WITH defence budgets being scaled back by some countries, ST Engineering is shifting its focus towards creating innovative cost-effective products for air, land and sea.

'Constrained budgets and the changing operational needs of governments and commercial organisations have brought into sharp focus the need for customised and integrated solutions that derive greater value from new and existing assets,' Patrick Choy, executive vice-president of international marketing for ST Engineering, said yesterday at the Singapore Airshow.

The defence budgets of more developed countries such as the US and UK are coming down at least 10 per cent year on year, he said.

ST Engineering also said that it will continue to invest in research and development (R&D) to ensure that it has access to new technologies and capabilities. It spends about 3 per cent of revenue on R&D.

The group, which invested 'a couple of million dollars' in its presence at the 2010 airshow, will unveil several innovations at the show this week, including South-east Asia's first unmanned surface vehicle, the Venus.

The single largest exhibitor at the show, ST Engineering group will also display a counter-mine product, the Trailblazer - which was awarded the Defence Technology Prize by the Ministry of Defence last year - and the Warthog, an-all terrain vehicle sold to the UK's Ministry of Defence for use in Afghanistan.

ST Engineering's subsidiaries also announced a couple of contract wins yesterday.

ST Kinetics, the group's land systems arm, has scored a 30.13 million euro (S$59 million) contract for the demilitarisation of ammunition for a country in Africa. Under this contract, ST Kinetics will provide specialised equipment and related services such as training. The first delivery is slated for the second half of this year, with the final delivery in first-half 2012.

ST Kinetics is also launching new 40mm medium velocity ammunition at the airshow. This is said to offer greater accuracy and longer range.

Meanwhile, ST Aerospace subsidiary ST Aerospace Systems has been chosen by Triumph Actuation Systems as an authorised service centre for the repair and overhaul of power transfer units used on A320 aircraft. The agreement spans three years, with an option for a further three years.

Commenting on the demand for maintenance, repair and overhaul work in the wake of the economic downturn last year, ST Aerospace deputy president Jeremy Chan said that the outlook is more positive after signs of improvement on a quarter-on-quarter basis.