James Hasik

What UAVs over Iraq have to do with the drug wars in Mexico

As if by chance, the Washington Times and the Dallas Morning News have an interesting pairing of seemingly unrelated articles this morning concerning military and police activities in Iraq and Mexico:

UAVs Can Function As Eyes In Sky: Unmanned Aircraft To Play Big Surveillance Role As Troops Leave The Cities
U.S. Military Role Possible In Mexico Drug Fight: Longtime Concerns Over Joint Effort May Fade

In Iraq and Mexico today, US troops are particularly problematic, if for reasons with differing origins. In Iraq, US ground troops will be withdrawing soon to encampments outside large cities, with an eye towards full withdrawal in perhaps another two years. In Mexico, US troops are remarkably unwanted by the federal government, and the political opposition would probably have even less favorable things to say about the idea.

However, as both articles make clear, troops are not always wanted where they’re needed, but they can be needed there are the same. In Iraq, the redeployment constitutes a considerable shift after the success found in placing them in smaller garrisons spread throughout contested urban areas. In Mexico, the federal government is looking for ways to increase police cooperation across the border, if military cooperation isn’t quite acceptable.

The article in the Times on UAVs, and separately the war along the Afghan-Pakistani border, together hint at how robots can fly where soldiers can’t tread. It is unlikely that the USAF would be quite as aggressive in attacking Taliban leaders within Pakistan if only manned combat aircraft were available. Using unmanned aircraft affords the Pakistani federal government a degree of distance from the issue that would not be available were fighter jets streaking overhead. The uproar over a pilot parachuting into Pakistan, even from a simple engine failure, could make for an even greater problem. Similarly, US troops may not be wanted anymore for tracking insurgents on foot, but they can certainly still help do so from the air.

As I have written before, the phased withdrawal from Iraq, and the Democrats’ futile and huge Keynesian “stimulus” package, render unlikely any previous plans to increase substantially the size of the US Army and USMC ground forces. There will soon be neither the need nor the money for it. However, smuggling in Latin America and piracy off the Horn of Africa each make clear the need for air and naval forces to police the global commons. Frequently that policing requires hot pursuit, or just plain intrusive surveillance, when sovereign governments can’t police their own territories effectively. The alternative to non-intervention is often to watch the problem slip across your border. If action is called, however, aircraft and ships, supporting the occasional foray of ground troops, have a generally have a less memorable touch, even when high explosives are involved.

This has already been seen at sea. As programs like those of the Littoral Combat Ship and the Joint High Speed Vessel have made clear in the United States, this is an opportunity for smaller firms with the right combination of smart design, affordable cost structure, and capabilities-extending alliances. A full version of that argument is available in my book Arms & Innovation: Entrepreneurship and Alliances in the Twenty-first Century Defense Industry. For military aviation, this combination of events in Pakistan, Iraq, and Mexico is a good reminder to unmanned aircraft manufacturers and the suppliers of compact C4ISR gear of similar market dynamics.

It is unlikely that US combat drones will be kinetically targeting narco-traffickers anytime soon (even if we can now read the book on a Kindle). It is like, however, that US surveillance drones will be patrolling the Mexican border in greater numbers in the next few years, and that their sensors will frequently slew southward. It is not even unreasonable to expect US drones to operate in Mexican airspace should things south of the border get really out of hand—if they’re not already.

That simply highlights that opportunities that drone makers and systems suppliers have been finding around the world, even with governments that aren’t embroiled in the kinds of wars underway in Mexico or Iraq. Surveillance drones are unobtrusive, persistent, relatively capable, and quite cheap. That’s good insurance for customers, and it’s good business for the host of small and medium-sized firms that are rapidly innovating in the field right now.

More boneheaded trade barriers from the US House of Representatives

The US House of Representatives is good at grandstanding, and many of its members aren’t the brightest bulbs in the drawer. More evidence of this arrived yesterday when the House approved a bill requiring federally-funded construction projects to be supplied with US-made iron and steel. As with most of these bills, it’s unclear what the eventual result will be, for at least three reasons:

1. The generally more sensible Senate generally takes a dimmer view of these shenanigans.
2. Such a law almost certainly wouldn’t withstand a World Trade Organization challenge.
3. There are plenty of opportunities for political appointees and bureaucrats to waive the requirements.

Should this provision become law, however, it would have at least two deleterious effects. Either of these are easy to demonstrate with a 101-level understanding of economics:

• China and India lie outside the WTO’s steel regime, so even with a successful (and accepted) challenge before the WTO, low-cost steel from those two countries could be excluded from many projects in the US. For US taxpayers, that’s a bad deal.
• The law would inevitably “increase costs and could cause delays by requiring contractors to legally ensure they are not using foreign steel,” as Reuters reported in a comment by Chris Braddock, director of procurement policy at the US Chamber of Commerce.

Time and money—there it is. At least someone around Washington understands procurement policy.

This sort of thing is potentially ominous for any company doing military contracting business across international borders—which is just about everyone. It’s notable that this sort of protectionism is almost always rejected by US aircraft, space, and armaments manufacturers—they almost all know what’s at stake. So, before this sort of creeping nationalism takes further root beyond just construction projects, some vigorous lobbying is called for.

Project Liberty and MRAP economics

As if to illustrate my point about MRAP economics, Inside the Air Force published four articles last week about how the USAF and some of its suppliers are getting enthusiastic about economical approaches to military aviation, at least in counterinsurgency. Two covered the MC-12Ss of the Air Force’s Project Liberty, one covered its plans to save fuel during operations, and one covered Boeing’s interest in a modernized version of the OV-10 Bronco.

Project Liberty, named for the Liberty Ship program of the Second World War, merits particular attention. The USAF plans this year to buy 37 MC-12S surveillance aircraft for just under one billion dollars. The MC-12S is a militarized Hawker Beechcraft King Air 350, a twin turboprop business airplane that has been in production since 1972. The government of South Carolina bought one last year for $5.2 million, which gives some idea as to the pricing in volume. Working through the arithmetic, the payload and other modifications amount to around $21 million. For the USAF, that’s a serious focus on the mission over the thrill of centerline thrust.

Aircraft like the OV-10 and the MC-12 could be called the aerial equivalents of MRAPs, in that they’re designed to excel at a particular mission within a realistic set of anticipated threats. In this case, they’re not intended to penetrate dense belts of radar-cued anti-aircraft cannons, but merely to fly above the fracas of insurgents’ Kalashnikovs and rockets. Like the vehicle, the aircraft is important, but it’s what’s carried, whether troops or sensors, that’s critical. And like the MRAPs, these aircraft are certainly less expensive than traditional alternatives.

Project Liberty had been kept quiet until now, so the timing of the announcement—so soon after the change in government in the United States—may be a matter of astute marketing. John Pike of Global Security told the Associated Press that the USAF leadership may be moving against bureaucratic opposition: announced programs are harder to kill off than hushed ones. They may also be trying to show that the Army’s celebrated Task Force Odin should not get all the glory for lethal aerial surveillance. They may even be firing an opening salvo in a budget battle against the Airborne Common Sensor: with 37 highly modifiable MC-12s entering the fleet, the case for a new Army fixed-wing signals intelligence aircraft just got harder to make.

Whatever the reason, we probably have further evidence that General Schwartz, the new USAF chief of staff and former commando air pilot, is having an impact.

Design modularity, industrial specialization, and competitive advantage in armored vehicles

I love the way that Germans think. Looking for some intelligence the other day, I ran into this description of a new product by a company in Berlin:

        The modular-concept design... is puristic and foregoing: to be agile, maintenance free and mobile in urban space, it finds it is not necessary to have high-tech armament.

What’s entertaining is that the company is Dailybread Bicycles. Still, high-tech armament does come in many forms. As I have argued, roadside bombs and MRAP-type vehicles can be deemed strategic weapons. Roadside bombs were the only thing that could have created enough attrition to have driven the coalition prematurely from Iraq, and MRAPs were the essential response to that threat. Roadside bombs tend to be more operationally than technologically artful, but some of the features of blast-protection are quite technologically sophisticated.

This is shown in the market almost every week. As Defense Industry Daily reports today, the Austrian Bundesheer has ordered 150 “Multirole Light Vehicles” (MLVs) from Iveco for €104 million. DID quotes the website Army Technology on six design features by which the MLV provides “vastly improved protection” over that afforded by AM General’s Humvee. Most of it is standard-but-essential stuff:

• “The MLV’s wheel stations are located away from the crew cabin so that if a wheel detonates an antitank mine, the explosion is vented upwards, leaving the crew cabin undamaged.”
• “The bonnet is hinged to the chassis to reduce the shock transmitted to the cabin.”
• “The underside of the vehicle is v-shaped and the ground clearance has been maximised to allow maximum dissipation of the blast.”
• “The location of heavy components under the cabin floor has been avoided because they can be projected through the cabin floor by a mine blast.”

What’s competitively notable are two more items:

• “The light alloy rear body is fitted with a canvas roof over a supporting frame. It is sacrificial and severs from the cabin in the event of a mine detonation under a rear wheel.”

• “The lower part of the vehicle has a three-layer sandwich structure that collapses on detonation of a mine under the belly, absorbing a high percentage of the energy that has not been vented away laterally.”

As a marketer in the business once told me, sacrificing automotive parts to save body parts is a key design strategy for all blast-protected vehicle builders. In this case, though, Iveco has made the whole back half of the vehicle sacrificial—something that would be more difficult to do with a rear-exit troop carrier. The multilayer sandwich is a further sophistication: most of the vehicles on the market rely primarily the right grade and thickness in that v-shaped steel. That is changing, of course. KMW has built its Dingos with a flexible undercarriage for some time, Force Protection has recently begun selling its composite Force Armor, and more than a few others are working on their solutions beyond simple steel.

It’s also notable who’s building these vehicles. Iveco, KMW, Force Protection, and the OMC division of BAE Systems have all had considerable success, but none are known particularly for their electronics integration capabilities. Time was, the Pentagon chose Boeing and SAIC to run the US Army’s Future Combat System program because electronics integration was thought a capability more central to the task than automotive design. Lockheed Martin joined Armor Holdings (now BAE Systems M&PS) in a bid to build the Joint Light Tactical Vehicle (JLTV) on the strength of what it knew about electronics. Northrop Grumman has tried to enter the land vehicles business in the same way.

At issue is that supposed centrality of electronics. The JLTV is quite analogous in purpose to the MLV, and probably not greatly more electronically sophisticated than an infantry fighting vehicle, such as the CV90 or LAV-III. Generally, though, the companies that build the vehicles are not those that build the weapon stations, sensors, radios, or turrets. BAE Systems Hägglunds has built a whole business model from offering the turrets for offset in export deals. Kongsberg and Rafael lead the business in remote weapon stations, but neither makes tanks.

This works because vehicle electronics, sensors, land weapons, and armored vehicles are relatively modular technologies with readily specified, standardized interfaces. In that sort of technological regime, the more successful companies tend to be those that specialize in one portion of the value chain, as Kongsberg and Hägglunds (quite separately) do. Boeing, Lockheed Martin, or Northrop Grumman could theoretically begin working more directly in automotive design and assembly, but there is no clear evidence yet that electronics integration and computer coding experience would be competitively advantageous for that. Rather, knowing how to build a high-quality, durable, off-road vehicle, and how to protect the troops with a good blast-absorbing shield, look rather more important for the time being.

Arming the Bug Hunt: our view on military-industrial markets in 2009

We are dispatching to a distribution list throughout the business our particular viewpoint on what lies ahead for the industry in 2009. This paper goes by the title

ARMING THE BUG HUNT
Why the economics of the JDAM and the MRAP are changing customer demand, and how contractors can adapt to succeed.

As we put it, there stands a widespread assertion that spending on existing military programs in the United States will remain constant for the next several years, perhaps trending downward only later on. We, however, remain unconvinced by this conventional wisdom. Rather, we anticipate that financial constraints, conventional overmatch, and constabulary impulses may combine to significantly reorder military spending priorities throughout the western world. Robert Gates’ reappointment as defense secretary and his article in the January issue of Foreign Affairs signal that the shift in emphasis towards preparation for small wars will be ongoing.

Appropriate procurements for these wars follow the economics of their decisive weapons—the Predator, the JDAM, and the MRAP. Revolutionary improvements will generally be sought only under what we term JDAM economics: where they are based on a small set of advances so inexpensive and compelling that they suppress old ideas about quality constraints. More common will be MRAP economics: evolutionary improvements that are both relatively inexpensive and essential, and based on the selective relaxation of old constraints. Many systems, like the Predator, will show hallmarks of both paradigms.

Preparing for what could be a structural break with the industry’s past requires at least three steps: an intense, practical analysis of the market; applied corporate development that tailors your corporate architecture to the emerging, dominant product architectures; and execution that demands mastery of the business on the order of the industry’s mastery of its engineering.

If you are interested in reading more, read the eleven-page analysis that you can download here. As always, please let us know what you think.

Announcing Hasik Analytic LLC

I have an announcement to make. After seven years of working independently, a partner and I are forming a firm. This is because the world is a dangerous place that needs our help. Hasik Analytic is to be a management consultancy dedicated to the success of the industrial organizations that supply the tools to secure our world. I will continue to serve the various organizations with which I have excellent relationships, because each of them have capabilities and relationships through which which we can all work profitably. At Hasik Analytic, we will particularly aim to raise the performance of our client organizations through a fusion of profound domain knowledge and serious business analysis. We will keep you all appraised of developments as we proceed.

Announcing Hasik Analytic LLC

I have an announcement to make. After seven years of working independently, a partner and I are forming a firm. This is because the world is a dangerous place that needs our help. Hasik Analytic is to be a management consultancy dedicated to the success of the industrial organizations that supply the tools to secure our world. I will continue to serve the various organizations with which I have excellent relationships, because each of them have capabilities and relationships through which which we can all work profitably. At Hasik Analytic, we will particularly aim to raise the performance of our client organizations through a fusion of profound domain knowledge and serious business analysis. We will keep you all appraised of developments as we proceed.