Implementing our strategy

• Moving from an export programme to a home market
• Focus on investment and training within Saudi Arabia

Saudi Arabia has been an important market for BAE Systems for a number of decades. The Group continues to strengthen this market relationship, creating new opportunities for the future and the development of Saudi Arabia as a home market.

BAE Systems can trace the roots of its relationship with the Kingdom of Saudi Arabia back through its predecessor companies to the supply of Lightning and Strikemaster aircraft in the late 1960s. The initial aircraft deliveries were followed by the provision of extensive support arrangements. In 1985 agreement was reached between the UK government and the Kingdom of Saudi Arabia for a substantial enhancement to the capability of the Royal Saudi Air Force (RSAF) and Royal Saudi Naval Forces (RSNF) through the purchase of Tornado aircraft and associated training systems and support, and supply of ships. As with the Lightning programme, Tornado was initially a UK export programme supported by a large expatriate workforce.

Over time, BAE Systems and the RSAF have worked to substantially increase the number of Saudi nationals employed on the programme. Well-trained and highly skilled Saudi nationals have progressively replaced a high proportion of the expatriate workforce and the capability to undertake major maintenance and upgrade activity has been established in Saudi Arabia. The Group employs approximately 2,300 Saudi nationals. BAE Systems has made significant investments into Saudi Arabia, both in new facilities for its people and in companies through which aerospace work is undertaken in support of the programme. The Group’s commitment to Saudi Arabia as one of its key home markets includes the recent relocation of the divisional management team to the Kingdom.

In December 2005 the UK government and the Kingdom of Saudi Arabia signed an agreement to modernise the Saudi Arabian armed forces. This programme, Salam, includes the supply of Typhoon aircraft, a contract for which was signed in 2007. Importantly, the agreement sets out a plan that will further enhance both Saudi Arabia’s indigenous capability and BAE Systems’ position as a major constituent of the Saudi Arabian defence industrial base and a major local employer. Further investment in industrial facilities is already underway to facilitate the modernisation of the RSAF and support the introduction of Typhoon aircraft under the Salam programme.