LONDON ― Artec plans to assemble the main element of its Boxer vehicle at Pearson Engineering’s factory in northeast England ― that is if the British Ministry of Defence hands the German company a deal to supply several hundred of the eight-wheel drive armored personnel carriers to the British Army.
“Pearson Engineering would carry out build/assembly of Boxer in our world-class facilities in Newcastle,” a spokeswoman for the engineering company confirmed.
Pearson makes mine-clearance, earth-moving and other equipment for military and security forces at a large factory it purchased from BAE Systems in 2012.
A Feb. 5 announcement by Artec ― the joint venture between Krauss-Maffei Wegmann and Rheinmetall ― that it had recruited as part of its team Pearson, BAE Systems and Thales UK comes as the MoD closes on a decision whether to buy the Boxer without a competition.
Britain has a need for mechanized infantry vehicles, or MIV, and skipping a competition would leave rivals like General Dynamics, Nexter, Patria, ST Kinetics and others out in the cold.
Jobs and support of the local supply chain as part of the government’s prosperity agenda have become a key battleground between Artec and its potential rivals; particularly General Dynamics UK, which was partly responsible for the parliamentary Defence Committee chairman Julian Lewis writing to the MoD at the end of last year questioning the government’s position on the £2 billion (U.S. $2.789 billion) MIV program.
Artec on the defensive
Recent media reports say British jobs could be put at risk in the local armored vehicles industry if the German company secures the deal.
Artec moved to try and counter that claim and help make a sole-source deal more politically palatable earlier this week, saying a decision in favor of Boxer would create a substantial number of jobs.
“Investment in the UK value chain is estimated to secure or create at least 1,000 jobs all across the country. At least 60% of Boxer’s value creation and 100% of final assembly will take place in Britain,” the company said.
Regardless of the jobs argument, a decision in favor of a government-to-government deal on Boxer is still likely to be controversial, not least because the Artec machine is expensive.
Rival eight-wheel drive suppliers say a competition would have flushed out whether Boxer provides value for money, particularly at a time when the U.K. defense budget is stretched almost to a breaking point.
Stefan Lischka, the Artec managing director, said a competition would take some years and cost millions of pounds to run.
“In three years’ time, when the competition is over, nobody knows the budget or the requirement, and it could be it’s more or less repeating the story [of previous U.K. attempts to buy an eight-wheel drive vehicle] — I think that is also the fear of the U.K.,” he said.
If, as many people expect, Boxer gets the nod of approval from the MoD, Pearson Engineering looks set to be the main local beneficiary.
Pearson has snared the largest part of the program, and there could be more work to come for the Newcastle-based company, said Stefan Lischka, Artec’s managing director.
“The drive module is the biggest part of the program, but they could also be responsible for supply chain sourcing, production and assembly of one of the Boxer mission modules,” he said.
A competition is ongoing for the mission modules between the three tier-one suppliers named by Artec this week, along with a fourth supplier, Rheinmetall UK.
Boxer is built as a modular system. The drive module and the mission modules are separate, with the former containing the power pack, running gear, driver station and other systems. The various mission modules can be swapped depending on the requirement.
Lischka expects the British to require four or five different mission modules if they opt to acquire Boxer.
The vehicle has been ordered by the Dutch, German and Lithuanian armed forces. The program received a boost last week when Slovenia said it was going to buy the vehicle.
Australia is also expected to decide by the end of March whether to purchase the Boxer or a rival Patria-built eight-wheel drive vehicle.
An Australian decision in favor of Boxer after a thorough competition would be a boost for any MoD sole-source move, said a U.K.-based executive, who spoke on condition of anonymity.
“But if it’s not Boxer, the British MoD will have to do some fast talking to justify their likely decision in favor of Artec,” the executive said.
The British have been prevaricating over the MIV acquisition strategy for at least two years. The British Army and the ministry’s Defence Equipment and Support agency prefer a noncompetitive purchase of the Boxer.
Despite the huge gap that has opened up between British equipment procurement plans and funding, acquiring a fleet of MIVs remains a priority for the Army. The service plans to equip two new British Army strike brigades with eight-wheel drive vehicles.
The other key investment in the strike brigades is the tracked 589 Ajax armored fighting vehicles supplied by General Dynamics. Most of the vehicles are being assembled at a plant in south Wales.
Some executives in Britain reckon an MIV decision, like most other programs, will be put on ice to await the outcome of a recently announced defense modernization review expected to be revealed by the MoD in the summer.
That review could alter the size and capability of the Army and the other armed services.
Others, however, expect the MoD will make an announcement as soon as the end of this month.
That forecast may be partly borne out by an MoD spokesman telling Defense News: “No decision has yet been taken on acquisition strategy choices for the MIV, but an announcement is expected shortly.”
This is a familiar path: The MoD has previously said several times that an announcement on whether to run a competition or go for a single-source purchase was in the works, only for the decision to be put off.
A second industry executive, who spoke on condition of anonymity, says this time could be different.
“We have heard the business case for MIV has recently been approved by the Treasury. The decision is being reviewed at the minute by the new defense procurement minister, Guto Bebb, but short of a major change of heart for some reason, I’m 80 percent sure it’s going to be a decision in favor of Boxer,” he said.
The MoD spokesman declined to comment on the Treasury approval or whether Bebb, who was only appointed to the procurement position last month, is reviewing the decision.
Andrew Chuter is the United Kingdom correspondent for Defense News.