The Last Word
To Compete‭, ‬Or Not To Compete

There is a significant distinction between sovereign defence capacity and competitive defence capacity. The former meets strategic domestic requirements and gives armed forces freedom of action to fulfil their duties. The latter, which involves competing internationally, carries additional responsibilities. 

A defence exporter needs to demonstrate technical credibility and industrial reliability. It must comply with import and export regulations in each jurisdiction where it operates. It must also be able to sustain and upgrade equipment and systems long after delivery. It must be available and responsive to clients in times of crisis. 

Defence exporters compete as much on the cost, technical quality and availability of their products as on their performance as trusted and reliable suppliers. These days, the interpretation of trusted, reliable and competitive is changing further as rapid advances in technology demand faster innovation. A supplier must now be adaptive to changes in its clients’ needs, and changes in the capabilities of its clients’ adversaries.

In today’s highly fragmented world, governments are putting greater emphasis on localising production and are investing heavily to expand their defence industrial capacity. Since domestic demand alone often cannot justify the cost, many countries are looking to export markets to balance strategic autonomy and economic viability.

But while many may be able to build advanced capabilities, not all will be able to establish competitive and sustainable defence industries. 

Some may fail because they cannot provide the service expected from an exporter as national requirements take precedent. Some may lack core elements of a competitive defence ecosystem such as talent and technology. Others will fail because the market will reach saturation point. 

Although globally we are witnessing a massive post-cold war rearmament drive, that cycle will eventually move into sustainment and demand for new sales will taper off. Then we reach the dangerous point where future growth would be reliant on wartime urgency. 

The new rules of defence competitiveness should include a critical examination of what capabilities must be produced to ensure sovereignty and what realistically could be developed to compete internationally. We must ask ourselves, where are the export opportunities once demand normalises? Do we have the capability and the genuine interest in becoming a full-service supplier able to compete with leading defence exporters, with all the extra responsibility that entails? Who else is planning what we are planning?

Additional production capacity is not necessarily sustainable competitive capacity. Learning that distinction the hard way will be a costly mistake to make.