Booming BAE ripples through Lancashire supply chain
Defence manufacturer BAE Systems has signed a three year extension to its relationship with Burnley-based Velocity Composites, a supplier of composite material kits for the F35 and Typhoon fighter jet programmes.
The deal with the UK’s biggest defence contractor includes a price increase to account for the increased costs of labour, energy and finance since it was last renewed. This renewal supports Velocity’s existing FY25 revenue expectations.
Velocity has been working with BAE Systems since 2010 and will continue to provide process material kits for the F35 and Typhoon programmes. Velocity has a close working relationship with BAE Systems, with teams regularly working at BAE Systems’ site in Samlesbury, Lancashire, to manage inventory and support continuous improvement activity, as part of the contract.
Jon Bridges, Chief Executive Officer of Velocity, said: “BAE Systems has been a key partner for many years, and we are delighted to continue our relationship. Our work with them helps to improve production standardisation and reduce the cost of composite part manufacture.
“As noted in our recent results, our business development teams are building on existing relationships in defence sector and developing our business case with other defence OEMs in Europe and the US.
Bridges also noted the need for suppliers to step up to the task as defence spening increased, which he said was good for business.
“Global defence expenditure is rising, and our services are identical for defence customers who share similar issues to civil aircraft manufacturers in terms of the need to improve fuel and operating efficiencies,” he said.
In its last annual results to the end of October 2024 Velocity saw revenue increase 40% to £23 million, up from £16.4 million in the previous year, which itself represented a 37% rise on the prior year, but the business posted a loss after tax for the year of £0.8m (FY23: £3.1m). The reduced loss was a direct result of the increased revenue.
Continued investment in the Typhoon programme and further export sales supports innovation and technology development and a network of thousands of jobs across the UK.
A report from PwC published in 2024 showed the programme contributing £49.7bn (€58bn) across the economies of Germany, Italy, Spain and the UK, securing almost 63,000 jobs and generating £12bn (€14bn) in tax revenues between 2024-2033.
It also showed that export and domestic sales of approximately 200 Typhoons could increase the benefits to £77.1bn (€90bn) in economic value, 98,000 jobs and £18.8bn (€22bn) in tax revenues over the same period.
At its AGM last week (7 May 2025) BAE Systems said it had a strong start to its 2025 fiscal year, as global tensions continue to increase in military hotspots around the world.
BAE Systems employs around 15,000 staff in the North West at its submarine yard in Barrow-in-Furness and its Warton and Samlesbury sites in Lancashire, and said the regions in which it operates are poised for higher defence spending.
The UK Government has stated its commitment to increase defence spending to 2.5% of GDP from 2027. It has also identified defence as one of eight growth-driving sectors in its upcoming industrial strategy.
The group said it is actively engaged with the Government on its ongoing Strategic Defence Review and Defence Industrial Strategy, which will make recommendations on the nation’s future defence plan in the coming months.
