Over the next decade, companies from emerging defense industrial nations will provide greater competition for the Western and Russian firms that have previously assisted in their development.

Successive Turkish, South Korean, Brazilian and Polish governments have invested heavily in their defense industries over the past decade, leading to much-improved capabilities and the introduction of complex platforms. While many of these are license-builds of Western equipment, a growing share is of original designs. However, their reliance on key subsystems from Western and Russian companies will likely continue for much of this period, presenting a potential vulnerability.

License-building platforms with technology transfer has been used as a means of developing a local industrial capability with a more realistic chance of success than starting from scratch. For example, in the 1980s and 1990s, Turkey and South Korea assembled hundreds of F-16 fighter jets, and both have also license-built German submarines, as has Brazil.

Significant investment in these programs has meant that these countries now have the industrial capability to produce an increasing number of platforms with original designs. South Korea’s T-50 Golden Eagle (a trainer and light-attack aircraft with multiple variants) was developed based on both the country’s experience and technology transfer from assembling F-16s.

Poland’s initial license-build of Finnish armored personnel carriers has now led to several local variants based on that design, and Turkey has begun to design a new attack helicopter based on its experience building the Italian-designed T129.

This has gone hand in hand with procurement and industry reform. South Korea created the Defense Acquisition Program Administration in 2006 to manage procurement and develop industrial capability. Poland consolidated most of its state-owned industry under the PGZ holding company in 2015.

South Korea’s threefold increase in defense exports over the past decade — $1.52 billion in 2019 with a record high of $2.36 billion in 2016 — has been boosted by its companies winning contracts against European and Russian competitors. The aforementioned T-50 family has won competitions in countries such as Iraq, Indonesia and Thailand at the expense of Western and Russian aircraft. Similarly, South Korean shipyards have now signed deals to export frigates and tankers to a variety of countries including Thailand and the U.K. Significantly, in 2011, a South Korean shipyard secured a contract to supply Indonesia with submarines, beating the German original equipment manufacturer that transferred technology to South Korea in the 1980s for license-production.

Although Turkey’s high-profile export successes have largely come due to its political relationships rather than success in open competition, it too has seen its defense and aerospace (including civil) exports more than treble during this time, reaching $2.78 billion in 2019.

Brazil’s export successes ($1.3 billion in 2019) have largely come in the aerospace sector with the A-29 Super Tucano trainer/light-attack aircraft being widely exported. Recently the country has begun to secure the first sales of its KC-390 transport aircraft.

Despite strong growth in defense manufacturing capability (both South Korea and Turkey report overall localization rates of around 70 percent, for example), these nations continue to rely on Western and Russian suppliers for key subsystems, with high-end electronics and engines being particular weaknesses. Attempts to fit a locally designed power pack into the K2 Black Panther main battle tank have been wracked with difficulty, forcing South Korea to order additional engines and transmissions from German suppliers. Similarly, Poland’s production of its Krab howitzer ran into problems early on due to technical issues with the chassis and engine, forcing a switch to South Korean and German replacements, respectively.

Turkey provides a case study of what can happen when a reliance on foreign subsystems clashes with those countries taking a dim view of your actions. Since the mid-2000s, development of the Altay main battle tank proceeded relatively smoothly, in part because the prototypes were fitted with proven German power packs. However, arms embargoes since 2016 have derailed series production. A 2015 contract to develop a local propulsion system was canceled in 2017 when the Austrian company selected to assist pulled out. Similar issues have hampered the sale of attack helicopters to Pakistan (an Italian design fitted with American engines) as well as the production of armed UAVs (Canadian sensors and engines).

Beyond these emerging challengers for defense exports, other nations also warrant consideration. Japan, a country with a high localization rate since the 1990s, produces a variety of advanced platforms across different sectors. However, changing government and business practices to support export campaigns will take time. India has also invested heavily in its industry, yet bureaucratic conflicts and technical challenges have made fulfilling local requirements a challenge. The United Arab Emirates has begun to export equipment, albeit low-tech materiel.

All this being said, the impact of COVID-19 on government spending will likely be felt for several years, with some importer nations already postponing programs. Whether local demand in exporter nations can make up for this remains to be seen.

Tom Waldwyn is a research associate for defense and military analysis at the International Institute for Strategic Studies, where Haena Jo is a research analyst for defense and military analysis.

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