Atlantic Council

Defense Industrialist

 

Scotland will free-ride in the Atlantic without sustained investment, but Catalonian maritime specialization would be welcome in the Mediterranean.

On 18 September, Scotland votes on the question of independence from the United Kingdom, and the polling strongly suggests a vote of no. On 9 November, Catalonia could be voting on the same issue vis-à-vis Spain, but the polling slightly suggests a yes—if the Spanish Constitutional Court allows the vote to take place. NATO members should treat neither case lightly, but the independence of Catalonia would pose fewer military problems for the alliance than that of Scotland.

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It’s much easier to kill an arms exporting franchise than to build one.


The armaments export policies of Germany and Japan seem to be crossing paths this month. His recent approval of the export of a whole tank factory to Algeria notwithstanding, German Economy Minister Sigmar Gabriel is said to have been piling up license requests on his desk, content to do nothing, save to tell German arms makers to find other work. At the same time, Japanese Prime Minister Abe has declared, at least in principal, the entire Japanese arms industry open for business globally. This could produce submarines for Australia, and even a new fighter jet.

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The MRAP experience still shows how military requirements need to hew to the state of the art in attainable technologies.

 

Early this month, the US Army’s Research, Development and Engineering Command held a conference at the Aberdeen Proving Grounds in Maryland to discuss ways to reduce the weight of armored vehicles by 40 percent, but without reducing protection. The story is worth reading, as it highlights the Army's angst, dating to at least 1999, of missing the next fight that the Navy and the  Air Force may charge into. The trouble, of course, is that heavy armor takes too long to deploy, and dispatching paratroopers without backup has historically induced disasters. So, Colonel Chris Cross, director of the science & technology division at the Army’s Capabilities Integration Center, commented for the press release that he’s working on this project because

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Commercial or military, autarkic or globalized, public or private?


What are the industrial base issues that need to be considered in any defense strategy? In this age of austerity in military spending, we are hearing calls for bolder policies that would break with past practice, rewarding companies for taking risks, and punishing those that failed. We hear assertions that defense ministries should think seriously about what capabilities they want to preserve as economic constraints force choices in future force structure, and ultimately strategy. We should applaud these  efforts to highlight industrial considerations in formulating strategy, for the question remains fresh. But in thinking about formulating public policies in this area, I believe that an overarching framework is important. I recommend orienting on three dimensions, each of which encompasses a spectrum of potential defense-industrial policies.

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Better outcomes in military procurement still await a better-educated workforce.


In April 2010, then-Under Secretary of Defense Ashton Carter promulgated the first version of his Better Buying Power concept, which mandated (amongst other things) "should-cost" reviews for major procurements. The strategy aims to determine what a weapon should cost, if the government and the contractors work together to eliminate unnecessary expenses; the alternative is to simply pay whatever the contractor bids, and thus what the weapon will cost in the absence of any intelligent follow-up. The initial memorandum was rather short on details for implementation, so ever since then, the way forward with this seemingly sensible approach has been subject to considerable debate. In a commentary yesterday in Defense News, Christian Hagen of consultancy A.T. Kearney endorsed the Pentagon's ongoing enthusiasm, but emphasized three inputs as critical to success: capable people, reusable processes, and pilot programs. All are important, but finding good people may be the salient issue.

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The appointment of SVP Emil Michael to the Defense Business Board is a good start.

 

Last week, the Defense Department announced that fully eight new members would be joining its Defense Business Board, the panel that advises the Pentagon on, well, business. We might hope that the Defense would pay more attention to its Business Board, but at least the makeup of the newcomers indicates renewed interest in recruiting people from the outside world. Saliently, as the Wall Street Journal noticed, the list includes Emil Michael, an SVP at Uber, that fast-growing car-sharing outfit that is making cab companies very nervous the world over. Last December, Defense Industry Daily wrote that Uber should be interesting to "anyone interested in supply chains and yield management. It’s all about minimizing idle time for capital goods.” 

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The USAF’s strategy sounds better than its plans.

 

In Real Clear Defense, my Atlantic Council colleague Alex Ward recently endorsed the US Air Force’s concept of strategic agility as what’s needed for the service “to employ new technologies, better deal with increasingly powerful state and non-state actors, and adapt operations to new environments over the next thirty years.” In its recently published strategy, A Call to the Future, the Air Force’s leadership wrote ambitiously of how it believes that “rapid change is the new norm," so “embracing strategic agility will enable [the USAF] to ‘jump the rails’ from… 20th-century, industrial-era processes and paradigms” (p. 8). In the future, the service will avoid “all-or-nothing outcomes and double-or-nothing budget decisions” (p. 9). Instead, in its procurements, the Air Force will aim to “lower the cost of failure… by driving timelines, cost structures, and architectures towards smaller, simpler programs” (p. 11).
 
That story sounds great, but in what way does it resemble the F-35 Joint Strike Fighter program?

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BAE’s planned sale of Land Systems South Africa reminds us that not just companies, but countries, can reconstitute some industrial capabilities when needed.

 

As was widely reported on Monday, BAE Systems and investment firm DGD are selling their Land Systems South Africa business to state-owned Denel for (US) $80 million. As Bloomberg Business Week noted, LSSA does make more than MRAPs, including "remote weapon launching platforms, fire directing systems, mechanical driveline products and precision-machined components and gears.” But mine-resistant armored troop carriers, from the widely-fielded RG-31 to the hulking RG-35, have been its signature product line for decades. As the press release from group president Erwin Bieber explained, the sale is aimed to "further focus” the rest of Land Systems on "strong franchise positions” in tracked vehicles and artillery. After all, few countries are buying wholly new MRAPs, as huge wartime purchases in the recent past have crushed demand today. That Denel is getting the business for such a low price manifests just how far the market has shrunk.

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The National Defense Panel Wants More Money for Defense. That’s Just Not Happening.

At the end of July, the congressionally-mandated National Defense Panel released its assessment of 2014 Quadrennial Defense Review QDR), with the inspiring title Ensuring a Strong US Defense for the FutureThe panel, hosted by the US Institute for Peace, was composed of an august group of former generals, legislators, and Pentagon officials. Their early August release, though, was more noticed by bloggers and specialists than the mainstream press. In Commentary magazine, Max Boot called the panel’s findings a “bombshell”. But whether the American armed forces are as unprepared or American allies are as spooked as the panel believes, their recommended solution to these perceived problems is a non-starter.

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Kiev will have an easier time severing military-industrial ties than Moscow will.


Harsher sanctions, meant specifically to limit technologically advanced imports to the Russian armaments industry, are on the way from the countries of Europe and North America. In response, President Putin earlier this week convened a meeting of officials from government and industry on “import replacement.” The sanctions, he asserted in his opening remarks, will provide "needed incentive to develop our production capability in areas where we had not done so yet.” But while Putin said that Russian industry is “definitely” capable of producing everything that the Russian military needs, doing so will come with a cost.

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