OSLO, Norway --- Thank you for inviting me to the Nordic Defence Conference and this opportunity to share my views related to defence and industry.
In recent years, hurricanes, flooding and international financial crisis have caused major ripple effects throughout the world. In addition, unrest and strife in remote areas increasingly affect us. In the aftermath of the financial crisis we have become acutely aware of how complex and interconnected the world really is. Evolving changes within technology, communication, energy, environment and migration reshapes our attitudes and way of life. All these dynamics have major impact on the world’s economy and international security.
Interpreting change and planning for the future is paramount in decision-making, - both in defence and business. Both sectors also rely heavily on information gathering to provide security. I am sure that you haven’t invited me here to give concrete investment advice. My focus will be on the comprehensive modernization of our armed forces and the cooperation with our defence industry, and thus provide a relevant backdrop for your conference.
The needs of the Armed Forces
Based on its own needs, the Armed Forces engage in broad strategic cooperation with R & D communities and industry. This cooperation related both to procurement and operations involves national as well as international partners.
Each year, the defence sector spends about 35 billion NOK, - out of which 25 billion is allocated to operations, and slightly less than 10 billion NOK to materiel procurements and construction. The sector employs about 20 000 people, and also contributes to employment outside the sector since a substantial portion of the operations budget is spent on goods and services from domestic and foreign suppliers. Thus the Armed Forces needs and activities contribute significantly to national value creation.
Interaction with commercial enterprises is always based on the needs of the Armed Forces, and in accordance with national legislation and regulations. Therefore Norwegian industry needs to be competitive in order to supply military equipment.
Today’s dynamic and complex global security challenges require responsive military organizations and readily deployable forces. In order to meet the broad spectrum of challenges both at home and abroad, the Norwegian Armed Forces have undergone major transformation. By creating a leaner and more efficient military organisation, it has also been possible to free funds for investments.
Every year, we invest about 7-8 billion NOK in new military equipment. This procurement rate is essential to realise the transformation of our defence structure, and ensure that it remains relevant to meet evolving security challenges. We have recently procured major new systems like the Nansen class frigates, the NH-90 helicopters and the Skjold class corvettes. Others, like the Archer Artillery System, the CV 90 update and a new Logistics supply vessel, are still in the pipeline, not to mention the procurement of our new combat aircraft, the F-35.
In short, Norway has been very successful in managing to maintain a high investment rate. At about 20-25 % of the total defence budget, we have one of the highest materiel investment rates in NATO, - surpassed only by the US and the UK.
Other allies have so far not been able to modernise their defence forces at the same pace, and due to unavoidable cuts in defence expenditure in the years to come, they are now facing huge challenges. The Norwegian Armed Forces, however, will most likely maintain its investment rate, - especially when we start renewing the combat aircraft fleet.
This high investment rate ought to make the Norwegian Armed Forces attractive for both foreign and national defence suppliers in the years to come.
Due to the increased complexity of modern military systems, we also envision that the Armed Forces will benefit even more from civilian competence and resources in the years to come.
Role and importance of defence industry
The Norwegian government recently initiated a broad national dialogue aimed at boosting employment, knowledge and competence levels. The long term focus is to create and develop companies that can accommodate the workforce of the future, and in this context, the defence sector is highly relevant. (end of excerpt)
Click here for the full speech, on the Norwegian MoD website.