Ninety years ago, British strategist and inventor Major General J.F.C. Fuller understood that “Tools, or weapons, if only the right ones can be discovered, form 99 percent of victory…. Strategy, command, leadership, courage, discipline, supply, organization and all the moral and physical paraphernalia of war are nothing to a high superiority of weapons – at most they go to form the one percent which makes the whole possible.”
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***Posted November 9th, 2009
With a significant shortfall in spending for new power projection platforms, the U.S. faces a core challenge of how to most effectively build forces for the years ahead. At the heart of this opportunity will be to shape joint con-ops for the US Air Force and Navy and to ensure more effective networking among Air Force and Naval systems as well as to shape more effective collaborative C4ISR systems with allies.
At the heart of this opportunity is to leverage new programs in play to ensure that they work effectively together. The cancellation of the future combat system means that the original concept surrounding the program whereby the network would enable the platforms will shift to ensuring that the ground network works effectively with the air systems in play. The air-ground revolution, which was launched by the Iraq invasion, has continued with the surge and with the transfer of forces to Afghanistan. The use of unmanned aerial vehicles to shape ground force options and decision and links like the Rover video system which has connected manned aircraft to ground decision-makers has rapidly expanded in the Iraq and Afghan operations.
Now the question is why not take the termination of FCS to shape an opportunity for greater collaboration between the air and ground systems. This will be especially significant as the F-35 enters into service. The F-35 is a “flying combat system” which will significantly enhance the capabilities of the air and ground forces to work together in shaping collaborative con-ops and to share decision-making. Leveraging this new platform as the U.S. reshapes connectivity between the air and ground systems is a significant opportunity for innovation and change.
The USMC can serve as an important catalyst to shape the new relationship between USN and US Air Force assets and the US Army. The USMC adopted Shadow as its common UAV with the Army. In so doing, the USMC and Army have worked through a number of common solutions to the use of data coming from the Shadow to support ground operations. This working relationship can be expanded to shape an important relationship between the USMC F-35 and the US Army. And because the systems on the USMC’s F-35 are virtually identical to those of the USN and US Air Force, an important template would be put in place to re-shape air-ground connectivity as the US Army modernizes and the F-35 is introduced as the common air element across three services.
There are already some elements for shaping such commonality in the connectivity revolution, which needs to take place in order to reshape joint operations. For example, DARPA has sponsored a Rockwell Collins program called Tactical Targeting Network Technology (TTNT) which can be used now to more effectively integrate air and ground operations. TTNT [.mov format] is a capable waveform built around an “open system approach.” The technology enables networking between airborne platforms, weapons, and ground forces, and as an internet protocol or IP system operates in ways similar to what is available commercially with systems like Blackberry or iPhone. But unlike such commercial systems, TTNT provides a highly secure structure and long range of operation up to 300 miles for line of sight operations and connections to beyond line of sight operations. In addition, the system is scalable and survivable complimenting existing legacy communications systems.
Navy program officials associated with the Unmanned Combat Air System have recently underscored the cost savings associated with an open architecture system such as TTNT. These officials underscored the significant advantages to having a scalable system like TTNT. As reported by Defense Daily, Glen Colby, the IPT leader for the system, commented: “if you design for scalability…then you pull the old one out, put the new one in, and it doesn’t really matter if it’s the same exact model or not because the design for scalability ensures that you can plug the new one in and you get better capability at less cost. ßIf you don’t design for scalability and you are asking this vendor to give you the exact same model, it’s very costly, because in the commercial world nobody builds [that part] anymore. It’s very important to understand what scalability is because inherent scalability allows you to design in flexibility. In fact, scalability is one of the things that allows you to rapidly update your system.”
And connecting some of the new air assets will provide significant gains in strategic capability as well. Notably, the Osprey with a range and speed which allows ground forces to operate over an entire theater of operation such as Iraq can provide a key piece of the puzzle in making unmanned aerial vehicles a much more effective instrument. Currently, if a UAV discovers a target of interest, which requires prosecution by ground forces and is not appropriate for an air strike, by the time current rotorcraft get the target it is almost certainly gone. And indeed one Osprey is the operational equivalent of three CH-46s and one-to two forward operating bases. With systems that connect the Osprey effectively with UAVs, the ability of the USMC, Special Forces and the US Army to operate rapidly against targets discovered by the UAV would be significantly enhanced.
Another significant area where connectivity creates strategic capability revolves around the Aegis and the F-35. Among the most important international programs for the USN in the 21st century are Aegis and F-35. Efforts to enhance their integration are a natural path to enhance U.S. global coalitions. Many Aegis partners are current or prospective F-35 participants; finding ways to link the two will be an important enhancer for partners. For example, given Norwegian concerns about Northern European energy security, including the Arctic, there is interest in enhanced Link 16 connectivity between Aegis systems and the F-35.
To the extent to which allies work integration of F-35 with Aegis, they create extended “littoral bubbles” into which the USN and USAF can plug their systems to, in turn, extend the capabilities of the allied “littoral bubbles.”
The role of connecting the F-35 and the Aegis is of increasing significance as the US and its allies move forward into the 21st century. The F-35 and the Aegis are the most significant multi-mission and coalition friendly assets to be deployed in the early part of the 21st century. Connecting these assets will be central to the Administration’s planning for more collaborative concepts of operations between the air and sea forces. Intersecting US and allied F-35 and Aegis fleets will be central in a period of declining numbers of platforms for the US and its allies.
There is another key feature of these platforms, which create new options and opportunities for the US decision makers. Historically, when one wanted to signal intentions to adversaries one would sequentially deploy assets of increasing capability. With the collaborative possibilities of a F-35 and aegis fleet, US decision makers need to determine whether to deploy or not. The deployed force can operate to do security missions, defensive missions, and offensive missions without signaling their intensions. These combined assets can operate throughout the spectrum of options and capabilities. This will be a new capability available to President Obama and his successors. But it only works if you have effectively connected the assets.
In short, in an environment of financial scarcity directing confronting the connectivity challenge is central to ensure that the U.S. and its allies will indeed deploy significant capability in the future. Otherwise, as the platform shredding process generated by financial stringencies unfolds, we will simply have fewer and fewer tools to deal with our global military and security challenges.
***
A version of this post written by Robbin Laird was published on November 2, 2009 in Defense News.
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***Posted November 8th, 2009
Mine Resistant Ambush Protected (MRAP) vehicles were rapidly acquired based upon an undeniable urgent operational requirement. In short, the rapid fielding of MRAPs was an absolute necessity. The use of improvised explosive devices in Iraq and beyond had become a clear threat after several years in the Iraqi theater. And, as the improvised shifted to de facto – becoming regularly developed and deployed explosive devices (RDDEs), the threat clearly had to be responded to on an urgent basis.
Luckily, the South Africans had developed the MRAP technologies and the United States was able to rapidly adopt and adapt its trucks and vehicles to MRAP standards. Today, it remains almost a given proposition that MRAP capabilities will remain part of the irregular warfare arsenal of the U.S. and its allies.[1]
But is the manner in which the MRAPs were acquired a good model of acquisition – urgent or otherwise? This question is significant because, almost at the level of legend, many analysts and policymakers today are suggesting that the MRAP acquisition experience be applied in developing acquisition reforms, especially in rapid acquisition cases. And they may be on the verge of codifying the MRAP approach as a model.[2]
According to the General Accounting Office (GAO), the “DOD use of a tailored acquisition approach to rapidly acquire and field MRAP vehicles was successful.” The GAO went on to argue that the success of the acquisition was built around “decisions to 1) use only proven technologies, 2) keep requirements to a minimum, 3) infuse significant competition into contracting, and 4) keep final integration responsibility with the government all led to positive outcomes and may be transferable.”[3]
And this success was predicated upon a “buying into the market approach:”
“To expand limited production capacity, indefinite delivery, indefinite quantity contracts were awarded to nine commercial sources, with DOD agreeing to buy at least 4 vehicles from each. Subsequent orders were based on a concurrent testing approach with progressively more advanced vehicle test results and other assessments.”[4]
The difficulties with assuming that this was the best way to go about rapid acquisition are several.
First, the government bought the market; and defense industry firms invested into the marketplace in anticipation of continued opportunities to support the marketplace. U.S. defense firms were well-placed to invest significant funds “up front” after several years of record DoD budgets and defense industry revenues and profits; but when the government would later turn around and narrow down its choices of firms to support the acquisition in the future (e.g. in eliminating BAE Systems, Force Dynamics and Navistar in favor of a single supplier – Oshkosh – for the Afghan variant of the MRAP, commonly referred to as the M-ATV), the impact was clear. The losers of this competition were left either with millions of dollars of inventories or several dozens of completed vehicles (which they were forced to purchase and/or build to meet aggressive government fielding requirements in the event of winning the competition). Given this outcome, firms understandably will be reluctant in the future to spend their own capital to meet near term procurements for the government.
Second, the diversity of the 20,000 plus MRAP vehicle fleet (built by nine different manufacturers) has meant that logistics and sustainment are a nightmare. Indeed, the continued propensity to see acquisition as being about the initial buy with little or no thought to sustainability is highlighted by this acquisition. MRAP acquisition is a poster child for “logistics-free” procurement considerations.
Third, the ability to give MRAPs to the Iraqis as we leave theater is limited, because of the difficulty of maintaining the vehicles. As a senior ground officer has commented. “We will not be able to provide these to the Iraqis easily because we have a hard time maintaining them. It will be better to give them something else like the Bradleys which we know how to maintain.” So a quick acquisition with little or no thought about its usefulness to help build “partnership capacity” is perhaps not the best idea.
Fourth, the MRAPs are a platform within the context of a mission. The USMC for one has used the MAGTF approach to countering IEDs with the use of air assets in addition to ground assets. What this acquisition implicitly (and erroneously) states is that stove-piped procurement is the best way to go in meeting urgent operational requirements.
Fifth, the upgrading of MRAPs as they enter the mainstream of tactical vehicles now becomes a core consideration. These vehicles were bought with very little consideration to how they would be upgraded. So, now the cost of upgrading those vehicles going into the permanent inventory is higher than if consideration had been built in to how to most effectively build an upgrade path. Again, in this regard, MRAPs are a poster child for acquisition without regard to sustainment.
Dov Zakheim, a former Comptroller of the DOD, in his testimony to the House Committee lionizing the MRAP acquisition added some cautionary notes and set forth an intelligent alternative path.[5]
“The Department needs to field militarily useful solutions more quickly. The current threat environment is one in which the enemy on the battlefield employs easily obtainable, off-the-shelf technology to undermine the effectiveness of US military operations.”
To deal with this Zakheim has suggested moving beyond “ad-hockery” as a procurement approach. He argued for “codifying and institutionalizing a separate set of rapid acquisition processes and practices that can be tailored to expedite the rapid delivery of capabilities that meet urgent warfighter needs.”
He then went on to argue for how this process could be crafted to ensure that needs are met but that they become integrated into an overall procurement effort. He argued for a new organizational home for rapid acquisition, which would be placed under the authority of the Office of USD (AT&L). The so-called Rapid Acquisition and Fielding Agency (RAFA) would “be a joint agency, organizationally similar to the Defense Logistics Agency or the National Security Agency.”
The advantage of the Zakheim approach is that it would deal with the shortfalls identified in this article with regard to the MRAP acquisition. RAFA would be part of OSD (AT&L) and its efforts would focus on spiral development with a modular open systems architecture,ensuring that fielding would include “training, sustainment and support in coordination with the services and combatant commands.”[6]
In short, the rapid fielding of MRAP vehicles to meet an urgent operational requirement is clearly an important development; but as important is not lionizing it as an acquisition model without an in-depth understanding of its longer term impact and usefulness. To ensure that Americans and allies do not needlessly die on battlefields of the future, it is important not to blindly enshrine short term solutions as if they were sound long term methodologies.
***
This post was co-written by Robbin Laird and Robert Johnson.
[2] “Legislators Consider MRAP as Model for Rapid Acquisition Programs,” Inside the Army (October 12, 2009).
[3] Statement by Michael J. Sullivan, Director Acquisition and Sourcing Management, Rapid Acquisition of MRAP Vehicles (GAO, October 2009
http://armedservices.house.gov/pdfs/DAR100809/Sullivan_Testimony100809.pdf
[4] Ibid.
[5] http://armedservices.house.gov/pdfs/DAR100809/Zakheim_Testimony100809.pdf
[6] Zakheim’s proposals reflect the work of the Defense Science Board task force on the fulfillment of urgent operational needs
http://www.acq.osd.mil/dsb/reports/2009-09-DSB_Urgent_Needs_Report.pdf
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***Posted November 8th, 2009
I have had a broad experience base in Acquisition: from working as a junior engineer on a few Programs to Deputy PEO for Naval TACAIR Aviation, on to a series of positions in the departments of the navy and the air force in the Acquisition, Strategy/programming and Requirements/Policy sectors.
A key problem to a person who has been a career acquisition professional is simply the future of the acquisition work force and the challenges facing the Administration as they seek to re-set that work force. When I look at the future, I have to go back to the past. It was during the Clinton Administration that a new strategy was embarked on. This strategy was based on two key efforts:
The outcome of all this for the past 17 years has become a weaker and less experienced acquisition workforce. This has been exacerbated by the ongoing wars and increased procurement demands; so the system is now severely over stressed (in other words more contracts and fewer overseers). Indeed, one could argue that the long running war efforts broke the reform effort generated by the Clinton Administration.
The Obama Administration and the Congress see the need to revamp the acquisition manpower system and approach. They plan to do this revamping via new acquisition reform policies (such as the McCain/Levin acquisition reform bill) and the Administration’s plan to hire 20,000 new employees.
Speaking to the House Armed Services Committee, Deputy Secretary of Defense Bill Lynn cited a “lack of critical skills” as a major consideration, while DoD reforms its process for purchasing weapons and defense systems.
The Defense Department budget includes funding to increase acquisition personnel by 20,000 positions over the fiscal years 2010 to 2015. The breakdown includes roughly 9,000 jobs at the Defense Contract Audit Agency and the Defense Contract Management Agency, the Pentagon components responsible for estimating contracting costs and contract oversight. The remaining 11,000 new hires will be created when roles currently carried out by contractors — jobs in systems engineering, program and business management, and logistics — are converted to federal positions (this is basically the re-conversion of the CSS jobs I mentioned earlier).
The overall objective is for the Defense Department to increase the number of federal civilian employees conducting acquisition-related jobs by 20,000, while reducing its contractor work force by about 10,000. This will expand the acquisition work force from its current 127,000 federal employees and 52,000 contractors to 147,000 feds and about 42,000 contractors by fiscal 2015. The first 4,100 of the new federal employees are expected to be hired through a competitive selection process during fiscal 2010.
“One of the critical reasons for some of our shortcomings in the acquisition process is the lack of critical skills in the acquisition work force,” Lynn said. “Over the last 10 years, defense contract obligations have nearly tripled, while our acquisition work force has fallen by more than 10 percent.
“In the absence of these personnel, we have outsourced too many functions that should be performed inside the department,” he added.
Bill Lynn acknowledged the challenge in attempting to enhance a system as complex as defense purchasing, noting that nearly 130 studies of acquisition reform have been completed since World War II. “Many very smart people have tried and have met with only limited success,” he said. “In this regard, we need to keep in mind the importance of not making the system worse in our efforts to achieve reform.”
Describing other areas in need of improvement, Lynn stressed a need for clearer, more realistic contract requirements and cost estimates, and the importance of shortening the development cycle.
So Bill Lynn’s last comment leads to the central theme of the new acquisition reform language that Congress in partnership with the new administration has focused upon.
Among the key themes coming out of the new language and new budget are:
The challenge will effectively be to align new programs, manage the Iraq withdrawal and the Afghanistan reset with the current force while hiring new folks. That is when the core problem of the aging of the work force comes into play: 25,000 personnel are eligible for retirement in the next five years and 25,000 immediately after that. If my math works, that means that in five years you might have 30,000 less oversight personnel than now. So the challenge might more adequately be seen as re-setting the relationship with industry to get better outcomes than the government desires, rather than really supplanting the private sector with new government personnel. Even more compelling, the proof will be in the pudding. Words and new regulations are plentiful; demonstrating through new buys that the government is a more effective buyer will be the real test.
But no doubt the core challenge will be replacing my generation of acquisition officials with a new one. The challenge will be to hire, train, and to let experience set in. And most significantly, these new officials will need to be allowed to buy equipment in a timely manner. Oversight without delivery of capability to the warfighter is a guarantee for futility, not reform. And surely we need a new generation trained to procure and deliver capability with industry for the current wars and the operations to come.
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***Posted November 3rd, 2009
Robert Dudney, Editor in Chief of Air Force Magazine, comments on the “Real B-2 Acquisition Mistakes” and the lessons one should apply when thinking about the acquisition of the next-generation bomber.
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In the B-2 program, one can find lots of mistakes not to repeat, but they aren’t as Robert Gates described them.
Defense Secretary Robert M. Gates, addressing an Air Force Association audience on Sept. 16, announced he was “committed” to acquiring a new long-range strike system for the nation. However, he admonished the crowd, “we must not … repeat what happened with our last manned bomber.”
Gates was referring, of course, to USAF’s B-2 stealth program of the 1980s and 1990s. “By the time the research, development, and requirements processes ran their course,” he said, “the aircraft … turned out to be so expensive—$2 billion each—that less than one-sixth of the planned fleet of 132 was ever built.” It makes “little sense,” he said, to pursue a prospective B-3 bomber in the same fashion.
With all due respect to Mr. Gates, that is not the way the B-2 saga actually unfolded 20 years ago, and it is not a proper guide for shaping a B-3 program or any other kind of aircraft effort. President George H. W. Bush reluctantly closed down the B-2 under intense Congressional pressure. In that, one can find lots of mistakes not to repeat, but they aren’t as Gates describes them.
Now that the Pentagon chief has made an issue of it, it is worth remembering what happened a generation ago. Three main points stand out:
For all of these reasons, Air Force officials decided USAF would be better off waiting to deal with the bomber issue. It recommended scheduling the next mission area assessment for 2013, though that assessment has been moved up several years.
Funds for initial work on a “next generation bomber” program are still included in this year’s defense authorization bill. The Center for Strategic and Budgetary Assessments, in a recent study, proposed shooting for a B-3 bomber force of 130 aircraft, entailing a development cost of $16 billion and a per-aircraft flyaway cost of $425 million. It would be extremely stealthy, capable of manned and unmanned flight.
As USAF gears up, however, Gates has laid down his marker. “Whatever system is chosen to meet this requirement—be it manned, unmanned, or some combination of the two—it should be one that can realistically be produced and deployed in the numbers originally envisioned,” said Gates.
This has produced something of a quandary. On one hand, his twisted history of the B-2 could generate public apprehension that a new program could wind up producing $2 billion bombers. On the other hand, he is setting up what looks to be unrealistic expectations about the low cost of a new long-range strike aircraft.
We agree that the US should stick with the program, whatever it turns out to be. The reality, however, is that high-quality weapons don’t come cheap.
Speaking to shareholders in May 1990, Kent Kresa, Northrop president, noted what should have been obvious: “A 350,000-pound aircraft with a 172-foot wingspan that is virtually impossible to detect and identify and track and then defend against, and is also more efficient than anything that has preceded it, is not going to be inexpensive.”
This was true of Kresa’s B-2. The same will be true of the next bomber. Yet to be seen is whether Washington will stick with the effort when the going gets tough, as it surely will.
***
This piece is reprinted with the permission of the Air Force Association.
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The video shows the operation of the boom on the new A330 tanker. The boom allows for much more rapid refueling than legacy tankers, greater security in operating the boom in night refueling operations and gives the aircraft an augmented capability to refuel more air platforms at the same time. This will be especially important for concurrent refueling of manned and unmanned platforms, a characteristic for 21st century air operations.
The third Australian A330 recently landed at Dover AFB on its way back from conversion operations in Australia for final test and preparation in Europe.
Currently, there are 28 A330 MRTT on order with four nations – the United Kingdom (14), Australia (5), Saudia Arabia (6), and the United Arab Emirates (3). The UAE is likely to buy an additional 3 tankers which would bring the total to 31 A330 MRTTs.
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***Posted November 2nd, 2009
The State Of U.S. Research: Fund Only Old Ideas
It has gotten more difficult for university researchers to conduct high-risk research in the United States. Few programs exist for research into “transformational” science and technology, according to witnesses at a recent hearing on the subject held by the House Science Committee.
The average age of a researcher receiving his or her first grant from the National Institutes of Health rose to 42.6 in 2007. This is not good for young university researchers trying to win a grant to pursue unproven ideas. Only 21 percent of new investigators applying for an NIH award in 2007 successfully received a grant, compared with 24 percent for established researchers. Half of all of the research grant recipients receiving their first award from the National Science Foundation (NSF) never receive another award.
Researchers at Carnegie Mellon University know how hard it is to win grants. Only 13 percent of grant applications from CMU scientists to NSF result in an award, says Richard McCullough, vice president for research at Carnegie Mellon. “NIH hit rates have dropped 18 percent over the last three years,” he adds.
The situation is even worse when a researcher has a novel idea that is considered to be high risk, for which there is little government funding. If an idea “is truly transformational, then probability of success in obtaining funding is a problem,” McCullough explains. “That is, you need results to get funded and you need funding to get results. I would be shocked if the NIH or the NSF had programs where an idea that is truly new and is high-risk, high-reward would be funded without preliminary results. I assure you that the number of high-risk funding opportunities without preliminary results is diminutive.”
As a result, the U.S. R&D system is rewarding incremental research conducted by people who have already proven their concepts. “As one advisory board member to one of the divisions of the NSF said, the system is set up to reward low-risk research,” says McCullough. “One program manager [said] if he is expected to report in one year how this research has contributed to our country how can he take a chance on high-risk research? I [can] give you multiple anecdotes on proposals in the regular process that get killed for being high-risk, high-reward proposals.”
There have been a few federal programs created recently to target high-risk, high-reward research, such as the NIH Director’s Pioneer Award and the NIH New Innovator Award. But last year these two programs provided grants to a total of only 115 people between them. The Director’s Pioneer Award made 18 of those grants in 2009. In the first year of the Director’s Pioneer Award, NIH received 1,000 applications and selected only nine proposals. “If you go to the NSF, the situation is worse,” says McCullough. “In my opinion, the system is broken.”
The Science Foundation has created the Small Grants for Exploratory Research, the Early-Concept Grants for Exploratory Research (EAGER) and the Transformative RO1 Grant programs. But the amount of money is small and the prospects of receiving an award are slim.
“Consequently, high-risk, high-reward proposal programs are not viable options” for researchers, says McCullough. “As an example, Carnegie Mellon has one $66,000 EAGER grant from the NSF, zero NIH Director’s Pioneer Awards, zero New Innovator Awards and zero Transformative RO1 grants. My colleagues at Carnegie Mellon have related to me that it is often easier to get resources for high-risk research by getting preliminary results at a very slow pace and then using the normal grant mechanisms to fund transformational research. From the perspective of these faculty members, high-risk, high-reward research funding is virtually unavailable from traditional federal sources.”
NSF program officers also do not have the experience to determine what is transformative research, and many don’t have the expertise in different scientific disciplines to recognize breakthrough ideas that are interdisciplinary in scope. The peer-review committees that review grant proposals “are the ‘white blood cells’ of high-risk, high-reward research, since these proposals are easy targets and the reason for elimination from competition,” says McCullough.
Gerald Rubin, vice president of the Howard Hughes Medical Institute, told the House Science Committee that when it comes to high-risk research it would be better to focus some resources on innovative scientists rather than individual projects. Breakthroughs are not planned, and researchers need to be given the latitude to chase unforeseen developments and those that come from a “flash of insight that occurs at 3 a.m.,” says Rubin.
At the NIH, 98 percent of all awards are made to projects, not people. “I strongly believe that giving money to scientists of exceptional and demonstrated creativity is a better way to promote innovation,” says Rubin. “In my opinion, even a modest shift in the federal research funding portfolio — going from 98 percent to 90 percent project-oriented — could make a big difference in producing innovative and potentially transformative research results.”
Former NSF director Neal Lane says that the difficulty of receiving research grants is leading to “high frustration levels and low morale felt by many new tenure-track researchers.” This frustration is now being “communicated to promising undergraduate and graduate students as they make their own career decisions,” he adds. “Discouraging our brightest students from pursuing research careers is an ineffective strategy for assuring our nation’s science and technology leadership in the future.”
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The testimony is located at: http://science.house.gov/publications/hearings_markups_details.aspx?NewsID=2621.
For further information on Richard McCormack’s Manufacturing News and an opportunity to subscribe to this industry leading newsletter go to : http://www.manufacturingnews.com/
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***Posted November 1st, 2009
In his recent monthly Teal newsletter, Richard Aboulafia of the Teal Group provided an insightful overview on the state of play of Italian aerospace and defense. The global business is in a serious period of re-structuring and redesign. The Russians, the Brazilians, the Chinese and the Japanese all have aspirations, programs and capabilities, which are likely to re-shape the Boeing and Airbus duopoly. And with the Indian competition for new fighter aircraft as well as Brazilian decisions to come, the global fighter market will be re-defined as well. The US has its F-35s, F-15s, F-16s and F-18s.
The question is what will the US have to compete with in the context of the follow-on market in which the F-35 will be the key and the dominant factor in the US fighter base. The Italians provide an interesting case of adaptation. The Italian industry has been consummate in global partnering and the dynamic global aerospace and defense business: the success of their approach could well re-shape the competitive capabilities of the US, European and the new global aspirants. Richard’s commentary follows.
***
Italy is all about Slow Aerospace. Which is a good thing. I think.
Most of the aero world, particularly the Anglo-US aero world, is focused on cost savings, return on investment, and industry rationalization. Call it Fast Aerospace. Just as fast food emphasizes convenience and cheapness, Fast Aerospace has resulted in more efficiency but fewer jobs (and fewer planes). Italy’s Slow Aerospace, by contrast, focuses on jobs, heritage, market share, and sheer critical mass. The country’s industries offer a bewildering variety of aircraft. These have been created organically (new products, like AgustaWestland AW139/149), or by acquisition (Aermacchi’s M-346), or by resurrection (bringing back the dead, as with the C-27J/G.222) or by mummification (keeping old products alive forever, as with the MB.339). Italy’s slow aerospace principals are simple:
1. Never kill a program or destroy a production line. Slow food involves heritage products, like heirloom tomatoes and old breeds of pigs. Slow Aerospace also preserves the past. Sometimes this pays off. The second life of Piaggio’s Avanti, begun three years after the first life ended, has proven way more successful than the first (160+ planes since 2000 versus just 30 in 1990-1998). Similarly, keeping the AgustaWestland A.129 line in stasis for ten years was repaid by a Turkish order for 60 helicopters. By contrast, the geriatric MB.339 line has seen just 65 aircraft built over the past 18 years. Humorously, the MB.339’s Rolls Viper engine is the last pure turbojet in production and has enjoyed that status for several decades now. That’s like building a TV with a vacuum tube.
2. If a line goes cold, re-invent the product. If a line dies because orders finally dry up or because working capital takes a holiday, wait a few years and put the old wine in new bottles. Many Italian products are resurrections of old has-beens (and never-weres). That MB.339? It’s just a re-invented MB.326. The M-311 is merely a re-invention of the old SIAI-Marchetti S.211, which went cold after 60 planes. And when the G.222 finally died, Alenia kept the tooling, and years later created the C-27J, which will probably sell in modestly greater numbers. (111 G.222s, plus, say, 190 C-27Js…that’s 300 planes between 1975 and 2020. An average of seven planes per year…now that’s Slow Aerospace.)
3. Whenever anyone offers a program or a property at a distressed price, buy it. It took several decades for the UK Government to admit that Westland was an unaffordable asset, but somehow, it works just fine under Italian management. AgustaWestland also took over Bell’s AB.139 share (it paid off great). Most recently, AW has indicated it wants to buy Bell’s majority share of the 609 tiltrotor. Sure, the 609 turned into a high-risk program with marginal rewards. But if AW gets it, it will be THEIR high-risk program with marginal rewards. As an aside, AW’s emphasis on product development has paid dividends. In 2006 the company eclipsed Bell on the civil market, becoming the number two producer after Eurocopter. In a combination of Slow Aerospace Principals Two and Three, Aermacchi’s M-346 is a re-invention of the Yak-130 trainer, acquired for $77 million.
4. Partner with as many people as possible. Accompanying Italy’s flying circus of aeronautical leftovers is a hyper-diverse portfolio of subcontracts. Italian industry has major partnerships with every airframer in the world, especially Boeing. Lockheed Martin and EADS. Finmeccanica is the only company in the world with a major partnership (Superjet) with Russia’s Sukhoi, a company not known for global partnerships. Finmeccanica’s Alenia unit is also the only non-French company to receive a major aerostructures contract from Dassault, a company famous for sticking to Franco-French partnerships.
5. Embrace redundancy. Just as slow food strives for a proliferation of dishes and ingredients, Slow Aerospace strives for a proliferation of products. Shopping for trainers? Alenia Aermacchi offers three jets (MB.339, M-346, M-311) and one prop (SF-260). Nobody uses a four-aircraft training syllabus, but why not blanket the market, even if it means intra-company competition? Italy also plans on being the only country to build in-country Eurofighter and F-35 JSF final assembly lines.
Contrast Italy with America, a paragon of fast food and fast aerospace. By 2015, despite having the world’s biggest economy and defense budget, the US is on course to have just two fixed-wing military production lines (down from nine today). What would happen if the F-22, one of the US planes slated for death, were an Italian Slow Aerospace program? For one, it wouldn’t be built at the US rate of 20 per year. It would be less than half that, but with almost as many jobs and the same infrastructure (again, efficiency is not the goal here). When the Italian Air Force had taken its fill, they’d still get three more each year, while the Ministries of Forestry, Fisheries Protection, and Cocoa would each get one. Export customers would get another few, perhaps with government subsidies. And if this Italian F-22 equivalent finally died, a decade or so later it would be upgraded and re-born as the F-22J. The eight per year production rate would resume.
The benefit of Italy’s Slow Aerospace practices is a slow and steady increase in the country’s aerospace work and global market share. There’s no way to verify this using official numbers. In true Slow Aerospace form, the statistics part of Italy’s aerospace industries federation website (http://www.aiad.it/Dati%20Statistici.asp) is “in construzione”. The drawbacks, of course, are equally clear. Many Italian programs feature very high costs relative to what’s actually produced. Large unionized workforces and giant, underutilized factories speak to a system that can’t scale down in the event of a market drop. When times turn bad, overcapacity really hurts. But as with Slow Food, Slow Aerospace doesn’t care about costs.
The big question: what could threaten this Slow Aerospace approach? The biggest threat is a shift in priorities. Italy’s aerospace umbrella company, Finmeccanica, increasingly looks like a fast aerospace company. It’s increasingly focused on growth and profit, like any Anglo-US aerospace company. Its purchase of DRS positions the company for growth in the key US defense/government market, but it was expensive, and a notable departure from the company’s usual investments in Italian-built aerospace products. As this is written, that Italian F-35 line is coming under threat for budget reasons.
The second threat to Italy’s Slow Aerospace is other countries getting annoyed. After all, the essence of Slow Aerospace is government support. Last year the European Union ruled that Italy violated EU law by awarding government helicopter contracts solely to AgustaWestland (in true Slow Aerospace style, Italy completely ignored the ruling). Also, Finmeccanica benefits from a very high level of government support (purchases, R&D, and a large equity stake).
So, why haven’t there been more complaints against Italy’s state support for aerospace? There are two primary reasons. One is that Italy has deftly played on both sides of the Atlantic, and is careful about directly competing with either side. Two, Italy has been careful to remain a US strategic ally. As a result, no idiot US congressmen are trying to re-name Italian spaghetti as “freedom noodles.”
But perhaps a third reason lies with Italy itself, a country that people fall in love with and don’t feel threatened by. Or, as fictional villain Hank Scorpio said on an episode of The Simpsons while contemplating which European country to destroy, “By the way, Homer, what’s your least favorite country, Italy or France?” To which Homer says, “France.” “Hah hah. Nobody ever says Italy,” Scorpio correctly notes.
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For more information on the Teal Group go to: http://www.tealgroup.com/
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***Posted November 1st, 2009