The US Arms Exports Future: The 21st Century is not the Late 20th


2013-09-09 By Robbin Laird

In the oft debated and discussed arms transfer export reforms, slow is an understatement.

Irrelevance to this century might be another one. 

The nature of the arms business has changed so much from the late 20th century in response to global manufacturing, that debating which widgets should be on a munitions list (even this nomenclature suggests the problem) is really out of phase with structural shifts in evolving global arms production.

A key problem in the United States is that the period since the collapse of the Soviet Union really created an anomaly: the US’s core peer competitor had collapsed leaving the U.S. with a significant cold war arsenal which it could leverage for its own use and for exports.  Even though the legacy of 20th century approaches remains dominant – platforms are the focus not capabilities – the stockpiles have dwindled and are not going to be replaced any time soon.

And as the U.S. draws down its defense investments, and in the presence of a strategy of sequestration fails to prioritize investments, the major US companies are looking to global exports as a key way ahead.  One can not go to a major air show without claims of significant growth in the international market as on offer for U.S. firms to allow them to deal with the uncertainties of DOD investments and the absence of strategy.

But such hopes are not founded on 21st century realities. 

Foreign customers are not looking for the sale of U.S. equipment as end items – and the necessity to deal with ITAR and other regulations breaking down every component inside those end items.  The kinds of allies, who are working with the United States, whether in Europe, Asia, the Middle East or Latin America, expect to participate in the production process and to part of the overall evolution of the product.  They expect to be part of the production cycle and to benefit industrially from buying any U.S. products.

It is no longer about things as end products; it is about participation in processes, which advance military and industrial capabilities.

Arms importers have such expectations for several reasons.

First, American companies simply do not dominate the global landscape the way they did 30 years ago or even 10 years ago.  There are significant global players in Europe and Asia, which have emerged or are emerging to shape new products and processes.

Second, there are global competitors, such as the PRC, which are generating technology and global reach and see the global market as a key area within which to shape partnerships for the long term.

Third, new industrial players such as Embraer and companies in India will over time become more significant players in shaping the production processes and products for global exports.

The U.S. is not unique in the way it once was in terms of production or capabilities.  What is unique is the nature of the U.S. military and its global experience and reach.  This key asset is fundamental if the U.S. hopes to play a key role in working with allies in shaping new military capabilities, and amortizing the costs of defense production.

But this will be done so in the face of 21st century production processes, in which prime contactors are responsible for the development and delivery of final product, but do so by sitting on top of global supply chains.  The global suppliers are just that and are found in commercial as well as military domains and produce parts, which are inherently dual use.

F-35C breaks away from formation prior to landing at Eglin AFB, June 22, 2013. The F-35 also breaks away from traditional arms export thinking as well and could be leveraged for a process of change. Credit Photo: 33rd Fighter Wing 

The cases of the 787, the A350 and the F-35 are quite similar in terms of the primes being the focal point of a significant global effort to shape supply chains which enable the delivery of new and capable products.

But the global nature of the supply chain is conceptualized differently from controls provided by a munitions list. 

The F-35 program has been built on a number of de facto reforms shaping a global approach and could be leveraged as an important element of shaping further reforms.  But what is interesting in the debate about the F-35 in the U.S. is how rarely the global production aspect even shows up in that debate.

It is as if the U.S. can debate its own defense future regardless of the allied commitments and engagement in the production of the F-35, which is underway.

There are a number of new products on the market, which are as good or better than US products, A330 tankers and A400MS or FREMM frigates come quickly to mind.  But the real point is not simply that there are alternatives, but that the production processes themselves are changing.

A key example of the change involves South Korea.  South Korea is an important partner of the United States and Europe in shaping new defense capabilities moving forward.

Two dramatically differently examples involve ships and helicopters.

With regard to ships, South Korean technology has been significant in allowing the U.S. to build a more cost effective and capable logistics support ship.

When we visited the USNS Montford Point, we had a chance to talk with the CEO of the NASSCO shipyard building the ship. Harris highlighted the processes followed by the Asian yards, and their commitment to a tight planning and design process prior to building any ship.

He told a story about a meeting which he had in South Korea with a US Congressman in attendance.  The shipbuilder was asked how many ships he had built that year and his answer was something on the order of more than 270.  The Congressman asked the shipbuilder:  How did you get that good?

The South Korean shipbuilder paused and then answered:  “We learned from the US during World War II in building the Liberty Ships as manufactured products.  We started there and have been working to improve on that model.”

According to Harris, South Korean yards have contributed significantly to the design and production of the ship.  One key example he gave was with regard to a technology transfer from South Korea to the US.

The deck is 1 ¾ inches of steel.  Relying on US methods, we would need multiple passes to build this steel plate on the deck.  We called Hyundai on the phone and said: what do you do?  One pass.  Will you share that with us?  Yes. We’ll share it with you.   

They shared it all with us, and it’s a process that we have here where you put powdered metal in the joint, it’s actually broken up pieces of weld material.  And you autonomously weld, and you fuse all that together.  And you build a crown when you put that material in.  And it really is fantastic.   

The process lead to very little, if any, weld rejects.  The issue with one pass for us was we were seeing some weld reject.  And we don’t want weld reject.  But the Koreans, used a two-pass system.  And their joint design was very different than our joint design.  We quickly qualified the joint design to the USN spec requirements. 

Harris highlighted throughout the interview the importance of the partnership for improving the design and manufacturing process and making it a more exacting effort to drive out cost and to enhance manufacturing performance.

A second example is the partnership between Eurocopter and South Korea in building a new version of the Super Puma being built in South Korea and available for global export. According to Norbert Duclot, the head of Eurocopter in Asia:

In 2006 we signed an agreement with KAI which has led to the development of the Surion helicopter for the Republic of Korea Army Aviation (ROKAA).  The helicopter first went into service this year.The South Koreans are planning to acquire 245 of these helicopters and to derive several versions of the helicopter.

It really is a Korean helicopter.  One needs to realize that about 80% of the helicopter has been redesigned by the South Koreans; it is not simply license production for it is a newly designed helicopter.  

And we have an agreement to export this helicopter with them to selected markets.  This is not a problem for us for the helicopter has no equivalent in the Eurocopter line.  It is a new build 8.5-ton helicopter. 

The South Koreans and Japanese are really at the top of the game globally in terms of production technologies and techniques.  We have advantages currently in design and having mature technologies available to the market place; but really the South Koreans and Japanese have much to teach the world in terms of production technologies and approaches.

These two examples highlight how production and development processes are becoming global in ways that do not prioritize U.S. capabilities.

To succeed, U.S. firms need to be part of these processes and not managed by munitions lists.

In shaping a new regime for the control of defense exports, the reality of working with allies in a global supply chain needs to be prioritized, rather than debating which widgets they are “allowed” to get, which probably came from them in the first place.

And new regulations by allies require such a shift.  For example, the EU requires direct offsets in defense, not indirect offsets in defense as part of any arms deal going forward.  This means that if the old F-16 model were being relied on rather than the new global production F-35 model, the U.S. generated aircraft would not be in play.

The new approach is going to generate changes for which a backward looking arms control process simply is not prepared.  Take the example of weapons for the F-35 fleet going forward. 

With the F-35 fleet coming to the Pacific, a little noticed aspect of the program is how it augments the market for those weapons manufacturers whose weapons are on the platform.  An entire weapons revolution is enabled by the F-35 in which key developments such as off-boarding of weapons are enabled.  What this means is that weapons can be fired by other platforms, whether air, sea or land based, while the aircraft is determining target sets.

Even though the U.S. has been the core architect for the aircraft, the implementation of the fleet will not be solely and perhaps primarily American.  The diversity of global weapon suppliers – European, Israeli, and Asian – will seek to integrate their products onto the F-35.

There are two examples already in play of how allies can work with the F-35 to weaponize the aircraft to the benefit of the entire fleet. The first example is the inclusion of a Norwegian missile on the F-35.  Indeed, for Norway, a key element of the F-35 decision by Norway was the acceptance of the integration of a new Kongsberg missile onto the F-35 itself.

Through the development of the Naval Strike Missile (NSM), the Norwegian Armed Forces has established KONGSBERG and other Norwegian industry in the top tier as a supplier of long-range, precision strike missiles that will meet military requirements in a 20 to 30-year perspective.

Historically, a Norwegian selection of an aircraft and a decision to integrate a missile on that aircraft would be largely for Norway or whoever else chose that aircraft and the series variant of that aircraft.  This would not likely be a large natural market.

With the F-35 the situation is totally different.

The F-35A to be purchased by Norway has the same software as every other global F-35, and so integration on the Norwegian F-35 provides an instant global marketplace for Kongsberg.  And the international team marketing the aircraft – is de facto – working for Kongsberg as well.

It is very likely, for example, that Asian partners in the F-35 will find this capability to be extremely interesting and important.  And so Kongsberg’s global reach is embedded in the global reach of the F-35 itself.

The second example is the development of the Meteor missile by the European consortium MBDA Systems. The new Meteor missile developed by MBDA is a representative of a new generation of air combat missiles for a wide gamut of new air systems.  It can be fitted on the F-35, the Eurofighter, Rafale, Gripen and other 21st century aircraft.

In short, the 21st century development and production processes are not the 20th.

Putting in place policy processes which are in this century not the last are crucial if the U.S .is to cope with fiscal stringencies and yet work more effectively with global allies who expect to part of the evolution of capabilities, not the receivers of an end product.

It would also be helpful if the continual attacks on “foreign” suppliers would stop from the Congress.  The tanker offered by Northrop and then EADS was an imported airframe, full stop. It also has been delivered to many of the world’s air forces while the USAF is waiting for the “American” tanker.  The full out attack on the Super Tucano for daring to enter the US marketplace as a “foreign” product even though to be build in the United States and thereby become part of the Embraer global supply chain is another.

These kind of rear guard actions simply worsen the ability of U.S. firms to work abroad and to be part of the reality of 21st century global supply chains. 

For a look at the challenge of buying 21st century systems in the Canadian context see the following comment on the Jenkins report:

For the version published by Breaking Defense see the following link: