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Our business model

Chemring delivers sustainable returns to its investors by delivering specialist products and services to its customers. In our Countermeasures and Energetics businesses these products incorporate materials which are relatively inexpensive, but can be hazardous if mis-handled, so our dedicated sites, processes and know-how ensure that we can safely and cost effectively produce these products at attractive margins. In our Sensors & Electronics businesses, the proprietary intellectual property embedded in our product hardware and software underpins the creation of high value solutions which detect threats, ranging from buried IEDs to sophisticated cyber-attacks on an organisation’s data.

The Group delivers protection solutions in a world facing rapidly– evolving threats from both organised militaries and the growing base of insurgents. The Group’s home markets in the United States, United Kingdom and Australia are amongst the largest in the world, and comprise a base of sophisticated and influential users who have demanding requirements for new solutions to meet these threats.

Our understanding of these customers, their threats, concepts of operations and specific technical requirements underpins everything we do.

The Group continually invests in research into new solutions to meet our customers’ evolving threats. We use internally-funded research to secure critical intellectual property, and develop proprietary solutions. A key part of our business model is to secure customer funding for our development efforts – this not only supplements our own funding, but this commitment provides valuable confirmation that we are addressing problems they need to solve as well as validation of the proposed technical solution. This partnership with customers also extends to the final qualification and acceptance of our products - in some areas, such as countermeasures and chemical/biological agent detection, customers provide test and qualification services, such as aircraft flight trials or live agent testing, which would be impossible to complete internally.

The Group’s commitment to research and development has established its leading position in expendable countermeasures, chemical, biological and explosives detection, and cyber electro-magnetic activity (“CEMA”).

The Group delivers a diverse range of offerings, from consultancy and development services, to very high volumes of highly energetic aircraft flares. It has manufacturing and delivery operations across twenty sites, matched to the nature of customer demand and the characteristics of the specific offerings:

  • In consultancy and R&D services, we form and re-form bespoke teams for each project
  • Sensors & Electronics are assembled and tested in batch operations
  • Energetic components use bought-in mechanical hardware with special batch operations to install the small energetic elements
  • High volume products such as flares and some energetic products are manufactured on semi-continuous, automated production lines

We maintain excellent delivery across the Group by integrating operations, continuous improvement and automation.

We evaluate our factory footprint, both in terms of the cost base, and also in terms of the effectiveness and efficiency of the operations – where appropriate, we integrate operations on to a single location and in several cases have not only reduced costs, but also improved delivery performance.

Our continuous improvement initiatives are based on “Lean” and “Six-Sigma” techniques, tailored to the special characteristics of our operations, particularly when processing energetic materials.

Finally, we aim to automate high volume operations, particularly where we are processing energetic materials. This improves operator safety by separating them from hazardous materials, but has also improved quality and consistency of product performance and delivery.

Chemring sells to over fifty countries around the world through a combination of direct sales and a network of sales partners who have strong in-country relationships with national procurement offices. A key element of our business model is our “Land and Expand” approach. We build on a single successful sale into a new customer and seek to expand on this by cross-selling all of the Group’s capabilities into that particular customer.

Secondly, we try to get close to our important customers by establishing a presence nearby:

  • Our Australian operations are a focal point for all Chemring’s offerings into the Commonwealth, including, most recently our land EW capability from the UK
  • We have established a regional sales office in the UAE as a central access point to most of the GCC countries
  • We have set up an office in Gloucester in the UK, close to a key consultancy and contract R&D customer

In addition, we recognise that defence is a sensitive capability for all countries, and many aim to develop a local industrial base to support their national security. This is particularly true for consumables such as countermeasures, where the ability of a supply chain to support military operations is key – the Group’s US and UK-based flare manufacturing capabilities were critical to support operations in Iraq and Afghanistan, and other nations are also seeking to be self-sufficient in their own supply chain. The Group works with nations who wish to develop indigenous capability, and supports product development and local manufacturing facilities to establish an expanded circle of “home” customers.

The Group is structured to facilitate each of these four elements across all our businesses, and to maximise the common themes and synergies amongst similar businesses, particularly within specific segments. Conversely, where there is limited commonality, we have separated operations to enable businesses to focus on the specific customers, technologies and operations which suit their business model – for example, splitting Roke’s contract development business from its product business has enabled both to focus and thrive. In Countermeasures, we have established a common international sales and marketing structure; in Sensors & Electronics, we share and transfer technology from the UK to the US to enable new detection capabilities; and in Energetics, we are building internal supply from our materials and components businesses into our products businesses.

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