INDUSTRIAL COOPERATION

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1 INDUSTRIAL COOPERATION How BAE Systems delivered a successful eur one billion industrial cooperation contract in the Netherlands

2 BAE Systems is committed to building strong working partnerships that will continue long into the future. Through open communication, mutual cooperation and a commitment to high standards, we strive for success with all our partner companies. A collaborative contract In 2004, BAE Systems secured the sale of 184 CV90 vehicles to the Dutch Ministry of Defence. In 2005 this was followed up with the sale of 74 BVS10 vehicles. As part of these supply contracts, BAE Systems delivered an package to the Netherlands between 2004 and We fulfilled 100 percent of the contract originally worth more than EUR 800 million, the largest offset contract in the country. BAE Systems evaluated over 200 local companies to find suitable partners to assist in the completion of the contract. More than 50 were chosen to fulfil a variety of roles. As part of the contract the Netherlands wanted to promote SMEs. To meet this demand, BAE Systems provided indirect in the form of business development. We introduced investors and provided marketing support for local enterprises. BAE Systems worked closely with the Dutch Ministry of Economic Affairs (MEA) on the contract. MEA Commissioner for Military Production M.J.M. Rini Goos described BAE Systems as an outsourcing supplier of offset projects that adds value to Dutch industry. The company has far fulfilled and exceeded our expectations and the offset contract is two-three years ahead of schedule. All of this has helped to make BAE Systems one of the best offset suppliers that MEA has dealt with." In this report we have testimonials from five partner companies, each offering a different insight into their participation and what they have achieved as a result of the contract. 120% 110% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% EUR 800 EUR million 800 contract million Over 50 contract partner ACCUMULATED CONTRACT VALUE 50% Note: The EU rules on offset have changed since the contract was signed. companies Contractual minimum offset value milestones 100% 100 percent Fulfilled CONTENTS A THRIVING PARTNERSHIP Van Halteren Defence...03 ENHANCING A REPUTATION Thales Netherlands...04 NURTURING MARKET LEADERS Neways Defence Electronics...05 RAISING THE STANDARD Variass...06 REACHING HIGHER LEVELS VanderPloeg...07 Over Over partner partner companies companies Contract fulfilled three years ahead 100 percent of Fulfilled schedule Location of Dutch suppliers or partner industries 2

3 A thriving partnership Through participation in a BAE Systems offset programme, Van Halteren Defence has been able to significantly increase revenue. Van Halteren Defence has been a supplier to BAE Systems since the early 1990s. The working relationship was strengthened in 2005 when the company was chosen for the complete turret assembly and vehicle integration of the CV90, as well as the supply of road wheels and road wheel stations for the infantry vehicles. Flexible and focused The relationship is characterised by flexibility and open communication, says Izaak Veerman, Marketing and Sales Director at Van Halteren Defence. It is very good working with the guys from BAE Systems as it s easy to communicate with them. They are always focused and to the point, and I think that is very important. The offset partnership presented Van Halteren Defence with the opportunity to compete with bigger companies. Van Halteren Defence responded by stepping up a level and convincing BAE Systems it was right for the job. We offered the best value, says Izaak. We are a small and flexible company and that set us apart from the competition. In return, BAE Systems provided technical support throughout the project to improve Van Halteren Defence s capabilities and assist it in completing the contract. A growing company Van Halteren Defence was then able to apply this new knowledge to secure new non-offset and government-related contracts. By completing the contract we built up our skills and that gave us the opportunity to win other contracts for land-based platforms in the Netherlands, states Izaak. This expansion of business has led to a sustainable revenue increase of more than 20 percent overall, compared to The project had a huge financial impact, says Izaak. Our company is at a higher level than it was before the contract. The CV90 project was a major step for Van Halteren Defence and has provided it with the competence to build a successful future. It has helped us to become one of the leading defence contractors in the Netherlands, concludes Izaak. Van Halteren Defence Izaak Veerman Marketing and Sales Director Van Halteren Defence Van Halteren Defence supplies high quality products and services to clients in the international defence market, including OEMs and governments. Engineering, project management, CNC machining, certified welding, assembly, integration & testing, maintenance, repair & overhaul and service & support. Road wheels, simulation & training, land systems and sub-contracting. The project had a huge financial impact. 3

4 Enhancing a reputation Ronald Slegtenhorst Marketing and Sales Director Thales Netherlands (Huizen) It enhanced our position as a reliable supplier to the Dutch MoD. Thales Netherlands A Dutch subsidiary of international defence company Thales Group, Thales Netherlands designs and supplies state-of-the-art electronics to customers worldwide. Optronics, data networks, logistics, naval, air, transport and communication systems. Defence, aerospace, communication and transport. For electronics provider Thales Netherlands, an offset contract with BAE Systems provided a Launchpad for new orders and was the realisation of a working ambition. In 2005, Thales Netherlands was selected to provide the optronics package for the CV90. It produced the vehicle s sighting system, integrating its cutting-edge Catherine XP and Claire thermal imaging cameras. Achieving business goals For Thales Netherlands, the contract was a significant boost in its standing with the Dutch MoD and BAE Systems. It enhanced our position as a reliable supplier to the Dutch MoD, says Ronald Slegtenhorst, Marketing and Sales Director at Thales Netherlands (Huizen). We had the ambition to be a supplier of vehicle related solutions, particularly mobile networks and electronics, to the Dutch MoD. Throughout the project there was a smooth working relationship between BAE Systems and Thales Netherlands. From a technical point of view there are always ups and downs but in general the communication with BAE Systems has been very open. says Ronald. They work with their suppliers to find solutions in case of any difficulties. So there are no hidden agendas. Launching new orders Thales Netherlands has worked on successful projects with other divisions of BAE Systems in the past, but the CV90 contract is the most significant because it has resulted in follow on business. We have some new customers which we did not have before this programme. In that way it is a very good point of reference for export orders outside BAE Systems, says Ronald. Thales Netherlands has since cooperated with BAE Systems in a similar program for the Canadian MoD, and has received multiple orders relating to the CV90 for the Danish MoD. Thales Netherlands has also become involved in the after-sales support to the orders. 4

5 nurturing Market Leaders Neways Defence Electronics has become a leader of the electronic manufacturing services market since its participation with BAE Systems. After two years of negotiations and quotations, Neways was awarded a contract worth EUR 29 million for the manufacturing of electronic boxes and harnesses for the CV90. It was a major step for the defence side of our business, says André Beckers, Manager at Neways Defence Electronics. Working well together The project involved the production of Printed Circuit Board Assembly, cables and system integration. The BAE Systems CV90 project was quite a major assignment, says André. Three operating companies had to be involved and they had to work together. That was something unique because it hadn t happened before. The partnership also acted as a way to transfer skills, allowing Neways to learn from BAE Systems and expand its cable work capabilities. With the help and support of BAE Systems we brought our knowledge to a higher level in that area, says André. He believes that three-way communication was key to the success of the CV90 project. There was a very good relation between BAE Systems, the Ministry of Economic Affairs and Neways, he says. That is something that is critical in a defence project. New knowledge, new business The project has since enabled Neways to better address the defence market for new contracts. This model was used for any subsequent RFQ that came in, says André. In 2008 it won a contract with German company Rheinmetall for the production of cables and harnesses for 472 Boxer vehicles. Neways has greatly benefitted from partnering with BAE Systems. Using its experience of the CV90 and Boxer projects, it built working relationships to secure new contracts, including offset and non-offset business. Overall, the offset program has been a great success and Neways has a lot to show for it. André says: We have the knowledge and experience of so many technologies now, that we are considered to be a leader in the market in the Netherlands. André Beckers Manager Neways Defence Electronics Neways Defence Electronics Neways Defence Electronics is a business unit of Neways Electronics International NV, an electronics manufacturing services provider with fourteen subsidiaries around the world. Micro electronics, cables and harnesses, Printed Board Circuit Assembly, box-built products, and systems integration & testing. Defence, industrial, medical, automotive and telecommunications industries. We have the knowledge and experience of so many technologies now. 5

6 Raising the standard Gert Veldhuis Account Manager Variass Variass Through collaboration and knowledge sharing, Variass grew more and more as a professional system supplier. Based in Northern Holland, Variass is a specialist system supplier in electronic and mechatronic products. Product and process development, logistics, purchasing, production, assembly, service and repair of electronics and components. Defence, medical, industrial and water technology. The CV90 contract was the first offset project for electronic manufacturing company Variass, introducing it to a new market that has significantly enhanced business. In 2005, Variass was awarded the contract to supply communication and navigation systems to subcontractor Saab's Business Area Support and Services for the CV90. It sourced, assembled, box-built and climate tested products such as the ruggedised vehicle computer and vehicle display. The Swedish connection It was a good cooperation, says Gert Veldhuis, Account Manager at Variass. We always say that the connection between Swedish people and Dutch people is very good. The culture is rather the same. It was nice working together because we clicked. The contract required Variass to work to the high standards of the defence market, and by adhering to strict management requirements it became AQAP 2120 and ISO 9001 certified. Defence is a demanding market, says Gert. A big advantage of the contract was that the AQAP standards are on a higher level. Our skills had to improve. Sparking success Due to the experience gained during the CV90 project, Variass is continuing to work with Saab s Business Area Support and Services on contracts to supply products for the defence market. Because we had the contract, we have more experience in this kind of business, says Gert. Through collaboration and knowledge sharing, Variass grew more and more as a professional system supplier. The new defence business has been so successful that in 2012, defence custom accounted for 30 percent of annual turnover. With good cooperation and mutual satisfaction we are collaborating more closely with our customers in order to reduce costs and improve quality, says Gert. 6

7 Reaching higher levels Industrial machine and equipment constructor VanderPloeg has considerably improved its core capabilities as a result of the contract with BAE Systems. In 2005, VanderPloeg won the contract to manufacture a series of turret hulls for the CV90. It was also awarded a simultaneous offset order for CV90 add-on armour from BAE Systems supplier Akers Krutbruk. Capability is key The project introduced VanderPloeg to the defence market and gave it the chance to improve its skills. It was a big step for our company, says Gert Vinke, Head of Sales and Marketing at VanderPloeg. We had a target for a higher level of capability in welding, commissioning, project management and quality control, and that targeted level was achieved because of the contract with BAE Systems. VanderPloeg was able to meet the requirements of the defence market thanks to the competence support provided by BAE Systems. We should have very high standards in quality, reliability and technical specifications, says Gert. It is the only way to compete with other countries around the world. First offset, now offshore VanderPloeg has since been able to use its improved skills and knowledge to address the offshore industry, and combined with its progress in defence has seen annual turnover substantially increase. Now we are able to do a lot of jobs in the offshore market as well because there are similarities between offshore and defence, says Gert. Through the CV90 project, VanderPloeg established a good working partnership with BAE Systems. BAE Systems set a standard, says Gert. They have a very open and direct way of communicating and making decisions. It s a professional company to work with. Gert Vinke Head of Sales and Marketing VanderPloeg Machinefabriek VanderPloeg Machinefabriek VanderPloeg is an industrial engineering co-maker and part of the international machine manufacturing company VanderPloeg Group. Construction, welding, project management, assembly and testing of components and machines. Chemical, food, steel, defence, offshore and energy industries. It was a big step for our company. 7

8 BAE Systems has fulfilled offset contracts on or ahead of schedule for over 20 years. Our industry experience and success allows us to offer unique skills and knowledge that help companies around the world improve their capabilities. We continually support industry partners and suppliers to maximize their potential and ensure that products and services are always delivered to the highest standard. For more information please contact us via the details below. For more information contact BAE Systems SE Örnsköldsvik Sweden Telephone +46 (0) Fax +46 (0) BAE SYSTEMS. All rights reserved. The information contained in this document is proprietary to BAE SYSTEMS unless stated otherwise and is made available in confidence; it must not be used or disclosed without the express written permission of BAE SYSTEMS. This document may not be copied in whole or in part in any form without the express written consent of BAE SYSTEMS which may be given by contract. BAE SYSTEMS is a registered trade mark of BAE Systems plc. offsetnl.2013

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