Tuesday 21 October 2014

News Focus - War: is still very good for business

The Irish defence industry is making billions from selling key parts for everything from Apache helicopters, to unmanned military drones and miniature technology for cyber warfare

Simon Rowe

Published 08/06/2014 | 02:30

War - a killing can be made in business.

Irish-based companies are making a killing in the multi-billion euro global arms and defence market. Export orders linked to military, armaments and defence industries are now worth a staggering €2.3bn a year, and firms with links to the global arms sector employ hundreds here.

Described by anti-war activists as Ireland's "dirty little secret", Ireland has become, by stealth, a vital hub in the supply chain of international arms manufacturers.

Whether its armoured vehicles designed by Meath-based Timoney Technology, unmanned military drones powered by technology developed at Dublin-based firm Innalabs, or Apache helicopter gunships using components made by DDC in Cork, our smart economy is providing the brains to bolster the military brawn of armies across the world.

And with cyber warfare set to replace more conventional battlefields in future war zones, Ireland's top software firms are now taking up a frontline position in the burgeoning cyber security market as nation-states bulk up their technology defences.

"Ireland is a small but burgeoning part of the global arms and defence industry," said one sector analyst. "And it's only going to get bigger."

Although Ireland's 'neutrality' means that fully-functioning weapons systems can't be manufactured here, the individual components, designs and software that comprise these systems can be shipped out from factories and R&D units located all around the country under Ireland's 'dual use' export rules.

Dual-use goods refer to products which, though manufactured for civilian use, can also have a military application, such as software which can be used for an IT system and can also be used as a component in a weapons guidance system.

In 2012 – the latest year for which figures are available – 727 export licences worth a total of €2.3bn were granted for dual-use goods by the Department of Enterprise to Irish-based firms exporting to the trouble spots around the world such as Afghanistan, Saudi Arabia, Russia and Israel. In the same year, 129 military export licences worth €47m were issued.

Exports of dual-use components present a significant annual boost to the Irish exchequer but they also provide a headache to export control chiefs, not least because many different countries are often involved in the manufacture of a single weapons system and determining the 'end use' of each component bound for export can be a complicated task. Components are also likely to be less visible in the final product, making it much harder to monitor whether or not such items have been misused.

Human rights watchdog Amnesty International has consistently raised concerns over Ireland's dual-use exports and their possible link to humanitarian abuses around the world.

Amnesty points to potential loopholes in Ireland's dual-use export controls whereby the "end-use of item" information which can be listed as "civilian" can relate to the supply of components to "civilian" companies who then incorporate the components into military systems.

A practical example illustrates the dilemmas faced by Irish-based firms and also human rights watchdogs. When the Cork-based manufacturing facility of US firm Data Device Corporation (DDC) exports components to Boeing for the assembly of an on-board computer system on one of its latest helicopters, it is hailed as a major trade success story. But when that helicopter is an Apache Attack Helicopters and its on-board computer system controls a lethal array of armaments, including 16 Hellfire missiles, aerial rockets and 1,200 rounds of ammunition for its automatic cannon, suddenly dual-use exports assume a far more deadly edge.

Joe Murray of Ireland's anti-war group Afri has called on the Government to provide more transparent information on the precise links between Irish-based manufacturing firms – some of which receive millions of euro in IDA and Forfas grant aid support – and the global defence industry.

"Whenever there is a jobs announcement by an electronics firm arriving to set up a factory in this country we are never told what those electronics will be used for," he said. "There are obvious areas of omission and questions are unasked. If there was a willingness to ask those questions there would be some semblance of integrity about the governmental position on our country's neutrality," he said.

But defence analyst Tim Ripley pours scorn on Ireland's claims of 'neutrality' as firms here battle to win a greater share of the global defence market. "Irish neutrality has always been a bit fake," says Ripley, who writes for Jayne's Defence Weekly. "Irish governments are happy for Shannon Airport to be used by American troops and American planes. Ireland is part of the EU, which has a defence policy, and Irish troops are taking part in EU battlegroups. It seems to me that Irish neutrality comes and goes with the flavour of the moment."

However, Afri chief Joe Murray accuses the Government of "deliberate, willing ambiguity" on the issue. He says not enough questions are being asked about the end users of dual-use exports and he fears they are ending up in the wrong hands and that Irish-based firms may have "blood on their hands".

But Enterprise Minister Richard Bruton, whose department has responsibility for ensuring compliance with international military exports laws, has moved to assuage fears by saying "the security, regional stability and human rights concerns which underpin export controls are of paramount importance".

Having completed an overhaul of arms export regulations after complaints that dual-use licence controls were too lax, Mr Bruton's department confirmed that between 2011 and 2012 five export licence applications were denied "on the grounds of considerations about the intended end-use and the risk of diversion".

But, clearly, today's global defence industry is less about missiles and tanks and more about developing smart technology for the cyber wars of the future. Indeed, defence experts believe cyber warfare is a greater threat than terrorism to nation states.

Ireland's sophisticated engineering and technology industry is luring global defence and security firms who are eyeing up firms for investment.

Defence giant BAE Systems spent nearly €220m buying Dublin-based Norkom Technologies, which specialises in regulatory compliance and crime detection products. BAE said it wanted to increase revenues from its cyber and intelligence services activities and the Norkom deal will enable that growth.

And one Irish-based firm has already opened up another front in the battle to capture this expanding market.

Mandiant, a global giant in the cyber security and national defence sector, opened a Dublin hub late last year. Its offices on George's Quay, which the firm has dubbed the 'European Engineering and Security Operations Centre', is already on course to create 100 high-tech jobs.

Mandiant is the firm behind the groundbreaking investigation that exposed Chinese state-sponsored hacking attacks aimed at stealing trade secrets from major US corporations. It first reported on Chinese cyber-espionage last year and its investigation ultimately led to the US indicting five members of the People's Liberation Army last week on corporate cyber-espionage charges.

Why is this so significant?

It's simple.

China has been hacking into major defence contractors for years and has reportedly hit the cyber-espionage jackpot.

The US has spent billions of dollars developing a new stealth F-35 fighter jet but design elements of the F-35 have already made their way into a similar Chinese fighter plane. So, American investment that was meant to give it a 15-year battlefield advantage is already totally undermined.

And an Irish-based firm is linked to exposing what is probably the largest corporate theft ever reported in history.

Clearly, the global defence sector is a lot messier, more opaque and more technologically advanced than ever before; but the good news is that our tech-savvy workforce will give Ireland a tactical advantage in the battlefield of the future.

Top 10 Irish-based firms linked to defence industry

* Timoney Technology

For over 30 years, Navan-based Timoney Technology has been a world leader in vehicle and suspension design.

It designs armoured personnel carriers and unmanned military vehicles which are used by the likes of the US Marine Corps as well as armies in Singapore and Turkey. The company transfers the technology it develops to other firms to make under licence.

One of its most successful designs has been the Bushmaster troop carrier, with hundreds produced in Australia by a licensee. The vehicle has saved the lives of countless soldiers in Iraq and Afghanistan as it was one of the first designed to withstand mine and improvised explosive device (IED) attacks.

The Singapore army bought 135 vehicles, while another version is being produced in Turkey. Shareholder Singapore Technologies Engineering has increased its stake in Timoney Holdings from 25 per cent to 27.4 per cent.

* Innalabs

This Blanchardstown-headquartered engineering firm makes high-spec gyroscopes for unmanned aerial vehicles (UAVs) or drones, similar to those used by the US military to hit al-Qaeda targets in Afghanistan.

As well as the drones, Innalabs equipment is used for remote-control weapons systems, naval sight and turret stabilisation and other military purposes, according to the company's website.

The Russian-backed firm, which is controlled by a number of Cypriot holding companies, has a research and development operation in Ireland.

* Iona Technologies

Iona, one of Ireland's biggest technology firms, has always recognised the importance of the global defence sector to its business.

Iona specialises in software that links disparate computer systems together.

This software is currently being used in the firing mechanism for Tomahawk cruise missiles and has been used by the US Army Tank Command for simulation research into battlefield exercises.

It was also reported that Iona Technologies sold communications security software to a US agency "responsible for designing and maintaining the US army's nuclear arsenal".

* DDC

The US-owned Data Device Corporation (DDC) opened a 25,000 sq ft plant in Cork's Business and Technology Park in 1991 to manufacture hybrid integrated circuits. Its circuits and devices are used in fighter jets.

Amnesty International has raised concerns that DDC-built components comprise the 'nerve system' of Apache attack helicopters and jet fighters such as the Eurofighter Typhoon and Dassault Rafale. The IDA gave grant aid of €3m to DCC to set up in Ireland.

* Transas

Transas, which makes and supplies software and systems for the marine industry, has set up its international headquarters in Cork, creating 30 jobs.

The company is based in Eastgate Business Park at Little Island.

Transas' products include integrated onboard and onshore systems, marine and aviation equipment, flight simulators and training devices, safety systems, geo-information systems, and unmanned air and floating vehicles.

Transas Group holds a strong market share in Russia in avionics and flight simulators.

The group's headquarters are located in Saint-Petersburg.

Its worldwide clients include the Irish Navy, British royal navy, US navy, Maersk Shipping Lines and Exxon Shipping. The Cork facility, supported by IDA funding, manages Transas's worldwide operations.

* Kentree

The Cork-based robotic bomb-disposal firm was bought by Canadian anti-terrorist device firm Vanguard Response Services for €22m in 2012.

It was previously bought from British defence firm PW Allen after being founded by former Adare Printing Plc boss Nelson Loane.

Kentree was backed by Enterprise Ireland investment. Vanguard Response Systems supplies robot orders for security forces in China, Uzbekistan and West Africa, as well as for bomb-disposal teams across America.

* Analog Devices

Analog Devices Inc (ADI) is a worldwide company with manufacturing facilities in Limerick. The firm manufactures a wide range of electronic components. These components have a wide range of applications within the civilian, aerospace and defence markets.

Analog's dual-use exports from Ireland have been the subject of scrutiny by Amnesty International over the firm's links to the military sector and concerns over the technology's military purpose.

Analog Devices processors have been reportedly used in military systems by manufacturers in Poland, the UK and the Netherlands.

* Essco-Collins

Clare-based company Essco-Collins, situated in the tiny village of Kilkishen, has secured 80 per cent of the world's market in radomes – the round covering for radar antennae systems. Their customers include Mexico, Egypt, China, and US aviation giant, Boeing, the Turkish armed forces and French military giant Thomson-CSF.

* Moog Ltd

According to Jane's International Defence Directory, Moog Ltd produces gun- stabilisation systems, turret-stabilisation systems and electrical equipment for wheeled armoured vehicles. The company makes electronic controllers for a range of tanks and anti-aircraft guns, including the Bofors L-70 air defence gun, which are known to be part of the ordinance of the Indonesian armed forces.

* GeoSolutions

Founded in 1995, Dublin-based company GeoSolutions produces an "electronic battlefield management system", which allows military commanders to track troop movements in any theatre of conflict. The firm's clients include the Irish Defence Forces and the Florida National Guard in the USA.

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