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British Defence Contractors Stand to Benefit From AUKUS Pact

Published: September 26, 2021
HMS Astute, a submarine produced by Britain largest defence contractor BAE Systems PLc, on the shiplift after launch. (Image: PoorTom/Wikipedia/Public Domain)

The AUKUS announcement on 15 September preceded the news that BAE Systems PLc, the UK’s largest defence contractor and third biggest globally, along with Rolls Royce Holdings PLc, had been awarded a Ministry of Defence (MoD) contract, each worth £85 million to design and develop the next generation of submarines.

According to an analysis by Sky News, one day after the Aukus statement and one day before the contract news broke, BAE told the outlet: “As a company with a significant presence in all three markets [the US, UK and Australia], we stand ready to support the AUKUS discussions as they progress.” Furthermore, it will likely tie in with other British businesses by promoting collaboration between the three countries in compatible fields such as “sonar technology, not to mention fields such as artificial intelligence and quantum technologies.”

BAE has its nuclear submarine facility at Barrow-in-Furness, Cumbria, where it has made nuclear submarines for the past 60 years.  The contracts underpin concept and development as part of the programme’s research and development phase, creating job stability while delivering a replacement for the Astute class subs. It will support the UK’s future underwater military capability and support 250 highly skilled jobs in Barrow-in-Furness, Cumbria. In addition, Rolls Royce will create a further 100 jobs in Derby.

Boris Johnson mentioned this during the Aukus announcement when he said: “It will draw on the expertise that the UK has acquired over generations, dating back to the launch of the Royal Navy’s first nuclear submarine over 60 years ago; and together, with the other opportunities from AUKUS, creating hundreds of highly skilled jobs across the United Kingdom, including in Scotland, the north of England, and the Midlands….”

Ben Wallace, MP for Wyre and Preston North and  the Secretary of State for Defence, said: “Marking the start of a new journey in submarine development, British designers and engineers will lead the way in building submarines for our Royal Navy.”

According to BAE, the company “will work alongside the SDA, Rolls-Royce, Babcock and partners on a new class of nuclear powered attack submarines for the UK Royal Navy to replace the Astute class – currently referred to as SSN-Replacement (SSNR). “

The shares of BAE, Rolls and Babcock rose at the news.