To paraphrase Ted Logan, strange things are afoot in the E-Ring, at least for those who thought that roles and missions debates had been settled. As Marine General and Vice Chairman of the Joint Chiefs of Staff James Cartwright asked rhetorically at a media roundtable one month ago today,
If you have bombers in the Pacific, do you also have to have aircraft carriers? Do we always have to have every thing in every service? How much of this do we really need, especially given the situation we face, which is a much broader spectrum of conflict, over a much great geographic dispersal than we’ve had in the past?
That’s a rather bold statement, but Bob Gates and his people are making clear that they’re willing to make meaningful moves without waiting for a pile of analysis. My analysis here concerns aircraft specifically, but it covers all five military services in the United States, and should be applicable worldwide, and to other sectors of military supply.
To begin, both Aviation Week and Flight Global are observing today that the 2010 Pentagon budget indicates that the US Army and the USAF will be swapping turboprop aircraft fleets. Authority for purchasing 38 C-27J Spartans from Alenia (the first eight next year) is being transfered wholly to the Air Force, while control of 37 MC-12W Liberties from Hawker Beechcraft (including a final six purchased next year) may be swinging to the Army. This would consolidate the fixed wing transport mission in the Air Force, while confirming the Army’s primacy in low altitude battlefield surveillance.
Next, parsing Amy Butler’s numbers at Ares, wholesale revolution in the USAF’s priorities continues. I made light last year of how the USAF’s 2009 budget, for the first time, included more unmanned aircraft than manned ones. Overall purchasing in this request would be much lower, and not quite according to that pattern, but still radically different. The service is requesting 10 manned fighter aircraft (all F-35A Lightning IIs), 29 drones (MQ-9 Reapers and RQ-4 Global Hawks), and 29 assorted transport aircraft (CV-22s, C-27s, -37s, -40s, and -130s). That’s right: far more drones and transports than fighters—a seemingly unthinkable shift even a few years ago.
Attack helicopters are getting a hard look as well. The Army’s Armed Reconnaissance Helicopter (ARH) program is not being restarted just yet, but rather, the current OH-58D Kiowa Warriors will be upgraded and life-extended. An analysis of alternatives (AoA) has been launched to determine what to do thereafter. As Bettina Chavane reported on Aerospace Daily & Defense Report last month, depending on the results of that AoA, the ARH may not wind up being a manned helicopter at all. The Army could buy more rotary-wing drones in the form of MQ-8 Firescouts from Northrop Grumman, or even more fixed-wing drones in the form of MQ-1C Sky Warriors (Predators) from General Atomics. My helicopter pilot friends are quick to remind me that the capabilities of fixed-wing drones and manned helicopters are worlds apart, but the Army and the National Guard do already have over 700 AH-64 Apache attack helicopters. Regardless of “validated requirements,” that’s a lot.
Similarly, as Graham Warwick observes at Ares, the US Navy may or may not have a strike-fighter shortfall, but the upcoming Quadrennial Defense Review (QDR) will deal with that question squarely. Though the division of the money is seemingly even, the current budget requests 22 EA-18G Growler electronic attack aircraft, but just nine more FA-18E/F Super Hornet fighter-bombers. That’s more than enough to keep the unit costs at Boeing down, but it’s not nearly what the Navy wanted.
Over in the Homeland Security Department, the Coast Guard is asking for another two CN-235s (HC-144A Ocean Sentries) from EADS CASA for maritime patrol. If that seems modest, that’s because it doesn’t quite complete the program, which had been planned at 32 aircraft. No word yet on the significance of that restrained outlay.
New starts were particularly lacking in the Defense Department’s budget, and the QDR may result in further program cancellations. That doesn’t necessarily indicate a wholesale retreat for the US military, as many of the most cost-effective ideas today are line extensions of existing aircraft. Consider the USMC’s Harvest Hawk program, which converts new KC-130Js from tankers to tanker-surveillance-gunship aircraft. A few underwing pods, lightweight missiles, and a 30 mm door gun mean that the same airplane can watch for insurgents, refuel the incoming attack aircraft, and if that doesn’t work, use some direct fire to take them out personally. The idea itself is brilliant: as Stephen Trimble quotes a Marine at Flight Global, “if we can get more utility out of the tanker platform, then why not?”
That said, it is an open question who is the efficient operator of such an airplane. A colleague asked me the other day “why does the Marine Corps have fighter aircraft, anyway?” While I could muster a good justification, I couldn’t find as much to explain why the Corps—but not the Army—might need its own tanker-surveillance-gunship. Indeed, there is a reasonable argument that a land-based aircraft as this ought to be operated by the USAF, or at least in joint squadrons, with Army or Marine Corps involvement. This is rather how the USAF, the Air National Guard, and the Army operate the 17 E-8s of the 116th Air Control Wing, and to a broader degree, how the RAF, the Royal Navy, and the British Army together run the 250 aircraft of Joint Helicopter Command.
Something similar could be said about the future of the EA-18G, or even a future EF-35. The need for electronic attack aircraft is not disputed today, even with the huge pending purchases of stealthy F-35s. The USAF, however, hasn’t had an organic capability since the retirement of its last EF-111 Ravens in the mid-1990s, and cannot seem to decide what aircraft to use in that role in the future. Alternatively, the defense secretary could simply assign that mission to the Navy, utilizing a single aircraft type, which would naturally be carrier capable. The analysis awaits, but it seems reasonable to suggest that the costs of carrier operability for the additional squadrons could be outweighed by common fleeting with a single type and operator.
It is entirely possible that Gates is already thinking this with the shift in priorities from the FA-18E/F to the EA-18G. In this context, it is notable that Robert Work, a retired colonel of marines and former think-tanker, has been nominated to be the Navy’s next under secretary. Work is well-known for his advocacy of drones on carriers decks. His analysis of the issue at the Center for Strategic and Budgetary Assessments with Tom Ehrhard (himself a retired USAF colonel) argued that the range of the Navy’s carrier air wings could be tripled by replacing some of the current manned strike-fighters with reconnaissance-strike drones. If this idea gains currency with the small group undertaking the QDR, the Pentagon leadership will observe no supposed strike-fighter gap in the Navy. After all, Northrop Grumman is slated to begin underway carrier suitability demonstrations of its stealthy, jet-powered X-47B drone in just 2011.
What does this mean for military suppliers? Big changes, and in four ways:
Your customer today may not be your customer tomorrow. It is good that Alenia has an excellent relationship with the USAF, because whatever it had invested in getting to know the Army Department in the C-27J program is not likely to pay off in the future. At the end of the summer, the QDR could change things rather suddenly. If roles and missions will be changing meaningfully, suppliers may want to start knocking on new doors to smooth the shifts in relationships. Even if June or July is premature for starting, contractors with programs that could shift between services ought to at least get a marketing contingency plan in place. To know whether you’re in that lot, ask yourself not just who would be the likely, but rather the efficient, operators of the products you sell. In the long run—or possibly the very short run—that’s quite likely where your program is going.
Worse, your whole program really could disappear tomorrow. If you were building the Next Generation Bomber at Northrop Grumman, it just did. If you’re working on the KC-X replacement at Airbus/Northrop or Boeing, you’ll still have a good shot at building hundreds of tankers for the USAF, because no one can come up with a better idea than refueling aircraft in the air with other aircraft based on existing airliners. Beyond that, few things about future budgets are certain. The aforementioned FA-18E/F may be moderately priced, but it’s not remarkably long-ranged and not remotely stealthy. It’s no wonder that Bank of America’s equity analysts last month asserted that “Boeing's future in the fighter market is precarious.” Having a back-up plan for your redeployable (as economists say, non-specific) assets is getting increasingly important. Fortunately for Boeing, as I note below, the boys in Saint Louis are already on this.
Don’t try to invoke “the industrial base” in your defense. Time was, big contractors could scare the government into buying more airplanes out of fear that something called “the industrial base” would vanish from neglect. On calm consideration, it’s hard to imagine that happening with $670 billion in annual US military spending. Moreover, structural government intervention in the collection of industries that get called defense has not been very successful. Consider how, as I argued in a paper in 2007, the USAF has tried, “in the roughly thirty years in which Airbus has been rising as an aircraft manufacturer... to defend the business of any US-based manufacturer of large commercial aircraft that was threatening to exit the business by allocating
work, extending credit, and running interference with the Congress.”
Fortunately for the government, that came to a suitable and screeching halt in the Bush Administration. As then-Air Force Secretary Jim Roche told Andrea Shalal-Esa of Reuters in January 2005, “if you have no leverage, and you have a company who thinks they're a monopoly supplier, then you're stuck and you flail and fight as we did.” That behavior has now largely lapsed, because technologically dynamic, entrepreneurial firms have shown governments (particularly in the US and the UK) that market entry is possible. This has been particularly demonstrated in the armored vehicles and unmanned aircraft sectors. If today the MQ-9 Reaper is part of the USAF’s force structure and employment calculations, then General Atomics’ industrial capabilities are assuredly part of its view of the industry.
Better yet, consider how a line-extension could ingress on someone else’s turf. After years of public speculation about the future of that aforementioned fighter aircraft business in Saint Louis, Boeing revealed this week that it has gotten the message. More pointedly, it revealed its Phantom Ray jet drone demonstrator, an internally-funded outgrowth of its work on the X-45 in the Joint Unmanned Combat Air System (J-UCAS) program. Graham Warwick lauded this “new focus on prototyping”; Amy Butler asserted that “this type of company-funded research is likely to become more critical to the survival of Boeing and its rivals in light of the expected leveling-off in U.S. defense spending.” I couldn’t agree more. Separately, Boeing has also landed a contract from Special Operations Command for 20 MQ-18 Hummingbird rotary-wing drones, and another for something called a “Mid Endurance Unmanned Aircraft System,” which is quite possibly an Insitu Integrator. With all this activity, the company is going after the drone business on multiple fronts.
Boeing has indeed been busy, but is of course not the only firm thinking this way. Consider the gunship question: Air Force Special Operations Command wants a AC-27J Stinger II; the Marine Corps is working on that KC-130J Harvest Hawk. Both could be multi-mission ships, as the Stinger IIs could be equipped for more than just carrying cannons and lightweight missiles. At least, that’s the marketing fight that Lockheed Martin, Alenia, L3, and all their subsystem suppliers ought to be having: to demonstrate that their off-the-shelf solution has the broadest or most cost-effective multi-mission applicability.
Starting wholly new programs without some wholly new capability has become appropriately unpopular these days. Now is the time to be thinking of what else you can pull out of the hangar or the garage for a second look, what else can get a new pod or fairing or remote mount, and what else could be done with that venerable system that hasn’t been rethought in years. If you’re inclined towards a woe-is-we argument, sharpen your pencil on the short-term issues. As future military needs are less knowable today than they were a decade ago, emphasize to customers the money that they could save in the next two to three years by extending or accelerating your program. That could at least buy some time for your next round of innovation.
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