North America

Four acquisitions in 2000 have enhanced the company’s position in the US market. Early in the year, the relatively small acquisitions of Femtometrics and Watkins Johnson expanded the company’s involvement in chemical agent detection and communications equipment respectively. These additions were followed in the second half of the year by the acquisition of two former Lockheed Martin businesses, Control Systems and AES, the latter primarily comprising the Sanders electronics systems business. Together, these acquisitions contributed £6m to operating profits, consistent with a contribution of £77m on a pro forma basis for the full year.

The North American business has strong positions in information systems, defence electronics and systems integration and engineering. Combined with the capabilities of our UK-based Avionics business, the new acquisitions have established BAE SYSTEMS as a world leader in digital engine controls, flight controls, and electronic warfare solutions for both the US and Europe. With the anticipated growth in US defence spend, we are well positioned to build on the good profitability and strong cash flow of this business.

BAE SYSTEMS North America also has a strong, well-established presence in the services and support market. It is the largest single technical support contractor for the US Navy, with a legacy relationship of more than 35 years. In 2000, it was awarded a $450m contract to provide systems engineering and technical assistance for the Federal Aviation Administration’s air traffic control programme.

Its strong indigenous presence allows the North American business to compete for prime contract opportunities. Such opportunities include the company’s bid for the potentially large C-130 AMP avionics modernisation programme, the outcome of which is anticipated shortly.