UK urges defence contractors to look overseas - Reuters

By Keith Weir

LONDON, Sept 13 | Tue Sep 13, 2011 11:29am EDT

LONDON, Sept 13 (Reuters) - Britain's arms manufacturers must look to tailor products for overseas markets to protect jobs and profits at a time of spending cuts at home, Defence Secretary Liam Fox said on Tuesday.

"For too long export potential has been ignored when initiating projects for the UK's own use: that needs to change," Fox said in a speech at a major arms fair in London.

"The best way to sustain UK defence and security jobs in the long term is to widen the customer base through enhanced defence exports."

Fox was speaking at the Defence & Security Equipment international (DSEi) trade fair, one of the world's largest military shows, which has attracted thousands of arms dealers from around the world.

Britain's defence industry employs almost 110,000 people and had a turnover of more than 22 billion pounds ($34.8 billion) last year, according to figures from trade group ADS, with exports contributing 9.5 billion -- some 43 percent of turnover.

However, defence spending in Britain and other Western powers is being cut at a time of economic crisis. The planned end of military operations in Afghanistan is likely to prove another headache for arms companies.

The British government plans to reduce defence spending by 8 percent by 2015, while the United States is cutting at least $350 billion from previous project spending.

Saudi Arabia has traditionally been Britain's largest defence export market, but sales to India are seen expanding rapidly.

NATO Secretary-General Anders Fogh Rasmussen on Monday called on the U.S. and European nations to do more to open up their defence markets.

Britain's Conservative-led coalition defence cuts are relatively modest compared with reductions of up to 20 percent faced by other departments.

Fox said the Ministry of Defence was reviewing and renegotiating up to 500 contracts with a value of up to 8 billion pounds to ensure they were providing value for money.

He said a list of contractors and projects which risked going over budget or being delayed may be published so investors in stock market-listed companies were aware of the problems.

($1 = 0.633 British Pounds) (Reporting by Keith Weir)