Tuesday, October 29, 2013

Defense industry left guessing as Army struggles forward with an unclear mission

Posted by John Keller

THE MIL & AERO BLOG, 29 Oct. 2013. Circumstances are gathering into a potential perfect storm that may threaten not only the U.S. Army's future mission, but also how the defense industry can move forward to support the Army's needs, and even the continuing relevance of the America's oldest American military service.

Some of these are well-known: sequestration, dim prospects for future military budget growth, and defense technology research and development, which for practical purposes has come nearly to a dead-stop.

Perhaps most serious, however, is how top military and civilian leaders can define the Army's role as the nation moves into the future, how they identify the top threats the Army must face, and how they justify the need for a large standing Army in an era when large-scale big-iron military land battles appear to be part of the past.

Here's where we are today: U.S. military forces are finishing their exit from Iraq, where they have operated for more than a decade. Their final exit from Afghanistan is but a few years off, or less. When operations in Southwest Asia are completed, where does the Army go from there?

Think about it. The Army has had a clear set of missions since the U.S. entered World War II. Although the close of that war saw a rapid drawdown in U.S. military power, the strengthening Soviet Union at that time weighed heavily on everyone's mind.

Less than five years after World War II ended, North Korean invaded South Korea, which created another sudden and dire mission for the Army. That mission grew from containing North Korean forces to containing Communism around the world, which continued until the fall of the Berlin Wall in 1990.

 One year later, Iraq invaded Kuwait, which triggered Operation Desert Shield, and eventually the military ouster of Iraqi forces from Kuwait in Operation Desert Storm. In both these military initiatives the Army played a central role.

For the next decade keeping an eye on a contained-but-restless Iraqi military, on ethnic strife in what then was Yugoslavia, and on other simmering hot spots throughout the world held the Army's attention and helped shape its mission.

Today, however, we find ourselves in different circumstances. Counter-insurgency operations are nearing an end in Iraq and Afghanistan, Russia does not pose the immediate military threat that did its predecessors of the Soviet Union, and Europe has been relatively quiet.

Still, trouble spots persist in areas like Syria and Iran, yet with no open conflict involving U.S. Army forces. There is no immediate and dire threat in these areas, and hence no clear Army mission -- at least not yet.

So how does the Army move forward? Counter-insurgency? Certainly. Special Forces capability? Of course. But what's the role of the established Army infrastructure that involves large combat infantry units, main battle tanks, armored fighting vehicles, and an order of battle designed for large ground conflicts?

I'm not sure there is a role, and I'm not convinced that the top Army leadership today knows what its role in the future will be, either.

Maybe the Army simply is at a moment of transition, and leaders will get a handle on the Army's core mission sometime soon. On the other hand, with the civilian leadership vacuum we have today in Washington, I'm not sure the Army will be able to do so.

This leaves the defense industry charged with supporting the Army perhaps in a more precarious position than it has been since the end of World War II nearly 70 years ago. If Army leaders are unable to define the Army's long-term mission clearly, then the defense industry will have no idea how to proceed, other than to guess.

These factors were on display just below the surface last week at the Army's big annual trade show in Washington -- the Association of the U.S. Army (AUSA).

Show exhibits revolved around what has been important up to now -- IED-proof wheeled armored vehicles, fast-response air power in the form of tiltrotor aircraft and fast helicopters, advanced body armor, and network-centric warfare equipment like wearable computers, small software-defined radios, and agile satellite communications.

What was striking at AUSA, however, was a lack of direction in where we go from here. It was as though the industry were pointing out to the Army officers walking the aisles how far technology has led us to this moment, yet pleading for direction on where the industry should go from here.

Tuesday, October 22, 2013

These are tough times for the combat vehicle and vetronics industries

Posted by John Keller

THE MIL & AERO BLOG, 22 Oct. 2013. The most prominent exhibits this week at the Association of the U.S. Army trade show in Washington involve glittering versions of the latest fast, armored, and networked military vehicles. Nevertheless, make no mistake, these are tough times for the U.S. combat vehicle and vetronics industries.

U.S. forces are wrapping up their withdrawal from Iraq, and the military draw down from Afghanistan is far along. Fleets of main battle tanks, armored personnel carriers, armored humvees, and self-propelled artillery have begun to sit idle, with little prospect for their continued operation anytime soon.

With this growing surplus of armored combat vehicles, demand for new vehicles and retrofits is at its lowest point in years. Sure, the industry is trying to put a good face on it with well-publicized programs for a new Ground Combat Vehicle (GCV) and new Joint Light Tactical Vehicle (JLTV), but where's the demand? More importantly, with the budgetary problems the U.S. government has these days, where's the money?

Military combat vehicle manufacturers like General Dynamics Land Systems in Sterling Heights, Mich., BAE Systems Land & Armaments in Arlington, Va., and Oshkosh Corp. in Oshkosh, Wis., are doing their best to keep themselves relevant amid these stark new realities.

These combat vehicle designers are building their latest models from the ground up to handle network-centric warfare, with built-in computer networking backbones to integrate surveillance, targeting, electronic warfare, and communications systems, and accommodate new technologies seamlessly in plug-and-play architectures.

 These will be come of the world's most advanced and capable combat vehicles ever made. Just as important, today's combat vehicle manufacturers are designing vehicles to confront the most dire threats from insurgents and terrorists whose favorite weapon is the improvised explosive device (IED).

The V-shaped underbelly structures of the latest combat vehicles are designed to protect against IED explosions and other roadside booby-trap threats. Their suspensions enable soldiers inside to drink coffee in safety and comfort even while tearing over rugged off-road terrain at 40 miles per hour.

Despite all this, however, dwindling military budgets and growing fleets of idle combat vehicles bode ill for the immediate future of the combat vehicle and vetronics industries.

Many in the defense industry are coming around the realization that the era of the heavy-iron U.S. military might be over. In the future, those companies that can accommodate a fast, agile, and Special-Forces-centric military may be the big winners.

Those who don't may take their places in the graveyards of irrelevant technologies.

Tuesday, October 15, 2013

Is the government shutdown a harbinger of more ominous things to come?

Posted by John Keller

THE MIL & AERO BLOG, 15 Oct. 2013. The U.S. government shutdown is entering its third week, with only vague rumors of ending the stalemate, and no real solutions in sight. While it's easy to find people to blame, and argue over potential solutions, it's clear that the shutdown is taking a toll on the defense industry and on the American population as a whole.

While I see abundant news stories that cover accusations and counter-accusations, proposals and counter-proposals, demonstrations and counter-demonstrations, all of these details ... this minutiae of monument closings, people forced from national parks, and rotting vegetables in the White House garden ... either miss or ignore a central issue that lies at the heart of this conflict.

Our American culture is more fragmented and polarized than perhaps at any other time since the Civil War 150 years ago. What we face today even might represent an American population even more fundamentally divided in its dreams and aspirations than it was during the Civil War, and here's why.

As the Union started pulling itself apart in 1860 along regional north-and-south lines, the antagonists were in agreement about the nature of government: it was essentially to nurture an equality of opportunity. Few people at the time argued over the fundamental role of government. The sticking point was one side allowed slavery and the other didn't. With the eventual abolishment of slavery at the war's close, there wasn't anything serious enough left to fight about, and we've had relative domestic peace for a century and a half.

Today it's different. We have a population in disagreement over how and why the government should exist. On the one hand we have segments who believe the government's role is to nurture individual initiative, encourage private business, and aid the individual's ability to reap the rewards of his own work.

On the other hand we have those who believe the government's role is to guarantee not only equal opportunity, but also equality of outcome -- that is, a sharing of wealth to ensure that everyone has a fair share, and that no one has to do without.

The notion of fairness is a central component of this great American divide as we push into the 21st century. An economic system based on individual initiative is not fair in terms of outcome, but it's fair in terms of opportunity. Results in this system, however, are not fair at all. We have vastly different economic strata from very rich to very poor. People drive different cars and live in different-sized houses. There are winners and losers, in other words. Should the government stand back and let this happen, or intervene on behalf of the less fortunate?

A vast segment of the American population today sees a system of winners and losers as unacceptable. How is it that anyone should be poor when there are those with great wealth? Why is it that the United States uses the lion's share of Earth's energy resources when some around the world don't even have electric lights? Why should some people have access to the best of medical care when others are relegated to crowded hospital emergency rooms? It's not fair, they point out, and something should be done about it. To these people, it is the role of government to determine what is fair for all, and mandate procedures on how to get there.

Both sides are passionate in their beliefs. Those who champion individual initiative point to the economic vitality of a culture encouraged to work hard, take risks, come up with new solutions, and invent new things. Those who promote economic equality maintain that a culture without want or envy enables each individual to be his best.

Viewed in this way, how can we claim with certainty which side is right and which side is wrong? What's clear, however, is many on each side today would be willing to die for their beliefs if pressed by circumstances to do so. It was much the same in 1860.

We as a nation in the 21st century are not all on the same page; far from it, and we're drifting farther and farther apart. We see isolated voices pleading for good-faith bargaining and compromise, but I wonder if it's too late for that. We as Americans have been focusing on what divides us rather than on what unites us for a very long time -- longer than most of us can remember.

History tells us, however, that once a nation's population divides itself on ideological lines far enough, and for long enough, that there's no going back. The strain becomes too great, and the most trivial of events can push things past the breaking point.

Although Americans have a long shared history, I wonder if we have reached this breaking point. Is this government shutdown just an isolated incident, or is it a harbinger of much more ominous things to come?

With this in mind, shall we continue arguing over who's right and who's wrong, and keep proposing solutions in direct conflict with one another? At what moment do we realize, finally, that we're playing with matches in a fireworks factory?

Monday, October 7, 2013

Government shutdown reduces military contracting, increasing pressure on U.S. defense industry

Posted by John Keller

THE MIL & AERO BLOG, 7 Oct. 2013. We've all seen the chicken-little news stories about the federal government shutdown. These, of course, are designed to scare average Americans into believing the fallout from this political stunt is worse than it actually is. I'm betting that Americans are smarter than that, but still ...

We've seen the open-air World War II Memorial on the Mall in Washington barricaded and wired shut. A similar closure can be seen for the Iwo Jima Memorial over the Potomac in Arlington, Va. This is keeping honor flights of our fast-disappearing World War II veterans from enjoying a memorial that they earned many times over.

Meanwhile access to the Potomac itself is being limited, federal workers are being furloughed, residents of privately owned houses located on federal land are being forced out of their homes until the shutdown is resolved, and areas in Florida are trying to limit access to the ocean.

I do notice, however, that President Obama's preferred golf course at Fort Belvoir, Va., is open for business, and that First Lady Michelle Obama's Let's Move Website is still up, but I digress.

Among the things that concerns me most about the shutdown is its effect on U.S. Department of Defense (DOD) contracts. The Pentagon's popular "bluetops" announcements of military contract awards have been dark since 30 September -- the last day of the federal fiscal year.

This is not to say that the shutdown has halted all military contracting since 1 October, but my take is it has slowed things down considerably. What this does is tighten the screws on an already-beleaguered U.S. defense industry hit hard by tight budgets and the sequester.

We're just one week into the government's shutdown, and there's no end in sight. The longer it continues, and the longer Pentagon contracting slows to a trickle, the more likely it is that we'll see furloughs and layoffs of defense industry workers.

These aren't pawns in a political game; they're people with families, mortgage payments, and holiday expenses rapidly approaching. A real question to ask is how much more discouragement can these people take? there's been little good news for quite a while now. Makes me wonder when they'll start leaving the defense industry for something the appears more stable.

We have irreplaceable experience and expertise in the U.S. defense industry. Really, it's a fragile thing not to be taken lightly, for there's potential for real and lasting damage to this essential industrial sector.

But for those elected officials in Washington looking to score cheap political points, I doubt if they've considered that. Let's hope the workers affected have clear memories over the next couple of election cycles.

Tuesday, October 1, 2013

Potential good news: has U.S. defense spending finally bottomed-out?

Posted by John Keller

THE MIL & AERO BLOG, 1 Oct. 2013. As those of us involved in the aerospace and defense industry know all too well, the Pentagon budget process has been a train wreck over the past couple of years, with sequestration, program cuts, and shrinking defense contractors only part of the story.

Still, I saw my first good news in a long time over the past few days with a report that U.S. military and homeland security spending actually could INCREASE over the next five years.

No, you didn't misread that. The Dublin-based market research firm Research and Markets predicts that U.S. defense spending will increase from 2013 to 2018 at a compound annual growth rate (CAGR) of 1.93 percent.

Okay, I know that's not a big number, but at least the trend might be headed in the right direction. Homeland security spending, meanwhile, should grow at a CAGR of 2.15 percent through 2018, analysts say in a report entitled "Future of the US Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018."

Acquisition of advanced defense equipment coupled with replacement of old and obsolete equipment should drive the country's capital expenditure over the next half-decade, presenting growth opportunities for the defense equipment and technology suppliers, despite the continuing threat of budget cuts and sequestration, analysts say.

Driving the homeland security market should be missions such as preventing terrorism and enhancing security; securing borders; enforcing immigration laws; securing cyberspace; and disaster preparedness.

During the forecast period, the U.S. government is expected to invest in homeland security products such as surveillance equipment, and cutters and patrol vessels. The U.S. homeland security budget is expected to increase from $60.7 billion in 2013 to $65.3 billion in 2018.

When was the last time you heard a market research firm predict an uptick in defense spending? I know, I can't remember, either. If those analysts are right -- and let's hope they are -- it begs the question: has U.S. defense spending finally bottomed out? Are things finally going to start getting better?

This is more than welcome news to a beleaguered U.S. defense industry, where employees have been spending more time in job fairs than they have in designing new military technologies.

It's too early to tell, of course, but perhaps now defense company executives can start planting the seeds of long-term growth -- shallow though it may be -- rather than bailing seawater as fast as they can.

There's more difficulty in store for the defense industry, make no mistake. We have three more years of Obama ... don't get me started ... and a very uncertain road ahead. Still, this is the first indication I've had in a long time that our industry can start the process of growing, and abandon now-familiar damage control.