Calhoun: The NPS Institutional Archive

Reports and Technical Reports All Technical Reports Collection

2007-05-01

Desired Characteristics of the 21st

Century Defense Industrial Base

Robert H. Trice

http://hdl.handle.net/10945/33200

2121stst Century Defense Century Defense Industrial BaseIndustrial BaseAcquisition SymposiumAcquisition Symposium

Monterey, CaliforniaMonterey, CaliforniaMay 16, 2007May 16, 2007

Robert H. TriceRobert H. TriceSenior Vice PresidentSenior Vice PresidentBusiness DevelopmentBusiness Development

RHT 2

USA39%

Russia6%

Japan3%

Other2%

Other NATO7%

Non-NATO Europe

2%

UK4%

France3%

Germany3% Italy

2%

India2%

Other Asia8%

Central & S. America

3%

Middle East and Africa

6%

China10%

Estimated Global Defense Estimated Global Defense Expenditures 2006 Expenditures 2006

0

10

20

30

40

50

60

70

80

U.S. U.K. France Germany Italy Other

U.S.U.S. NATO EuropeNATO Europe

ProcurementProcurement

Con

stan

t 200

6 U

.S. $

BC

onst

ant 2

006

U.S

. $B

U.S.U.S. NATO EuropeNATO Europe

R&DR&D

Con

stan

t 200

6 U

.S. $

BC

onst

ant 2

006

U.S

. $B

$1,300 B$1,300 BSources: IISS Sources: IISS The Military BalanceThe Military Balance and Other Estimates and Other Estimates

0

10

20

30

40

50

60

70

80

RHT 3

Force Structure ReductionsForce Structure Reductions19901990 2006 Change2006 Change

•• Army DivisionsArmy Divisions 18 18 10 10 -- 45%45%

•• Aircraft CarriersAircraft Carriers 1515 1111 -- 27%27%

•• Attack SubmarinesAttack Submarines 9797 5252 -- 46%46%

•• Surface ShipsSurface Ships 546546 285285 -- 48%48%

•• Naval Aviation WingsNaval Aviation Wings 1313 1010 -- 23%23%

•• Air Force WingsAir Force Wings 2424 1212 -- 50%50%

•• Marine Corps DivisionsMarine Corps Divisions 33 33 -- --Source: Center for Strategic and Budgetary Assessments

RHT 3

RHT 4

US Combat Equipment US Combat Equipment –– Average AgesAverage Ages

•• BB--52 Bombers/C52 Bombers/C--135 Tankers135 Tankers 44 years44 years

•• CC--130 Transports/H130 Transports/H--53 Helicopters53 Helicopters 34 years34 years

•• FF--15 and F15 and F--16 Fighters 16 Fighters 17 years17 years

•• UU--2 Reconnaissance Aircraft2 Reconnaissance Aircraft 22 years22 years

•• Naval Amphibious ShipsNaval Amphibious Ships 20 years20 years

•• Coast Guard CuttersCoast Guard Cutters 35 years35 years

•• M1 Abrams TanksM1 Abrams Tanks 20 years20 years

•• HUMVEE FleetHUMVEE Fleet 16 years16 years

•• Army Medium TrucksArmy Medium Trucks 21 years21 yearsSources: Air Force Association, AUSA, Navy League

RHT 4

RHT 5

7,5817,581

Defense Systems ProcuredDefense Systems Procured

Ship ProcurementShip Procurement

19801980 19851985 1990 1990 20002000 20052005

1111

3333 3131

66

Missile ProcurementMissile Procurement

19801980 19851985 19901990 20002000 20052005

18,46618,466

87,11387,11365,10765,107

5,7025,702

Aircraft ProcurementAircraft Procurement

531531497497

337337

138138

19801980 19851985 19901990 20002000 20052005

188188

Source: DoD Procurement Programs PSource: DoD Procurement Programs P--11

88172172

20082008

8,6168,616

20082008

77

20082008

Helicopter ProcurementHelicopter Procurement

124124

353353

243243

19801980 19851985 19901990 20002000 20052005

66662828144144

20082008

RHT 6

2

4

6

8

10

12

14

16

18

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

6261 110 156 110 24 2143 82 6572 41 29 29

J FMAMJ J ASONDJ FMAMJ J ASONDJ FMAMJ J ASONDJ FMAMJ J ASONDJ FMAMJ J ASONDJ FMAMJ J ASONDJ FMAMJ J ASONDJ FMAMJ J ASONDJ FMAMJ J ASONDJ FMAMJ J ASONDJ FMAMJ J ASONDJ FMAMJ J ASONDJ FMAMJ J ASONDJ FMAMJ J ASOND0

InternationalUSAF

International Sales Can Be VitalInternational Sales Can Be VitalF-16 Line

BreakWithout Int’l

Sales

International Sales Brought:• $39.6B In Additional F-16 Sales• Continued Production Options For USAF

682 deliveries to 12 Countries; 32 to U.S.682 deliveries to 12 Countries; 32 to U.S.

LOCKHEED MARTIN PROPRIETARY INFORMATION

RHT 7

U.S. Defense Industry is DiversifyingU.S. Defense Industry is Diversifying

Lockheed MartinLockheed Martin

Systems & Systems & InformationInformationTechnologyTechnology

Aeronautics

Boeing (Defense)Boeing (Defense) Northrop GrummanNorthrop Grumman

Systems & Systems & InformationInformationTechnologyTechnology

SpaceSpace

Aeronautics Systems & Systems & InformationInformationTechnologyTechnology

Aeronautics& Space

Ships

Systems & Systems & InformationInformationTechnologyTechnology

Space

Systems & Systems & InformationInformationTechnologyTechnology

Marine

Combat

RaytheonRaytheon General DynamicsGeneral Dynamics

Note: Commercial Aerospace not included Sources: Company Reports

RHT 8

0102030405060708090

100

Northro

p Gru

mman

Lockheed

Mar

tin

General

Dyn

amics

Raytheo

n Boeing

United T

echn

ologies

Finmecca

nicaEADSSmith

sThale

s

BAE SYSTEMS

Rolls R

oyce

Home Market Other Europe Export

Relative Dependence on Home MarketRelative Dependence on Home Market

% o

f 200

4 &

200

5 Sa

les

Source: Company Annual ReportsSource: Company Annual Reports

For Europeans, ~ 75% of A&D Sales are ExportsFor Europeans, ~ 75% of A&D Sales are Exports

24,726 (45%) 24,726 (45%) Employees Employees Outside of Outside of

FranceFrance

Approx. 38,000 Approx. 38,000 (40%) Employees (40%) Employees in North Americain North America

16,488 (14.9%) 16,488 (14.9%) Employees Employees

Outside of Home Outside of Home Countries Countries

22,200 (74%) 22,200 (74%) Employees Employees

Outside of the Outside of the the U.K.the U.K.

RHT 9

CC--295

295

MeteorMeteor

Euro HawkEuro Hawk

Arrow

Defense Cross Border RelationshipsDefense Cross Border Relationships

General General DynamicsDynamics EADSEADS

GM CanadaGM CanadaSanta BSanta Báárbara rbara

SistemasSistemasSteyr Spezialfahrzeug Steyr Spezialfahrzeug

Mowag AGMowag AG

EADS North EADS North AmericaAmerica

EADS North EADS North America Defense America Defense

CompanyCompany

MEADSMEADSM

BDA

MBD

A

JSFJSF

MEADS

MEADS

USUS--101101

MEADSMEADS

RaytheonRaytheon

MitsubishiMitsubishiHeavyHeavy

IndustriesIndustries

JSFJSF

CVFCVF

Thales Thales Raytheon Raytheon SystemsSystems

Military Tankers

FinmeccanicaFinmeccanica

IAIIAI

ThalesThalesBAE SYSTEMSBAE SYSTEMS

BAE Systems, Inc. BAE Systems, Inc. (North America)(North America)

Lockheed Lockheed MartinMartin

Northrop Northrop GrummanGrumman

NGIT Europe LtdNGIT Europe Ltd20% HDW20% HDW

BoeingBoeingBoeing AustraliaBoeing Australia

LMUKLMUKLMAASALMAASA

LM EspanaLM Espana

ELCANELCANRaytheon Systems Raytheon Systems

LtdLtd

Italian Tanker

Italian Tanker

FF--22

TT-- 5050

KAIKAI

LL--33

CC--27J

27J

KCKC--30 Tanker30 Tanker

RHT 10

F310 Norwegian FrigateF310 Norwegian Frigate

SR 76MM GunSR 76MM GunOto Melara Oto Melara -- ItalyItaly

MK41 VLSMK41 VLS32 cells 32 cells MS2 MS2 -- USAUSA

Hull Hull Navantia Navantia -- SpainSpain

ECM ECM Terma Terma -- DenmarkDenmark

Nav / RadarNav / RadarKongsberg Kongsberg -- NorwayNorwayIFF IFF

UK UK -- BAEBAE

SPYSPY--1F Radar1F RadarMS2 MS2 -- USAUSA

Electro OpticsElectro OpticsSagem Sagem -- FranceFrance

Sonar Sonar Thales/KDA Thales/KDA -- FranceFrance

ASW / ASUW ASW / ASUW Control SystemControl SystemKongsberg Kongsberg --NorwayNorwayAegis Aegis

Weapon Weapon SystemSystemMS2 MS2 -- USAUSA

Robust Global Defense Supply Chain ExistsRobust Global Defense Supply Chain ExistsGenuine Collaboration on Defense Opportunities ExpandingGenuine Collaboration on Defense Opportunities Expanding

Fridtjof Nansen Launch – Ferrol, Spain - 2006

RHT 11

• Domestic Markets

• Defense Products

• Government Funded Development

• Exports andCo-Production

•• Domestic Domestic MarketsMarkets

•• Defense Defense ProductsProducts

•• Government Government Funded Funded DevelopmentDevelopment

•• Exports andExports andCoCo--ProductionProduction

• Defense & Civil Govt.• Customer-Funded R&D• International Launch

Customers• Global Supply Chain

•• Defense & Civil Govt.Defense & Civil Govt.•• CustomerCustomer--Funded R&DFunded R&D•• International Launch International Launch

CustomersCustomers•• Global Supply ChainGlobal Supply Chain

* GM

LRS * F

* GM

LRS * F -- 16 B

lk60 * 16 B

lk60 *

* VH* VH--71 * PFI/PPP * RD 180 * 71 * PFI/PPP * RD 180 *

* F* F--22 * C* C--130J * T130J * T--50 * MFTS/BWC *50 * MFTS/BWC *

Recent ModelsRecent ModelsPrevious ModelPrevious Model

New Business Models Are RequiredNew Business Models Are Required

Future ModelsFuture ModelsFF--35 (JSF)35 (JSF)

Maritime AMDMaritime AMD

MEADSMEADS

Global Products for Global MarketsGlobal Products for Global Markets

RHT 12

What the A&D Industry Needs to DoWhat the A&D Industry Needs to Do

•• Generate Innovative, Affordable SolutionsGenerate Innovative, Affordable Solutions•• Reduce Costs with Targeted R&D Reduce Costs with Targeted R&D

Investments and Streamlined Production Investments and Streamlined Production ProcessesProcesses

•• Meet Government Customer Expectations Meet Government Customer Expectations on Cost, Schedule and Performanceon Cost, Schedule and Performance

•• Retain Competitive Suppliers Retain Competitive Suppliers •• Leverage StateLeverage State--ofof--thethe--Art Commercial Art Commercial

Technologies and the Global MarketplaceTechnologies and the Global Marketplace•• Recruit and Retain a Skilled and Diverse Recruit and Retain a Skilled and Diverse

S&T WorkforceS&T WorkforceRHT 12

RHT 13

What Government Can DoWhat Government Can Do

•• Engage Industry to Promote a Common Engage Industry to Promote a Common Understanding of Defense and Civil GovUnderstanding of Defense and Civil Gov’’t t Strategies and Acquisition ObjectivesStrategies and Acquisition Objectives

•• Maintain Stable Program Requirements and Maintain Stable Program Requirements and FundingFunding

•• Adopt Multiyear Procurements for Mature Adopt Multiyear Procurements for Mature ProgramsPrograms

•• Promote a Rational Technology Transfer / Promote a Rational Technology Transfer / Export Control RegimeExport Control Regime

•• Support Efforts to Increase the Pool of Young, Support Efforts to Increase the Pool of Young, Diverse Scientists and EngineersDiverse Scientists and Engineers

RHT 13