New weightlifting champion: Airbus A400 M Atlas /Low-flying Airbus A380s lumbered through the skies above the sleepy Hampshire town of Farnborough this July, and the roads for miles around were backlogged with blacked-out Mercedes-Benz cars. The international aerospace industry had descended for their biennial get-together. State delegations, hordes of buyers and industry watchers were slowly snaking their way towards the world’s largest temporary exhibition.

“The uk may be a corner of Europe at a time when Europe is starting to look like the corner of the world but Farnborough is one of the only truly international events we have in the UK and we need to be proud of that,” says Shaun Ormrod, ceo of Farnborough International. “We’re looking at 52 per cent foreign exhibitors this year.”

International it may be but the event retains a distinctly British feel, with Hampshire locals setting up trestle tables on the outskirts of town selling everything from earplugs to model planes. Attendees are even ferried to and from the car parks in old London Routemaster buses. Only at Farnborough will you find sharp-suited Omani, Russian and Korean businessmen queuing in a muddy field to board a red double-decker.

Once inside the fairground however, it’s clear you’re at the heart of a multi-trillion euro industry. Standalone pavilions from the likes of Boeing, bae Systems and Thales vie for dominance, while vast halls of smaller exhibitors ply their hi-tech wares. Defence exhibitors account for roughly half the market at Farnborough but as military budgets are slashed across key markets, the outlook is far from rosy. This was particularly acute following the radical restructuring of the domestic market, with uk defence secretary Philip Hammond announcing the loss of 17 units and 20,000 military jobs just weeks before the event.

The consensus seemed to be that when times are tough, get smart. “Sensor technologies, artificial intelligence systems and innovative human-to-machine interfaces are centre-stage this year,” says Kevin Jones, director at ads – the uk’s national trade association for aerospace, defence and security.

This emphasis on cutting-edge technology was particularly evident in the surveillance sector. “Modern warfare doesn’t have battle lines, it takes place in towns and villages, making situational awareness key,” says Paul Mottershead of Thales. With this in mind, the French-headquartered behemoth was showcasing a range of information gathering and processing products, from the high-definition Catherine MP thermal camera to TopOwl information-overlay helmet visors and touchscreen cockpit interfaces.

Even with the best technology on the market, gathering information in hostile environments is no easy feat. This is where unmanned aerial vehicles (UAVS) come into their own as another booming defence sub-sector. Thales was showcasing its latest reconnaissance pod this year, as was uk-based Ultra Electronics, whose Tacpod C2 can plug in to any vehicle, delivering full motion pictures remotely to the driver.

“Penetrating deep into enemy territory has always been a challenge for uav flight times in the past,” says Tom Caster of Ultra. “It’s been a major limitation for aerial reconnaissance.” Enter one of Ultra’s star products: a new solid oxide fuel cell that takes flight time to over eight hours, up from around 90 minutes.

Information clearly was power at Farnborough this year, but that’s not to say that the grim-faced men and women gathered under grey British skies were ready to give up on their warheads just yet. Around €60m in contracts were announced at Farnborough this year – an increase on €38m in 2010.

The Anglo-Italian firm AgustaWestland delivered the first in its lucrative aw159 Lynx Wildcat contract with the uk Ministry of Defence – 34 army Wildcats and 28 maritime variants are due to be in action by 2014. The AgustaWestland helicopters carried out an elegant aerial display above the fairground but these cats have teeth and the Thales lmm missile system has been specially developed for the project. The long-awaited f-35 Joint Strike Fighter project, led by Lockheed Martin, also had ripples down the supply chain, with MBDA developing the new Spear missile for this trillion euro project.

“The defence sector certainly finds itself in a challenging, constricting environment,” says Jones, “and US and European defence companies face stiffer competition in terms of capability.” But with the major arms companies peddling hi-tech wares to strong developing and oil-rich nations, there’s still an international market in rude health – worryingly so for those who see it as a barometer of future conflicts. “Western budgets may be dwindling,” says Ormrod, “but you’ll find that the other three quarters of the world are increasingly keen to defend their assets.”