Evidence submitted by Thales UK
INTRODUCTION
1. Thales is a major international company, employing 68,000 globally in 50 countries covering interests in defence, aerospace and security for a wide range of customers including national governments.
2. Thales employs 9,000 across the UK. Over half of Thales' business is in defence; in non-defence areas we are in sectors including tele-communications and there are a number of sites in Scotland servicing these contracts. Thales is a major supplier to the MOD. The company is a Prime Contractor, systems integrator, technology provider and service provider. Our current major programme involvement includes being a member of the Alliance delivering the Royal Navy's aircraft carriers, Prime Contractor for the Watchkeeper unmanned aerial vehicle and consortium partner in the AirTanker air-to-air refuelling programme. Thales is also the Prime Contractor for the Future Integrated Soldier Technology programme and has recently been selected as the System of Systems Integrator on the Future Rapid Effects System requirement. Thales is also supporting urgent operational requirements for current operations.
3. In Scotland Thales is a major player in the defence industry and operates at all levels of supply to the MOD from its range of sites. Thales welcomes the Committee's inquiry as an opportunity to highlight the significant contribution defence companies in Scotland make to the supply of the UK MOD, the benefit exports brings to the economy of Scotland and recognition of the unique and world-class capabilities of Scotland's defence industry.
THALES IN SCOTLAND
4. Thales operates from a number of sites in Scotland. The Optronics business in Govan, Glasgow is our principal facility in Scotland employing 500 people across a range of high-tech skills. This site designs and manufactures world-leading electro-optic night vision systems and equipment for all three UK Armed Services. The company, whose origins date back to 1888, has a unique 90-year heritage of exclusive sole UK supplier of Periscopes and Optronic Masts for Royal Navy's submarines. This includes periscopes for the current Trafalgar Class, Optronic Masts for the Royal Navy's newest submarines, the Astute Class, and Periscopes for the UK's nuclear deterrent/ballistic missile submarines of the Vanguard Class. The Glasgow site has also supplied most of the UK's armoured fighting vehicles such as Challenger 2, Warrior and Scimitar vehicles with night vision equipment such as the CH2 Sighting System and BGTI (Battle Group Thermal Imaging) systems. These vehicles are currently on active service providing our troops with, in many instances, life-saving protective capabilities. The site also manufactures reconnaissance pods, Infra-Red Search and Track for the Eurofighter Typhoon. The site's turnover is 2006 was over £110m and is expected to grow significantly in 2007. Export markets include all the main defence markets and accounted for 25% of sales in 2007. This is expected to more than double in the next two years. The company invested £24 million to build the Govan facility in 1990-91 and has continually upgraded it since.
5. Thales operates as a service provider at a number of MOD sites in Scotland including simulator and classroom based military training services at RAF Leuchars for the Tornado F3, at Lossiemouth for the Tornado GR4 and at Kinloss for the Nimrod MR2. Contracted under a PFI arrangement, these services represent a 30year plus investment in providing military training services and jobs for the MOD in Scotland by Thales.
SUPPLY CHAIN
6. The company's involvement in the Scottish supply chain extends beyond its operations in Scotland with companies from Scotland supplying Thales activities in the UK and beyond. The Glasgow facility makes extensive use of Scottish suppliers whenever possible with a significant expenditure associated with the company's supply chain remaining in Scotland. Thales was a founder signatory of the SC21 (21st century supply chain) initiative. In major programme bids Thales has reached out to the Scottish supply chain through supply chain workshops to ensure maximum potential for companies to engage in MOD programmes. For example, the Thales supplier roadshow in Glasgow for the Watchkeeper requirement attracted interest from 140 companies.
CONTRIBUTION TO THE SCOTTISH ECONOMY
7. With currently more than 600 employees in the defence sector in Scotland, Thales has generated more than £650 million in sales between 2000 and the end of 2006. Through direct employment or through partnership supplier arrangements with local SMEs, Thales has re-invested more than £250 million of business back into the Scottish economy during this period. Thales contribution to the Scottish economy is projected to rise significantly, in relative terms, to more than £550 million over the next four years alone.
EMPLOYMENT AND SKILLS
8. Thales UK employs 4,000 engineers and technicians, of which some 90% are qualified to degree level of above. Some 30% of employees at the Glasgow facility are engineers and scientists. The Glasgow site has an active apprenticeship programme with disciplines including electrical and mechanical engineering. Foundation core skills training for apprentices takes place in conjunction with East Kilbride Group Training Association. Thales engages with schools within the Glasgow area to help fulfil its apprenticeship requirements and extends this to include site visits and student placements/work experience to help generate interest in engineering as a future career. We also provide financial support to schools within the immediate area of the site. Similarly, Scottish Universities are normally our first port of call for high quality graduates to help satisfy our long-term engineering requirements. We have an ongoing and developing dialogue with these Universities to establish potential future partnerships, especially in the areas of engineering skills for product design and development to support our high technology business.
9. The trade union relationships of the Glasgow facility has been the benchmark and template for Thales UK and was the forerunner to the company's nationwide trade union partnership agreement signed in 2002. The company works closely with its trade unions on skills and workplace training.
CONCLUSION
10. The Thales operations in Scotland represent a key element of the global Thales capability. In turn, Thales is a significant player in Scotland's defence industry, a major contributor to its exports base and a key user of the Scottish supply chain. The company is delivering significant MOD capability from Scotland and is proud of its history of innovation in supplying the Armed Forces. It is proud of its history of investment in its Scottish facilities and the skill and commitment of its people. We look for continued investment in the appropriate skills that will allow the company to prosper. We would welcome the opportunity for the Committee to visit our Govan site and, if with the RAF's agreement, one of our training facilities at RAF bases.
John Howe CB OBE
Vice Chairman, Thales UK
January 2008
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