Wales’ small and medium-sized businesses are being encouraged to reassess their potential role in the UK’s defence sector as changes in global security and UK Government policy open the door to new suppliers.
Industry figures told the Business in Focus podcast, From Startup to Scale Up, that the combination of shifting geopolitical pressures, technological change and recent announcements had created an opportunity for more Welsh firms to enter the market, including those with no prior experience of defence work.
Rear Admiral Dr Chris Parry CBE said the international environment had entered what he described as a period of ongoing strategic competition, with tensions between major powers shaping the way nations think about security. He argued that developments in areas such as drones, cyber activity, space and underwater infrastructure now required a faster and more flexible approach to procurement.
Chris said the pace of innovation seen on today’s battlefields meant systems were becoming more important than the platforms they sit on, with modular and rapidly updated technologies gaining ground.
According to Chris, this shift could benefit smaller Welsh firms that can adapt quickly. He suggested that dual-use technology, electronic shielding materials, counter-drone systems and other components could come from businesses that currently see themselves as entirely civilian manufacturers.
He pointed to examples overseas where civilian factories are expected to convert production rapidly in a crisis, arguing that similar thinking could help Welsh firms identify routes into the sector. He also said signature-reduction materials and other protective technologies were becoming increasingly important as more equipment and people become detectable by physical or infrared signatures.
Phil Jones, Chief Executive of Business in Focus, said the announcements emerging from the UK Government, including the Wales Defence Growth Deal and the identification of potential sites for new munitions and energetics facilities in Monmouthshire and Pembrokeshire, showed that Wales is viewed as part of the national defence picture.
He noted that Wales has a long-standing history of engagement in Armed Forces recruitment and defence-related industries, and that the country’s recognised strengths in unmanned aerial systems have been acknowledged at national level.
Phil said the key now was ensuring Welsh SMEs are able to participate in that opportunity. Business in Focus has a specialist defence consultancy service aimed at helping firms understand the market, develop a route to entry and build confidence when approaching primes or the Ministry of Defence.
He said that SMEs needed a clear understanding of their “why, what and how” – why they might consider entering the sector, what capability they bring, and how they can take it to market. He added that firms might hold enabling technologies that support other companies’ specialist work, even if they are not directly defence-related.
Richard Morgan, Defence Consultant at Business in Focus, said SMEs often assumed the entry threshold for defence was too high, but recent changes had made it more approachable. He works with firms to map their capabilities against defence requirements, refine business plans and understand where they sit in the supply chain.
Richard explained that companies do not need to sell directly to the Ministry of Defence; many will operate at tier-three or tier-four level, providing components that feed into a wider system.
He said development cycles in places like Ukraine were now measured in weeks, not months, and that this played to the natural strengths of SMEs, which are often more agile than larger primes. Richard also pointed to the rapid evolution of counter-drone technology, where threats and countermeasures change quickly and require fast innovation. He said this demonstrated that smaller firms, including those from unrelated sectors, could bring useful capability to defence if given the right support.
Phil said the opportunity for Welsh SMEs was significant both in business terms and as part of a broader national effort. In his view, Wales could be in a stronger position within five to ten years if the public and private sectors work together effectively. He said businesses should have confidence in their capabilities, adding:
“Brilliant ideas come out of Wales, brilliant innovation comes out of Wales, and we need to back ourselves and enter into this market with ambition.”
Hear more in the Business in Focus From Startup to Scaleup podcast. Listen here.
