November 21, 2013
Linda Hudson, CEO of BAE Systems in the US, as the second speaker in our 'Captains of Industry' series. In the press so far, her talk has mostly been covered as an address on the state of human capital in the defense industry, and specifically on immigration reform. For my part, I was at least as interested in a single line she uttered to explain the importance of that factor of production. A continued flow of technical talent into the United States is important for national security, she asserts, because people here would much rather work for Apple or Google than in the defense industry, and because in military matters, “we are rapidly losing our technological superiority in America.”
The US Land Systems Industry has Lost its Edge
But Does that Matter?
Actually, in the area in which BAE Systems has been best known for the past decade—land systems—I would say that superiority was lost long ago. I just don’t think it matters, as it hasn’t since the end of the Cold War.
Let’s start with one of BAE’s leading products, the M2 Bradley infantry fighting vehicle (IFV) that the company makes—refurbishes, really—in Pennsylvania. It’s an awesome tank destroyer with passenger seats, but it’s hardly regarded as the leading tracked IFV on the market. Only the US Army and the Royal Saudi Land Force drive it. By international acclaim and number of customers, the pole position in that segment arguably goes to another product of BAE Systems: Hägglunds’ CV90, which is used by the armies of Finland, Sweden, Norway, Denmark, the Netherlands, and Switzerland. It just happens to be made in Sweden.
Linda’s domestic competitor General Dynamics Land Systems is in a similar position in tanks. Last week Defense Industry Daily and Defense Update reported on how the Indonesian Army has just signed a contract to buy a large lot of refurbished armored vehicles from Rheinmetall. The deal includes 103 Leopard 2A4 tanks, 42 Marder 1A3 IFVs, and 11 armored recovery and engineering vehicles, plus the customary load of documentation and ammunition, for €216 million. That price works out to just about $1.75 million per vehicle—arguably a real bargain. And as the company noted in its press release, Indonesia thus becomes the 18th Leopard 2 MBT user nation.” That’s almost a global standard.
In contrast, GDLS so far has five users of its M1 Abrams series: the US, Egypt, Saudi Arabia, Kuwait, and Australia. But even this shorter list is not as impressive as it looks. The sale to Australia in 2007 has since turned out to be a small deal there: out of the original set of 59 tanks, fewer than 30 are operational. The Egyptians have been buying American tanks mostly because American government has been paying them to buy them, or at least was until the July coup. The Kuwaitis bought American for the very valid reason that the Americans (and pointedly not the Germans) saved their country. The Saudis couldn’t buy German for a long time, simply because the Germans had the scruples not to sell tanks there—until recently. In short, the Americans are not tearing up the market, except on political connections.
GDLS has also supplied several thousand Stryker troop carriers to the US Army. Whatever the initial complaints from pundits, troops in Iraq and Afghanistan have generally loved them. The basic design, though, is Swiss, and the vehicles are mostly assembled in Canada.
I could write a similar story in amphibious assault vehicles about the twelve-year fiasco of GDLS’s Expeditionary Fighting Vehicle. As an engineer at BAE Systems once told me, all the way back in 1996, the company told the USMC that its competitor’s winning design was overreaching, and would never prove reliable in operations. Meanwhile, BAE Systems Hägglunds and Singapore Engineering Technologies continue to crank out much more reasonably designed amphibious armored vehicles, which a host of customers around the world are actually buying.
In artillery, we’ve heard for decades that the US Army and Marine Corps did not have the best weapons around. Their guns were famously outranged by Iraqi artillery in the 1991 war. That didn’t matter, as American gunners were much more accurate, partly because they had GPS (not actually a land system), and partly because they were just much better trained. But the Army’s domestic replacement programs over the past two decades have been either wholly ill-conceived projects that were far too expensive—the Crusader and the Non-Line of Sight Cannon—or interesting ideas that were also too expensive—the Netfires rockets-in-a-box idea. The only two wholly new systems introduced have been the British-designed M777 lightweight towed howitzer and the Marines’ new French-designed 120 mm mortar.
As bad as this all sounds, we should ask whether it matters.
First, let’s note that all of these competing products are made in countries at least loosely allied to the United States, and they’re sold to countries that are at least reasonably friendly to the United States. As greatly as Europeans value the American contribution to their collective security, no one in Europe is about to hold up American access to armaments. If one needs British howitzers or French mortars or Swedish troop carriers, the technologies and the products will be available.
Second, let’s laud the superior kit that American contractors have delivered when it has really mattered. Here, exhibit one is the MRAP. In support of Hudson’s thesis about immigration, I also note that one of the two pioneering companies in that field, Force Protection (now a subsidiary of GDLS), was founded by South African émigrés whose American passports were sponsored by DARPA. The other, of course, was BAE Systems, but again, through its South African subsidiary OMC. Whatever the foundation, though, an industry arose from a nearly standing start around 2002 to deliver the largest armored vehicle program since the Second World War. Today, it’s in the waning phases of its shutdown, and that’s fine. For after the experience of that surge, why would we question whether Americans and their friends could do that again?
Third, let’s note that American companies actually are quite good at incremental improvements to existing systems. One of the best examples may be BAE Systems’ M109 'Paladin Integrated Management' upgrade of the Army’s armored howitzers. It’s the seventh upgrade in a vehicle series that dates to the early 1960s. The PIM is a solid product now entering production, but the design represents inside-baseball marketing. It’s an evolutionary development of an existing system, rather than another attempt at a technological Great Leap Forward that utlimately falls flat.
Finally, let’s acknowledge the real source of American military advantage on land. The question is not whether it’s founded on technological superiority. The debate in this field is between the viewpoints of Stephen Biddle (of George Washington University), who says that what matters is a closely coupled combination of technology and training, and Daryl Press (of Dartmouth College), who says that it's mostly training, given just reasonably good equipment. Frankly, I find that the contrasting techno-centric view horribly downplays the importance of that human capital. Hudson extolled the skills of industry in her talk this week. I say that we should also consider the skills of the troops industry supplies.
That is, after twelve years of hard fighting in two land wars on the other side of the world, the United States has a reserve of hundreds of thousands of combat veterans, many with multiple tours of duty and years of experience, available for whatever next war might arise. As Tim Kane of the Hudson Institute has written, the personnel system that organizes them is a Bolshevik nightmare. As the Chairman of the Joint Chiefs himself has admitted, the compensation scheme that sustains them is itself unsustainable. As half of Washington is lamenting, a sequestered budget is restraining their large-scale training. But to paraphrase the Duke of Wellington, with enough of those fine fellows, any would-be hegemon can be defeated. There may be a great deal of work to be done to secure the future of the US land forces, but there is no reason to panic over the state of the land systems industry in the United States. Whatever the rumors of its demise, it has been rumbling along just fine for twenty years.
James Hasik is a senior fellow with the Brent Scowcroft Center on International Security.