I appreciate the opportunity to once again provide the US aerospace and defence community’s perspective for American British Trade & Investment. In recent years I have written in these pages about the impact of budget austerity on investment in aerospace and defence. I have warned that continued budget cuts on both sides of the Atlantic not only threaten our mutual security interests, but also inhibit the long-term technological innovation and economic dynamism that are critical to Great Britain’s and the US’s long term success. It is possible that the alarms being raised by the conflicts in the Middle East and Eastern Europe and by the rising tensions in East Asia will force lawmakers in both countries to revisit past decisions to elevate budget concerns over the need to invest in national security.

Despite the impact that “green eye-shade” budgeting is having on our companies and their ability to invest in the technologies of tomorrow, there is some good news to report. A number of companies in both Great Britain and the US have pinpointed dynamic market segments in the defence, space and civil aviation sectors and are addressing them with healthy amounts of investment capital and the attention of our most creative designers and engineers. And just as important, useful government policies are facilitating these efforts.

One productive activity that has been around for more than three decades in the US is the Department of Defense’s Foreign Comparative Testing programme (FCT). Grounded in the idea that a strong US military helps promote our common defence interests, FCT’s mission is to test and certify at a high technology readiness level items and technologies already developed by companies in nations that are US allies or partners that can quickly and economically satisfy US defence requirements. All US military services participate in the programme along with the U.S. Special Operations Command. Since 1980 nearly $11 billion in foreign items have been purchased by the US government through this mechanism, with United Kingdom companies leading the pack with 27 per cent of the funding for testing and receiving $3.2 billion in procurement awards.

While the aim of the FCT programme is to improve the US Armed Forces’ operational performance, this leveraging of foreign research and development has served as a catalyst for industry teaming arrangements, leading to the strengthening of both US and allied nation’s firms in this increasingly competitive global market. Indeed, teaming arrangements leading to the US production of a foreign item provides good opportunities for small foreign vendors to gain entry into the US defence market, which can often look daunting to small companies that see the market as being the primary domain of large US or foreign industries. The programme has the additional benefit of strengthening US relationships within the international community by providing tangible evidence of the US’s commitment to a “two way street” in defence cooperation.

Examples of companies from the United Kingdom participating in the FCT programme and teaming arrangements with US firms over the years include:

• Fairey Allday teamed with Advanced Technology to provide Combat Bridging Support Boats for the US Army

• Graseby worked with Intellitec and ETG, Inc. to supply the US military with Improved Chemical Agent Monitors to identify potential chemical munitions during the conflict in Iraq

• BAE Systems was tapped to replace the analogue flight controls on the Northrop Grumman EA-6B Prowler electronic warfare aircraft with a digital system

There are also positive developments to report on in the civil space and aviation arenas. Lockheed Martin’s Orion Multi-Purpose Crew Vehicle is scheduled for its first flight test in December 2014, a journey that will take it 3600 miles above the earth, farther than any human-rated space craft has travelled in more than 40 years. With this programme, NASA is setting the stage for a serious attempt to send humans beyond Earth orbit, a mission that has great potential for international cooperation.

And regarding commercial space activities, this sector has significant long-term prospects, with an expanding list of commercial spaceports (eight in development in the US and the United Kingdom hoping to have its first commercial spaceport in operation by 2018), launch vehicle and satellite providers – both large and small – pointing the way to market opportunities for companies with aerospace expertise.

With respect to civil aviation, United Kingdom and American companies are certainly benefiting from the world-wide growth in air transportation, with the expected doubling in air traffic in the next 15 years contributing to what analysts estimate will be an annual growth rate of 6.8 per cent over the next few years of the UK aerospace industry.  Additionally, both our aerospace industries are investing heavily in 3D printing technologies that have tremendous potential for revolutionising the way that aircraft parts are built in the future.

With the growth of civil aviation also comes the need for new technologies to ensure that the increasing utilisation of our skies is managed safely and efficiently, not just due to expanded aircraft operations, but also to the integration of civil Unmanned Aircraft Systems (UAS) or Remotely Piloted Vehicles (RPV) into our national airspaces, and to the aforementioned commercial space flight activities. Here in the US, our multi-billion dollar NextGen air transportation system effort to move from a ground-based radar system for air traffic control to a satellite-based system using GPS technology is making great progress. This year saw the completion of much of the foundational work of the Federal Aviation Administration’s (FAA) NextGen programme, with the installation of ground infrastructure for Automatic Dependent Surveillance-Broadcast, or ADS-B, which enables controllers to determine an aircraft’s location and track it with far greater accuracy than radar provides. Similar progress is being made with the European SESAR project for modernising air traffic infrastructure on your continent. Since it is in everybody’s interest to have a seamless fabric of air traffic control systems across the globe, I believe opportunities abound for companies in our country and the UK to develop better communications links between the NextGen and SESAR systems, which in turn will help reduce the cost of equipping aircraft for these important modernisation projects.

Finally, as I noted in last year’s article, the explosion of useful applications for civil UAS is one that companies looking to expand into new markets should pay heed. This year, the Federal Aviation Administration began operational safety tests of a variety of UAS/RPV at test sites in Alaska, Nevada, New York, North Dakota and Virginia. Testing activities are open to foreign developers of civil UAS/RPV systems. Another positive development was the FAA’s recent decision to grant permits to six television and film production companies to use these systems. Next on the FAA’s agenda is the development of a rule for small UAS/RPV to enter the national airspace system. In the coming months, I am certain that we will be hearing more about the market potential of this new technology, as well as continued concerns about how safety and privacy issues will be addressed.

To summarise where we stand today, despite the drag effect that budget austerity is having on the aerospace and defence industries in the UK and US, our companies continue to apply resources to areas that will benefit from the innovation our dedicated and talented workforces produce. The United States and United Kingdom aerospace industries rank first and second in the world, and I have no doubt through our continued commitment to innovation and collaboration we will maintain our hard won leadership positions.