engineering.
Russ Wardle: I would not say that we get a huge amount of help from either the UK Government or the Welsh Government. We get a little. We are interested in degree apprenticeships, as has been mentioned. If I am honest, bachelor-level degrees do not really do much for us. It is more MScs.
If I had an observation there, it is that I have some issues with the different approach to degree apprenticeships across, in our case, England, Scotland and Wales. I sometimes play slight games on where we are and who we are because I am interested in where the individual lives. I have members of the team in Scotland, England and Wales, and they all access completely different MSc degree apprenticeships and, in the case in Wales, no MSc degree apprenticeships, because they do not do them.
Q98 Chair: Thank you, Sarah. Can I follow up with Ms Northover about the apprenticeship point? You said that, despite the close relationship that you enjoy with a company like Airbus, to some extent you are also looking for skills and talent. As you well know, their apprenticeship scheme is massively over-subscribed. It is perceived as one of the elite apprenticeship schemes for a young person to go into.
Kimberly Northover: It is.
Chair: Could Airbus not come to you and say, “We have had x number of people we have been able to take on this year. Here is another great cohort of people we haven’t been able to find a place for, but we could redirect them to you”? Does that kind of collaboration go on?
Kimberly Northover: It would absolutely be welcomed. We attend the same college fairs, so we are generally there at the same time. We try to get in early at the local colleges to pitch Tritech and to sell it to young people. It is a slightly different technology. It is that little bit lower down the supply chain, where we are looking more at materials, metallurgy and machining. That is how we pitch it to young people.
Q99 Chair: What disciplines are your apprenticeships focused on? Give us a flavour.
Kimberly Northover: In terms of what they are looking to achieve from it?
Chair: Yes. You have broadly talked about mechanical engineering. Would that be the label of the apprenticeship that they are doing?
Kimberly Northover: Potentially. We also offer CNC machining roles. We have some of the most advanced machinery available in our dedicated machining centres in Wrexham as well. So people are working with the latest technologies in machining. We talk about future growth and progression, we showcase examples of people in our organisation—laboratory roles, materials and mechanical testing. All those different roles are available to young people coming into our business.
Q100 Chair: Do you think we have a cultural problem, where youngsters are less interested these days in training and apprenticeships that involve tools and machining? We have heard similar to what you have just told us from numerous different sectors, from the higher-end welders involved in energy projects through to other sectors as well.
Kimberly Northover: Yes, certainly. I think there is a generation now of young people who aspire for degrees, and not necessarily through an apprenticeship route, so we must collaboratively look to promote that route and the security that it offers. A conventional degree does not necessarily offer job security at the end of it—
Chair: Or a decent salary.
Kimberly Northover: Exactly. In that same timeframe, people are trained in very specialist areas, and there is security there. We really need to showcase that to young people.
Q101 Chair: Are schools helping?
Kimberly Northover: We have little engagement with schools. Again, when we talk about the promotion of STEM careers, I think that SMEs as well as the OEMs need to be in there at a younger age to talk about that with people.
Q102 Robin Millar: I am the Member of Parliament for Aberconwy, in north Wales. I grew up in north Wales, and I had the typical experience of expecting to have to leave to find a decent job, build a career and such. That is what I did, and I came back when I was elected back there. I never lost my ties—my parents were there, and I had my house there.
The area I would like to dig into is the relationships you have with SMEs, research and development opportunities and prime companies. Perhaps I could go straight to you, Ms Northover. You mentioned that the range of products you supply to Airbus has increased over time. I am interested in what you think has made that partnership work and, specifically, whether is replicable with other primes. I am thinking of the advanced manufacturing cluster we have in north-east Wales. Has that worked? Could it be a cookie-cutter model we could deploy elsewhere?
Kimberly Northover: Potentially, yes. Tritech started as a centre of excellence for investment castings. Recognising the demands of our customers, we have followed up on that. We aim to provide product now that is manufactured, and we have added operations to that. We now offer CNC machining and assembly surface treatments through sub-contractors as well. That is so that we can reduce the supply chain demands of the customer, which is primarily the USP for Tritech Group. What makes us more attractive is that they do not need to have a supplier of castings, a supplier of machining, and somebody else to go to for surface treatments. It is more of a one-stop shop for our customers. We have found that that has been beneficial in promoting and developing our relationship with our OEMs.
Q103 Robin Millar: I know that the MOD’s encouragement to SMEs to provide supply chain services to the primes is a key area of interest. I am curious whether you have seen evidence of the MOD’s support for SMEs actually happening and business being stimulated as a result. Mr White, what steps has Qioptiq taken to make sure your own supply chain is as accessible as possible to SMEs? I note your comments about a cluster, which I am interested in, because that takes time and commitment.
Peter White: I think that the cluster was not a deliberate strategy—it happened. We have been in north Wales in St Asaph for 60 years and we have fourth-generation families in the business. From that point of view, it is fantastic. People left and they started up little businesses. Those little businesses have grown. OpTIC, which is now Glyndŵr University, was a spin-out from people from our factory. They went away and started with a vision.
I can think of three or four other companies that have done the same. There are probably 2,000 quality jobs in north Wales—700 of them ours, the other 1,300 from other companies, and all of them in the St Asaph region. It is almost who knows who. It is families, and it is people. They have started the businesses. So it is a connected industry.
To answer your question on how we can encourage the supply chain, I think that it is a challenge. Ten per cent of our supply chain is in Wales; we have about 400 suppliers, and 40 of them are Welsh suppliers. By value, it is not 10%; it is 5%. We are buying higher-value items globally. We have to compete, so we have to go where there is a cost benefit. We would rather not; we would rather do things locally and work with suppliers. We use Tritech as a supplier already and there is the potential perhaps for more. We will follow that up after this meeting—there is the first connection. [Laughter.]
We need suppliers in Wales to be world-class, because we have to be world-class, and we need people who are productive. We are all competing with overseas suppliers. We are all competing with machine shops in Malaysia or optic shops in India or eastern Europe. That is our competition, and to compete on that global stage, we need suppliers in Wales who are world-class. Then we can work with them. If we do, we will be delighted. I think that it is a challenge, but it is one that we all recognise. It is hard.
Q104 Robin Millar: Can I press you a little on that? I love the answer, “It just happened.” Anyone who lives in north Wales will recognise that that is a very north Wales answer to that question, because these things do not just happen. I suspect that some of that is organic, and it is a consequence of deliberate actions. One point you just made there was about being a world-class company requiring world-class workers and world-class suppliers. Is that something that you have seen—that by demanding high standards, you have seen high standards in response? Have you set a local standard?
Peter White: Yes, without consciously doing it. That is what I was trying to say. We know that we are world-class. I can give examples. We directly export 70% of what we make. We are exporting to nations around the world. They do not come to us because they like us; they come to us because we can solve problems that other companies cannot solve. We solve their optical problems and then we supply. To do that, you have to continually innovate and develop, and you need world-class people.
I call our products—not disparagingly—optics in tubes. We are now working on artificial intelligence. We are putting brains into the product. We benchmarked our prototypes and concepts in the US with the special forces, and the feedback we got was that what we were making was ahead of anything they had seen from the big US primes. You do not have to be big to compete, but you have to be on your game all the time.
Q105 Robin Millar: I think that it is an inherent part of the north Wales narrative that we send great stuff all over the world. We always have done, and we will continue to. Thank you for that.
In the south-west of England, an MOD-backed regional defence and security cluster has been set up to support engagement between large firms and SMEs. Do you think that model would work in Wales? That is to all of you. Perhaps, I can start with you, Mr Wardle.
Russ Wardle: Any opportunity to engage more and establish stronger relationships is to be welcomed. I cannot speak to whether that would definitely work in Wales, but any opportunity to better engage would be welcomed.
Kimberly Northover: The trade association Aerospace Wales are extremely proactive in promoting the development of relationships between SMEs, primes and OEMs. They regularly signpost information identifying funding opportunities, where those are available, and they give us a platform to promote our organisations to both UK and export markets.
In recent years, however, we have seen the Welsh Government scale down their presence at defence exhibitions amid controversy. These are key platforms for SMEs and suppliers to the sector to showcase their capabilities—we are talking world-class capabilities in north and south Wales—so that really needs to be supported. They are a major part of the Wales aerospace, cyber-security and defence sectors. The value there is over £4 billion, and over 18,000 people are employed. Promoting us as a defence nation should not be something that we shy away from.
Q106 Robin Millar: Mr White, is that something that would enhance your presence in north Wales, or are you happy with the relationships and the support you are getting at the moment?
Peter White: The relationship we have is fantastic, but it gets put to the side when there is a competition, and the competition is on competition rules. A lot of nations these days—NATO buyers—are moving to what is called MEAT, or the most economically advantageous tender. Anybody who meets the requirement gets across the line, and buyers then pick the lowest price. That has no regional bias; it has no regional benefit. It gives no credit to any company in north Wales, south Wales or anywhere else. It is open to anybody who meets the criteria, and the lowest price wins. Therefore, you have to be competitive, and you have to try to find a way. But even if you have done something clever, if that is not part of the tender, you score no points for it. It is a harsh world out there at the moment, and Governments are challenged to spend their money wisely.
Q107 Robin Millar: You mentioned in an earlier answer the importance of innovation, and any world-class business needs to be able to innovate. Thinking about your R&D and innovation work, how do you collaborate with academia? You are doing a project with, I think, four Welsh universities. I have a particular interest in Bangor University, and my colleagues might have an interest in others—other universities are available, as they say. Could you elaborate, please, on what you are doing, how you collaborate with academia or other companies, and what the Government could do to help you scale up? We can start with Mr Wardle, whether it is applicable or not.
Russ Wardle: I think that, again, this is probably a question that is more applicable to manufacturers than a service provider.
Robin Millar: I did not want to make that assumption, but yes.
Russ Wardle: If I am honest, we do not particularly need help to scale up. We never have, and I do not foresee us needing to do so.
Kimberly Northover: The scaling up for Tritech will involve investment into upcoming technologies.
Q108 Robin Millar: Specifically, scaling up of your innovation and R&D functions.
Kimberly Northover: Yes. We are now in the process of establishing a new engineering research and development facility to support our projected growth. That focus will be on technologies, future materials and understanding what the demands are of defence platforms going forward. That is where we will need assistance as an organisation to help with that growth plan.
We have had academia collaborations. We have taken industrial partnerships with universities, but facilities are limited. We are looking at quite a niche market. We have found that the focus is perhaps more on satisfying a PhD than on overall industry development.
Peter White: Of the universities in Wales, we have collaborated recently with Cardiff and Bangor. We are currently working with Aberystwyth, with Swansea and with Glyndŵr, so we do work with Welsh universities. We need to find universities that can add value. It is easy to get drawn into something that looks like it could be interesting but that is a diversion. You have to focus your R&D.
We are an optical engineering company, and there is no longer any university in the UK that provides optical engineering as a course. There used to be, but it stopped. There used to be one at Imperial College London. Now, there is none. We are now working with Delft University in the Netherlands—we have PhD activity going on with them.
We have nine optical designers as a business, and the only way we can grow that is to bring in new people with MScs, train them and then grow them. At some point, if that conveyor belt breaks, it will be difficult to restart it. You have to have a continuous flow.
We used to rely on universities, but now—back to a point that was made earlier—degree apprenticeships are not always on the courses that we would like them to be. We would like to have one in business development, for example, and there is not one. It is not all about the technology; it is also about the selling of the technology and the marketing of it.
So I think that businesses need a broad array of skills, and we need to develop that better. The onus is on us. It is no use blaming other people; we have to work with them.
Q109 Robin Millar: You have made some really important points there for us. Peter and Kimberly, if I could go back to your very first answers, where you talked about your overseas ownership, has that had any effect on where your R&D might be happening? Is it perhaps happening, but in other parts of the world?
Peter White: The answer to that is actually no. We are owned by the US, and one of our strategic goals is to win more business in the US. To do that, we need to build a relationship—and we have a fantastic relationship—with DSTL. We do a lot of work with DSTL on prototypes, products and concepts. The US would like us to replicate that into the US by working closer, but there is an ITAR barrier in the way. We would almost have to replicate our skills into the US, because they cannot tell us about their future needs without licences. However, to some degree, our US owners would like us to replicate, because they recognise the strength of what we do in the UK and in Wales and they think it is fantastic.
Kimberly Northover: Certainly for Tritech, our R&D is being pushed by our Indian owners. India are a very fast, up and coming development country in the aerospace and defence sectors, and their own R&D is very fast-paced. Our customers are looking to Tritech particularly to offer low-cost sourcing. We are trying to transfer work packages and take on higher-value and more complex manufacturing within the UK. But they are fast becoming more competitive to what we can do in the UK, so that is driving our innovation.
Q110 Robin Millar: Just a final couple of questions, please. The MOD has an agency—the Defence and Security Accelerator, or DASA—which has 12 regional innovation partners. One of those is in Wales. Have you had any exposure to it? Are you working with it at all? If not, why not? Is there something missing or something that could be done better?
Russ Wardle: We know them. We have had conversations with them, but we do not work with them.
Kimberly Northover: Our engagement is very limited and again, predominantly due to the fact that we are a design-to-print, not the design authority, so we are manufacturing the designs of our customers.
Peter White: We have one contract with DASA. We bid and we were successful. DASA and DSTL, to my mind, are complementary. We have a number of DSTL contracts and work closely together. That is fantastic because, going back to a point I made earlier, it allows us to develop things—it is co-funded some of the time, and some of the time it is more than co-funded—that the user wants, it allows us to listen to what the customer is going to need, and it drives our strategic thinking. That is fantastic if you can get in there, but you have to have something different. You have to already be innovative in order to win those contracts, because they do not fund today’s technology. One programme we are working on, they describe as “the generation after next.” They are not interested in next generation; it is what is coming the generation after—it is generation-after-next technology.
Q111 Robin Millar: Very interesting. Just a final question if I may. Do you think the MOD does enough overall to recognise the potential contribution of SMEs to our onshore defence and security? I will start with Ms Northover.
Kimberly Northover: From Tritech’s perspective, I would have to say no. Of the £11 million turnover for defence and military aerospace, 65% is exported to the US. Only 15% goes to UK OEMs. The rest of that is made-up of military aerospace. So I would have to answer no.
Peter White: From our perspective, I would say yes. UK MOD is our single biggest direct customer, as well as indirect because we supply to people who then supply to MOD. It is difficult for the MOD because the big programmes they are awarding are going to go to the big primes, and it is then difficult. In terms of engaging with SMEs, they have to start at the beginning. You have to win those seed contracts and then you have to grow with it. That is our business model.
Russ Wardle: From our perspective, I have noted a couple of times that I think that SMEs find it difficult to engage adequately with the MOD.
If I may slightly twist the question, one of the problems we have as a service provider, as opposed to a product provider, is that we are always under greater risk of budget changes and things like that. By that I mean that, if you are producing a product—a platform of any kind—you are inevitably locked into long-term contracts, which provides a lot of assurance to you about the future.
We find that, in our world, contracts are inevitably written so that they can be stopped very quickly and very easily, at little notice. Only in the last two weeks—this is not a defence example, but it is one example—a Government agency, overnight, with no warning at all to us, announced that they had run out of in-year money and wanted to stop work immediately. For us as an SME, five fully employed people suddenly had no work to do, and that has caused us quite a lot of problems.
Q112 Chair: Just developing the point about SME relationships with the MOD, our predecessor Committee did a report on defence in Wales in 2019. Mr Wardle, I think that you gave evidence to that. One recommendation of the Committee at that point was that the MOD should simplify tendering arrangements for SMEs and provide more support. Is it possible to discern any improvement on that score in the last five years? Perhaps Mr Wardle can go first.
Russ Wardle: The straight answer would be no. The slightly developed answer would be that, in general, if anything, it has got slightly more complicated. A specific example would be the social good elements of these things. For a relatively tiny piece of work that will take place over a very short period of time, we have spent an inordinate amount of time explaining how this will provide social good, when, frankly, it is difficult to do that. We are providing a service over, say, three weeks of work. We are not going to employ lots of extra people. We are not building schools or anything else like that. I think that it is getting harder and more complicated.
Chair: That is helpful to hear. Thank you. Ms Northover?
Kimberly Northover: I do not really have anything to benchmark our latest engagements with, really. We have looked at platforms such as JOSCAR and Hellios to try to promote Tritech as well. Because we are not a tier 1 supplier, it is quite difficult.
Q113 Chair: Mr White, you have had some success with the MOD. You have already spoken today about it being your most important single customer. Is there a particular secret there, apart from a track record of excellence, which I guess every company aspires to?
Peter White: I cannot think of any secret. I think that it has got a little harder. The world we live in has become a bit more litigious. I have seen programmes where we were told we had won, and then one of the losing contestants protested and the competition was annulled because of technicalities. I see the MOD in a very difficult position.
People do not like to be told that they have lost, and they get lawyers poring over the contract to find reasons to protest. I think that is forcing behaviours. It makes it difficult to run a competition, if you are looking over your shoulder before you start. We have seen that, and it was frustrating. We won, and then we lost. Then, on the rerun of the competition, we lost to another European nation. So, having won, we finished up not having won. That can be frustrating.
Chair: You were effectively notified that you were going to be awarded the contract, and then that prize was out of reach.
Peter White: Every contract has a 10-day standstill period, so the MOD announces its decision and then there are 10 days for people to do just that and to say, “I don’t think this was a fair competition.” That happened, and somebody protested in that standstill period. The protest was upheld, the competition was annulled and rerun a year later, and when it was rerun we came second, not first.
Chair: That is very interesting to hear. Rob Roberts, do you want to develop this point?
Q114 Mr Roberts: In the time that we have left, I want to talk a bit about your interactions with the UK and the Welsh Governments and how that works on both sides.
In our previous evidence session, John Whalley from the Aerospace Wales Forum suggested that, because some parts of defence are reserved and some parts of economic development and things are not reserved, there is a bit of a tension and a bit of conflict, in that the UK and Welsh Governments do not necessarily always want to work together. How does that sound from your point of view? Do they work together effectively, and do they support you and your companies as well as you might have come to expect?
Russ Wardle: Again, it is difficult to give a negative answer. I am not entirely sure we get any particular support from the UK Government, other than being able to tap into some of those programmes that we have already identified, such as degree apprenticeships or whatever—things like that that that are Government policy. Other than that, I do not think we get any support from the UK Government, in truth.
The support we get from the Welsh Government tends to focus through things like John Whalley's aerospace forum. This goes back to a previous answer. From my perspective, there is a bit of a love-hate relationship with the Welsh Government. They like the defence industry, in that it produces high-paid, high-tech jobs—they like all that side of things—but they are, probably understandably, not particularly keen to be associated with the slightly bloody end of the business. This leads to an answer that one of my colleagues gave earlier about the way the Welsh Government try to distance themselves from things like DSEI. They do that by getting Aerospace Wales to front it. It is pretty opaque, in that the same Welsh Government officials are stood there on the stand as would be if it was the Welsh Government, but the branding has changed.
Q115 Mr Roberts: Does it cause trouble, where you notice that distancing? Is it a tangible problem?
Russ Wardle: No. From a personal point of view—not necessarily from our business point of view, but from my wider defence engagements and things, and I am chairman of the Reserve Forces’ and Cadets’ Association for Wales—I would love to hear the Welsh Education Minister stand up and say, “Actually, there are literally thousands of brilliantly paid jobs for 16-year-olds joining the armed forces on apprenticeships.” They are not going to do that; I have been around this a long time, and they are not going to say that. But does it impact us? Not really. We work our way around the system.
Q116 Mr Roberts: Mr White? The two Governments?
Peter White: The honest answer is that I cannot see any conflicts but, like my colleague, I think that, in terms of the amount of benefit we get directly, it would be hard to write a long list of what we get.
Q117 Mr Roberts: From both?
Peter White: From both. I have a great relationship with the MOD. I have a great relationship with customers. Our HR team have a great relationship on some of the skills and the development. Are we getting tangible things from it? The last tangible benefit was support on a major bid in 2015, so I am looking back eight years. Coming here, I was wracking my brains to think what else the Governments have done for us, but I could not think of anything significant to add to that list.
Q118 Mr Roberts: I do not necessarily mean what they have done for you, but do they engage with you well? Are there open dialogues? Are you able to impact on things that Government are doing in your sector?
Peter White: There is not a great dialogue, and I think that the responsibility is with myself and the company. I do not think that we have engaged as well as we could. Having said that, if I could see a return, I would be delighted to engage. I tend to spend my time engaging where I think that I can get a return for the business.
The proof is that we are a member of Aerospace Wales, a member of Make UK and a member of ADS. We do all these things, and I spend time and I listen, but I do not think I have engaged enough as a business. So that is a failing; we hold our hands up to that, and we could do better. But I do not see what I am going to get and, therefore, I do not spend a lot of time doing it, if I am honest.
Kimberly Northover: Our engagement with the Welsh Government, I cannot fault, really. Sarah has visited our facility in Wrexham to discuss concerns we had about skills shortages and how we could promote our business to veterans, so she was a great asset in supporting us with that. But that is really where it comes to a standstill with the UK Government. The basis of all of our communications comes through the Welsh Government and the trade association, Aerospace Wales.
Q119 Mr Roberts: We have heard a bit about what backing you might need. In terms of growing your business, we have heard lots about apprenticeships today, but we have also heard a bit about the other, non-technical stuff that all your businesses require. Are you able to find those non-technical skills in the local job markets that you are in? If you are not, do you engage with the Government on that side to say what skills are missing in the supply chains for skills in your areas?
Peter White: We can find most of the skills we need, and I think we are big enough to be relatively self-sufficient. I am not sure how I would engage and who I would engage with if I was short of skills. Being honest, I am not sure who I would go to ask for help. That is probably one of the challenges. You would sit there and think, “Okay, we could do with some support. How and who?” It is not obvious; it really isn’t. I have been in industry long enough to think that I would know that. If it is other challenges, you know what to do and how to do it, and it is easy. On engaging over skills shortages, I would not know where to start.
Kimberly Northover: I very much echo that answer for Tritech. We have a large workforce of skilled and semi-skilled labourers, and that is where we have had issues with recruitment post covid. We have recovered within the industry very quickly—more quickly than we were expecting to—but drawing people back into the work environment has been where our biggest challenges have been.
Russ Wardle: Our requirement is largely on the running the company side and our administration—how we are actually set up and run. Unlike my colleagues, we are down near Cardiff. You might perceive that that would be quite expensive or whatever. The reality is that I am always shocked at the high quality of IT support, finance people, administrators, security administrators and people like that that I can find. It is a fact that, even though we are good payers, it is still very affordable to do so, to be honest. I do not think that we have a problem with that. We are going out advertising and interviewing large numbers for a job, and there are some very high-quality people around and available.
Q120 Mr Roberts: Very quickly before we close, the last area is export opportunities. This is somewhere where the Government really should have more of an impact. Ms Northover, you have said a couple of times that 65% of your stuff goes to the US. That seems a large proportion. Have the UK Government been any use or any help in opening up other markets or getting you into places when you perhaps say, “We want to be there. Help!”?
Kimberly Northover: Yes, certainly. The most recent example of that is Tritech’s drive to promote ourselves to the Asia-Pacific market and our attendance at the Singapore airshow. We had funding applications approved so that we could be financially supported to attend that show to showcase what Tritech can offer. Those opportunities are most welcome.
Peter White: We use the Department of Trade and Industry. Before a show like DSEI, we will go down and brief the desk officers for the nations that are visiting and try to get them to bring the delegates to the stand. That is one area where we do get support.
We export something like 65% to 70% to Europe, Asia, America and the Middle East. Sometimes UK export licences can be an area where there is uncertainty. Sometimes the process can take a long time. The UK is not unique in that. When you are buying things from Germany, for example, for defence, you have to get a German export licence to bring the goods in. We will try to avoid German suppliers if we can, because there is uncertainty on our supply chain with German export regulations. If there is one thing the UK Government could do, it is make that process slicker and easier.
Q121 Mr Roberts: Was that a result of Brexit, or was it a problem before?
Peter White: It is just a problem. The German export regulations are famous the world over, as are the US ITAR. If you want to have a defence product from the US, it will need an ITAR licence. You have to apply for it. It will take time. They can be quite rapid. Germans can be quite extensive. The UK can be quite extensive.
We had one export for UAE where, for the first year after our application, nothing happened as far as we could see. We sat there and waited for a year. After about 15 months we were told the licence had been approved. Our customer was waiting for 15 months for us to tell them that we were going to start making. We then have six months to make, because we would not dare make until the licence was cleared, so 21 months was the lead time for the product.
The US are trying to sell in competition to us, and they do not have a 21-month lead time. Licences can be a barrier. If we cannot have a licence, tell us quickly and we can stop. If we can have one, tell us quickly and we can proceed. In that example, it took a long time.
Q122 Mr Roberts: Mr Wardle, how does that apply in exporting services?
Russ Wardle: I am probably contradicting a previous answer, actually. We get opportunities from UK Trade & Investments to attend various things. We do not tend to take them up, because we are not convinced that these are markets we want to break into. There is some help there; it is just that we choose not to take it up.
From our point of view as a service provider, our expertise is on UK law, NCSC guidance, MOD rules and regulations and follow-on EU laws. There is a minefield out there in terms of starting to operate elsewhere, certainly in places like America. The laws, rules and regulations are significantly different on cyber-security, which would complicate things for us, and we would not have that.
There is probably quite a growing opportunity in the Middle East. If we had spare capacity, we would probably spend more time looking at that, not least because of the background of my people—I have quite a lot of Arabic speakers actually, although they do not tend to do much of their work in Wales, I must admit.
So we could probably do more there, but we do not have a huge amount of spare capacity to do that, and I cannot see us making a big push to start exporting anytime soon.
Q123 Mr Roberts: My very final question is directly to Ms Northover. In response to Robin Millar earlier, when he was talking about R&D and development of new technologies, you said, “We will need assistance.” What kind of assistance, and who from?
Kimberly Northover: We are looking for some level of collaboration on the equipment that is needed to support the sector going forward, such as 3D printing machines. Self-funding that is not a viable option for Tritech. Potentially, we are exploring options of funding opportunities, loan schemes and any other available avenues.
Q124 Mr Roberts: Is that an area you would speak to the UK Government about and say, “We are looking to expand. What have you got for us?”
Kimberly Northover: Yes. Our technical director and head of engineering research and development is engaged in those conversations at the moment, putting together a plan that showcases what we are trying to do, what we need support with, why we need support and when we will start to see a return on investment.
Q125 Chair: Thank you very much. We are drawing to an end. Mr White, very briefly, has the conflict in Ukraine fed into the growth of your business, or are the growth factors completely separate from those kinds of immediate conflict events?
Peter White: Surprisingly, the answer would be not yet. The business model we operate is that we build to order. Somebody comes along with a requirement, and we will build to order, because things are unique to different customers.
Q126 Chair: I think that it is fair to say, Mr White, that some of the products that you offer are directly related to battlefield capabilities, aren’t they?
Peter White: Absolutely. Some of the things we make, or things like the ones we make, are being used in Ukraine. As industry, we were all asked, when the Ukraine conflict started, “What have you got to supply today? What have you got on the shelf? Here is some money. We would like some night vision goggles and all sorts of different things. We would like some today. What do you have?” If you are a build-to-order company, you do not have anything. We did not have a stock of 1,000 products we could ship. The initial demands were fulfilled by people who had things on the shelf, because it was a case of, “We need it now.”
The potential challenge that we, as a nation, need to consider is that, if there was ever a conflict where we need product, could UK industry satisfy the demand as fast as the demand needed to be satisfied, if that is not a bit of a riddle? It it is a lesson that we might need to learn: do we have enough on the shelf to meet our needs for things like missiles? Reading the press—I am not an expert—different missiles were supplied, including missiles like the NLAW missile and the Javelin missile. Those are being used, and I think that they are being used from the stockpiles of the nations that have provided them to Ukraine. Those nations’ stockpiles will need to be replenished at some point. At that point, there will be a pull on the supply chain to replenish. As a result, there will be a lag on some things; on other things, it was instant demand.
Q127 Chair: I don’t think that there are enough NLAWs at the moment for British troops to call on. They are all out in—
Peter White: I think that there were. I know the company that makes NLAW, and I know that they have had orders for replacement NLAWs. Of the stockpile of NLAWs that the UK had—I am not an expert on the numbers—I believe that a quantity were gifted. It depends how many we have and how many we gave, but I know that the company has had orders for more.
Q128 Chair: Before I bring in colleagues with interventions, I want to return to the point that Ms Northover touched on about the Welsh Government perhaps being a bit shy about promoting the defence industry. Mr Wardle, you alluded to it as well. I attended the DSEI this year as a guest of ADS. It was the first time I have been, and I was struck by two things. One was the sheer number of companies that have some kind of footprint or operation in Wales. The second was that I came across Welsh people, some of whom had perhaps started out as an apprentice on a factory floor and were now helping to do face-to-face deals with foreign Governments. I thought the career progress that they had made, coming from working-class communities, was a really inspiring story, which we should not be shy about.
I attended the Aerospace Wales stand, and I could see what they were trying to do to provide a subsidised space for smaller companies from Wales. But with such a large convention, where there are lots of foreign delegations, is there much value to trying to do more under a Wales umbrella? Should that be an objective, or is it better for companies to be under their own brand names, which might be multinational? Is it really of value to pursue a Welsh angle at something like DSEI?
Kimberly Northover: Yes, I firmly believe that it is, not only in promoting the individual SMEs’ or the prime’s capabilities, but in saying of Wales as a nation, “This is what we have.” We have talked about the trade association, and there is a directory there. I had an engagement with Airbus Helicopters; I am not able to offer them all the solutions, but I can introduce them to the Aerospace Wales team, who can say, “Here is a trade directory. Here is where you will find things that Tritech cannot supply.” My opinion is that there should be more Government engagement.
Q129 Chair: Mr Wardle, did you want to expand on your earlier comment?
Russ Wardle: As you noted, there is always an element of preaching to the converted at these things. If we go to a cyber show, it is lots of people like us all talking to each other; it is not exactly new business. As I have described, the numbers of foreign delegations are not really exciting us. A surprising number of people who walk the floor at a place like DSEI are looking for jobs, so there is a recruiting spin-off bit.
To address your point, if we were not able to be there under the banner of Aerospace Wales, we would quite possibly not attend. It is expensive, not just the cost of it, but getting the accommodation and everything else for a significant number of days. That said, and again in slight contradiction to the “nobody helps us” mantra, the fact that we are given assistance by Aerospace Wales and can be part of their stand is useful to us. It is particularly useful, in that, notwithstanding that most of the people we want to talk to know us and know of us, it is a good opportunity to corral lots of quite senior people in those defence primes that we are otherwise struggling to get far enough up the chain. They are there somewhere. So my business development team find it useful to get around there, and we do pick up some additional work from DSEI.
Q130 Chair: The same questions are asked about party political conferences, by the way: what is the value of them? It felt like a large party political conference, but much better and with much more interesting stands. Mr White, is there anything you want to add?
Peter White: Two things. We were at DSEI under our own steam, so we had our own booth. We go to other shows, like Paris, Farnborough and others, where we go on the ADS booth, because that is a cost-effective way of doing it. I think that it is fantastic.
When I go to the shows, I do two things. I try to promote our business, but I also make a point of walking around and looking at the SMEs. I want to see small companies with niche enabling technology that we could build links to and associations. I spend more time on the small booths than I spend on the big stands like BAE Systems, which was huge as we all know. It was an enormous booth and impressive, but I go and look at the little ones. I want to find niche technologies that will differentiate us and will allow us to work with them. That is the benefit I get from a show like that.
Chair: Thank you; that is helpful. Sarah Atherton, I think you had a follow-up question.
Sarah Atherton: It was just a quick response to the stockpile situation. The Defence Committee are very alive to those issues, as are the MOD. Significant funding has gone into that. Of course, as you know, things take a while, parts take a while and some are obsolete, but it is an issue.
Chair: Thank you very much. It has been a really useful, insightful session. I really appreciate how frank and open you have been in your answers. It gives us a lot of good food for thought. Thank you for giving us your time today, and thank you to my colleagues for making this such a useful exercise. I bring the meeting to an end.