Defence Offsets


This document has been produced to assist defence platform and system suppliers to understand the commercial implications of the Offset Obligations they may be contracted to deliver in their customer markets, and proposes an effective strategy to build enduring and profitable commercial relationships if they do.



Profit margins for defence contracts are being squeezed around the world as a result of an increasingly congested market combined with onerous offset requirements.  Many Original Equipment Manufacturers (OEMs) and their Tier 1 & 2 suppliers view offset as an additional cost and risk to their business, and certainly an unwelcome burden to be avoided.

Hawsksland Associates believes that, rather than shunning offset obligations, defence suppliers should develop effective strategies to rapidly achieve them, and thereby create commercial opportunities for the future.

The United Arab Emirates, like many rapidly growing countries, has sought to use offset as a mechanism to enhance its industrial capability, increase production capacity and create sustainable employment for its citizens.  This strategy is set out in UAE Government’s ‘Abu Dhabi Economic Vision 2030’, an effective ‘blueprint’ for a knowledge economy and a valuable source of guidance for OEMs.  However, to identify and implement successful offset projects in the UAE, defence suppliers must adopt a strategy that engages every employee within their organisation to identify and nurture offset opportunities.