SIMI VALLEY, California – US defense firms that want to sell to the United Kingdom should be prepared to give more generous workshare programs than in previous years, the UK's top defense official said Saturday.
Michael Fallon, UK Secretary of State for Defence, said US firms must "do more" for British companies, whether through the supply chain or directly creating jobs overseas.
"We want to see more coming back, let's be clear about that. A lot of our new expenditure is going to the United States, to American companies, and it is helping to support American jobs," Fallon said in an interview for Defense News TV. "So it's very important to us that this is also a two-way street, that we see these prime contractors in the United States investing in British companies, in their supply chains, and doing their best to choose British where they can and create jobs back in the United Kingdom.
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"We are seeking understandings with the large American primes that they have to do more, they have to accept that they have to do more, to give British companies a fairer crack of the whip when it comes to their supply chains," Fallon added.
Over the last year, UK officials have emphasized the importance of the UK as a potential supply chain partner.
The secretary held up Boeing as an example of a company that has agreed to increase workshare as part of a contract. During the Farnborough Air Show this summer, the UK agreed to purchase nine P-8 maritime surveillance aircraft as well as 50 AH-64E Apache helicopters, both made by Boeing. As part of that deal, Boeing will create 350 new jobs in the UK, as well as landing British companies roughly 5 percent of the Apache global supply chain.
"We want to see similar agreements" with other American primes, Fallon said. However, he emphasized that he was not interested creating a system with "overt protectionism," such as India’s "Make in India" effort, given the reliance on defense exports for both UK and US firms.
The Apache and P-8 buys were announced in the wake of the referendum vote to leave the EU, which sent the pound tumbling, increasing the cost of the American-made goods. However, Fallon deflected questions about whether the UK would need to curtail planned buys from American firms if the pound continues to weaken versus the dollar.
"It’s too early to start speculating exactly where sterling will end up. The referendum is only a few months ago, and already there are some signs sterling has increased in value against the Euro. So I think it is too early. We certainly take precautions against fluctuations among the currency," Fallon said.
For more from Fallon, watch the Dec. 11 episode of Defense News TV.
Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.