Russian threats and US economizing may be driving the business north and east.

 

Earlier this month, investors’ website the Motley Fool called the recently-announced alliance between France’s Nexter and Germany’s KMW the possible “birth of a European tank-building superpower” and “General Dynamics’ new challenger”. All the same, in a recent essay for the Lexington Institute, Dan Gouré argues that General Dynamics Land Systems (GDLS) and BAE Systems Land & Armaments (L&A) will “remain at the forefront of the armored vehicle market” for at least the next few years. His concluding sentence was unmistakable: “while this is a difficult time for vehicle makers everywhere, the best of breed will survive and eventually prosper. Both General Dynamics and BAE Systems are certain to be among the winners.” Will they? And in which countries? And will that matter, on either side of the Atlantic?

 
A few weeks ago, in the run-up to his announcement to version 3.0 of the Better Buying Power initiative, US Under Secretary of Defense Frank Kendall said that tanks are one of his three top sectors of concern in the American industrial base. The US Army and the USMC have huge inventories of recently overhauled and upgraded machines. That doesn’t bode well for General Dynamics’ factory in Ohio, which refurbishes and upgrades old M1 Abrams tanks. Kendall was also including tracked troop carriers as ‘tanks’, and called out BAE’s lack of new work of that type at its factory in Pennsylvania. Apart from turning old Bradleys into new Armored Multi-Purpose Vehicles (AMPVs), there isn’t much emerging there.
 
What I found really notable was the overall arc of Gouré’s argument. First, he notes, apart from that JLTV, the US Army and the USMC are buying very little in new armored vehicles. Second, though he doesn’t state it, American manufacturers haven’t been very competitive globally with their armored vehicles: neither the Abrams nor the Bradley has led its category in export success. He and Kendall seem to agree that there’s little else promising for the industry in the United States in the near future, save perhaps the USMC’s Marine Personnel Carrier (MPC) program. Therefore, Gouré implies, look to both production and buying outside the US to determine who’s leading the business. Interest does seem to be rising in Europe, awakened by the fighting in Ukraine. Some of NATO’s rearmament will continue to come from refurbishment of old stocks: note how Latvia is buying some of the CVR(T)s replaced buy those forthcoming British ASCOD IIs. But it’s also possible that central Europe could decide to meet the threat from the east with new materiel. As Bloomberg put it last month, Mr. Putin ‘may be rousing European tank-makers’ dormant growth ambitions’.
 
I thus question both Gouré’s conviction and Kendall’s discomfort. In this column last November, I argued that the the industry in the United States had indeed lost its edge, but that the decline wouldn’t matter for North American and European security. Programs like the LAV-6 in Canada, the ASCOD II in Spain, the CV90 Mark III in Sweden show that innovation is rolling along. If US firms had everything to offer, BAE Systems wouldn’t be relying on Italy’s Iveco, and Lockheed Martin on Finland’s Patria, for the basis of their entries in the MPC competition. But that reliance indicates why this is a non-problem: the United States, like most any country in the alliance, has access to the technologies it needs from companies around North America and Europe. Rather than lamenting American economy, we might consider lauding Canadian and European industry and initiative.
 
James Hasik is a senior fellow at the Brent Scowcroft Center on International Security.