This accidental Finnish defence startup can teach the UK some lessons
The UK is home to some of the world’s most significant defence companies, but also its most innefficient procurement systems. The story of Finnish startup Kelluu offers some valuable lessons, writes Eliot Wilson
One of the most profound lessons of the war in Ukraine, since it went from hybrid, proxy conflict to a full-scale land war, has been that technological change is rapid and unpredictable. It has mainstreamed unmanned aerial vehicles (UAVs), and drone warfare is now part of every aspect of combat.
This should be great news for the defence industry. New and evolving technologies and a NATO-wide commitment to spending five per cent of GDP on security and resilience will drive countries to the marketplace, even if some of them are relying on maxed-out credit cards. The UK’s defence sector is significant: we have the world’s sixth-biggest manufacturer, BAE Systems, as well as Babcock International, Rolls-Royce and QinetiQ, and major facilities owned by overseas companies like Leonardo UK, Airbus and Rheinmetall.
The UK also has one of the most sclerotic, inefficient, unaccountable and change-resistant procurement systems in Europe. The most notorious current grotesquerie is the Ajax armoured fighting vehicle: the Ministry of Defence awarded the contract to General Dynamics in 2010 and the first vehicles should have been delivered in 2017. A running score of delays, including trials which had to be halted because of excessive noise and vibration making soldiers ill, has meant that full operating capability will not be achieved until October 2028. The programme has so far cost £5.5bn and after 15 years not a single vehicle is yet in service.
The accidental defence startup
It doesn’t have to be this way, if the defence establishment will listen and learn. Last week I spoke to Janne Hietala, CEO of Kelluu, a Finnish company which makes autonomous airships. Kelluu was not founded as a defence-orientated manufacturer; starting in an old farm shed in 2018, it began producing 40-feet-long, lighter-than-air dirigibles with hydrogen fuel cells, which used very little energy and had extremely long operational flight hours, to create a platform for hyper-accurate aerial photography.
The military potential of Kelluu’s products became obvious. Airships have many of the advantages that more conventionally recognisable drones have in terms of providing real-time data from aerial surveillance, but they are almost silent and can stay in the air for far longer, allowing vital sustained overwatch. That potential has been recognised by the investment of €15m in Series A funding from NATO’s Innovation Fund.
Hietala is not resting on his laurels, and NATO funding is welcome and deserved but, in defence sector terms, €15m is an opening gambit; it is not much more than the price of one Ajax AFV, and the through-life cost of a single Eurofighter Typhoon is something like €215m.
Airships, he says, were not immediately an easy proposition to sell. In the world of last year’s 14,000-mile bombing raids on Iran’s nuclear facilities by the US Air Force, and Royal Navy destroyers with radar able to track 1,000 targets at a range of 250 miles, there is something almost steampunk about the idea of deploying airships as part of an intelligence and reconnaissance network.
So he and Kelluu proved the concept the hard way, by doing it, both in their own testing and with NATO military exercises. The company is based in Joensuu, the capital of North Karelia, “at the edge of Europe”. I asked him about the conditions, and he described snow-laden winters with a record low temperature of -40°C.
“And we’re 50 miles from the Russian border, so…”
What the UK can learn from Kelluu
Kelluu’s story offers a number of lessons which governments and military establishments have to absorb if Europe is going to re-arm successfully.
The first is to think laterally about new capabilities. No defence ministry would have concluded that it needed autonomous hydrogen-powered airships to support and augment drone capacity in reconnaissance; even less would they have devised a data-as-a-service model in which Kelluu can construct and operate the airships and provide the military with a product of data. Only by looking at what was already happening in civilian use did that potential emerge.
Constant, rigorous testing is irreplaceable. Kelluu had to prove its product, so its team drew on previous civilian feedback as well as getting their airships into the skies in the most challenging conditions and using every minute of experience for constant refinement and iteration.
Then there is speed, in design, acquisition and finance. Defence procurement is familiar with schedules of the order of 10 years from concept to in-service date. People like Janne Hietala, with civilian start-up backgrounds, find this leisurely pace almost impossible to imagine. Moreover, it is far too long for the pace of change on the modern battlefield. In just over four years of full-scale conflict in Ukraine, technology has evolved not just incrementally but in development generations, and with those changes have come radical rewriting of doctrine and tactics.
Finance is the final piece. Defence procurement authorities have to be much more alive to the pressures that particularly smaller, more innovative companies experience. These businesses do not have huge cash reserves or the ability to absorb substantial delays. Decision-making has to speed up and we cannot have, for example, the Ministry of Defence waiting 20 months to award the contract for its New Medium Helicopter to Leonardo UK – the only firm to submit a bid.
These are hard times. The UK’s economic situation offers little cause for celebration; we face immediate and ongoing security threats from Russia, China and Iran. Confronting these threats will cost money, and a reconception of security and resilience to understand that they are threaded through almost every area of public policy.
The West can do this. We have innovative high-tech industries, but we have to make sure that our procedures and rules do not tie one arm behind our own back. There is a laconic Finnish proverb which sums up the people’s quiet, patient determination: Etiäpäin, sanoi mummo lumessa – ”Forward”, said grandma in the snow. Make sure we’re not fighting self-imposed bureaucratic strictures, free up our best and brightest, and we can all hope to follow grandma.
Eliot Wilson is a writer and historian. He is a senior fellow for national security at the Coalition for Global Prosperity and a contributing editor at Defence on the Brink