Selex sets sights on new markets

By ERIKKA ASKELAND
Published on 11/11/2012 00:00

THE re-election of Barack Obama as president of the United States has underpinned the drive of one of Scotland’s largest engineering firms to seek contracts with air forces in emerging markets.

Radar and laser sensor specialists Selex Galileo, owned by Italian aerospace conglomerate Finmeccanica, sees its future in military hot spots such as Turkey and India as growth in the West slows, and Obama pledges to focus on priorities other than defence.

In its most recent accounts, Selex Galileo saw its turnover in the UK – the company is one of the largest suppliers to the Ministry of Defence – fall £100 million in the past year to £418.4m.

Mark Smith, vice president of capability for Selex Galileo, said: “The UK government is now somewhat strapped for cash. They are very important customers, but we can’t wait for them. One of our models is to go abroad and look for foreign opportunities – of course, 
always in the context of export control.”

The company is a specialist in electronic warfare. At its Edinburgh base, where the Basildon-headquartered company maintains its research and design operations, the company produces “fire control” radar systems – used by air forces to detect and track enemy jets to allow missile 
systems to fire.

Its largest programme, which has sustained the company’s 1,900-strong workforce since the early 1990s, has been the production of 500 radar systems for the troubled Eurofighter Typhoon. The other lead product is a laser-directed infrared counter-measure system, which it developed with US aerospace giant Northrop Grumman for its anti-missile technology known as Nemesis.

The profitable Selex Galileo business, which is supplied by up to 120 engineering firms in Scotland, is a solid performer for Finmeccanica, a part-state-owned company that spans sectors including defence, transportation, energy and the manufacture of helicopters.

But the parent company has been hit by the global downturn. Finmeccanica pledged to sell ¤1 billion of non-core assets by December. Last year the Rome-headquartered group as a whole posted a ¤2.3bn loss. Meanwhile, the company’s top management 
is being overshadowed by an ongoing corruption probe.

A spokesman for the company confirmed that Selex Galileo was not part of the assets to be sold, but the company will be rebranded and merged with two other Selex brands – Elsag (a military communications specialist) and Sistemi Integrati (systems integration) – in January. The merged division will be called Selex ES.

The company traces its roots to 1943, when Manchester-based electronics pioneer Ferranti opened a plant on the Crewe Toll site to manufacture gun sights for the Spitfire. At its height it employed more than 8,000 and had eight plants in Edinburgh.

Now the company’s investment of 14 per cent of its 
annual £1bn revenues into 
research and development each year has allowed it to 
develop products that are less reliant on national military programmes. Smith said the company scored a “major coup” selling a surveillance radar system to the US Customs and Border Protection agency, as the US market, along with that of France, tends to be closed to foreign competitors.

“It is a major coup to sell 
radars to the US – we are probably the only company that has ever done so,” he said.

But the re-election of Obama is widely seen to be less favourable to defence contractors, as he steps up the US withdrawal from Iraq. “His 
focus doesn’t tend to be defence,” said Smith. “That is one of the reasons we can never become dependent on any one nation, including the UK or the US.”