"To inquiry into the manner in which companies in the fields of engineering and physical sciences decide on developing new products and processes and the factors influencing their decisions with particular reference to the industrial application of Government funded research".

1.  INTRODUCTION

  Pilkington Optronics designs and manufacturers electro-optical systems, modules and components mainly for the defence industry and is one of the largest optronic solution suppliers in the world. With an annual revenue of £115 million and sales to over 50 countries Pilkington Optronics is a truly global company.

  Over the last five years the company has invested in two new facilities (in Scotland and in north London) and has greatly modernised its third facility in North Wales.

  In particular Pilkington Optronics with the Defence Evaluation and Research Agency have developed an extremely high resolution thermal imager using a long linear array detector. This imager is known as Stairs'C' and has world leading thermal imaging performance. The United States are developing a similar sensor (called SADA) which although not quite meeting the performance of Stairs'C' is likely, through the economy of scale, to be lower in cost to manufacture.

2.  SUMMARY

  Pilkington Optronics supports the Government policy of competition but within an environment where competition enables a healthy growth of an essential indigenous capability. New Product Development, in particular that fostered by UK Government partial support, must be focused to meet a need. The co-ordination of the Government need and the government sponsored research is essential for the health of the industry.

3.  IR SENSOR TECHNOLOGY

  The need for competition in the MOD procurement process is not questioned—however it is clearly in the national interest that the competitive process does not unnecessarily escalate the eventual cost of the in-service product and that the procurement of overseas technology (particularly from the US) does not dilute the indigenous national capability.

  Pilkington Optronics reinvest some 8 per cent to 10 per cent of our turnover directed at future product in R&T it is essential that we invest in the right things.

  Although we are prepared to invest some of our R&T funding in more generic and underpinning research, and somewhat more on process improvement and engineering efficiency, most of our investment must be structured around specific military functions. We can increase the efficiency of our engineering process as much as we like but unless we focus on the right programmes we are wasting our investment.

In short we must do the right things and we must do the right things at the right time

  Only when the integrity of the need is sound will industry obtain a return on investment through series production.

  We take much of our lead from the national defence research organisations such as DERA and it is a fact of the matter that the research community at some levels within DERA have too strong a vested interest in their own research programmes to make objective judgements on the correct directions of research and are consequently often the last people to determine the research programmes in which we should invest.

  It is essential therefore that government clearly specify the need. It is only with a clear understanding of the need can Industry be in a position to make the right judgement in response to this need by aligning their PV investment to meet it. In addition the timing of the need is required to be clearly understood.

  The STAIRS C Technology Demonstrator Programme is an example where the partnership between UK industry and MoD has achieved a world leading thermal imaging capability but, to date, has lacked the necessary co-ordination to enable success:

—  The jointly funded Mod/Pilkington Optronics STAIRS "C" programme has demonstrated World leading thermal imaging performance, PO have continued to invest to enhance the target identification capability of the DERA demonstrators.

—  A Technology Demonstrator Programme (TDP) in isolation with future procurement on a case by case basis and export restriction creates uncertainty for UK industry. Under these circumstances further investment is difficult to justify.

—  The structured and fully funded US SADA technology offers a short term lower performance alternative for key UK programmes, but its use would lead to certain death of an independent UK capability followed by high US prices and limited access. Exploitation of future leading technologies from DERA will be difficult without a successful revenue generating industry.

—  Co-ordinated procurement to achieve commonality of high performance EO would yield cost, risk and time scale reductions for MoD. Additionally, relaxed export control would increase pay back for both MoD and industry. The UK's 1st generation TCM programme was highly successful, 9,300 units have been sold, the majority of these were exported generating significant levy revenue.

—  Pilkington Optronics propose a continued partnership with MoD to establish 2nd generation modules based on STAIRS C which would maintain the UK's world lead in night vision.

  There is little point in our investing heavily in a Government sponsored IR Sensor programme such as Stairs "C" if at the completion of the development programme there is no programme with the sensor need and it is additionally frustrating if we are also not free to sell the technology overseas. It is even more frustrating if any need should be satisfied by overseas procurement and we are still prohibited to sell freely overseas.

22 October 1998