Europe looks at Military Aerospace beyond 2035

[buglerbilly]

EDA and SAAB Sign a Contract on the Future of the European Military Aerospace Defence Technological And Industrial Base

(Source: European Defence Agency; issued July 20, 2010)

At the occasion of the Farnborough International Air Show 2010, the European Defence Agency (EDA) and SAAB, representing a large part of the EU’s military aerospace industry, signed a contract launching strategic work to help safeguard Europe’s ability to independently provide competitive aerospace solutions to meet CSDP capability requirements in the 2035 timeframe.

The contract, valued at EUR 400 k, aims to provide an achievable step by step plan to develop a more robust, sustainable and competitive European military aerospace industry, one better able to provide the military capabilities Member States require. It includes work to:

-- capture a commonly shared view of the state of the industry and the challenges ahead,
-- identify the strengths and weaknesses,
-- provide a roadmap and implementation plan identifying priority measures to be taken to strengthen the industry,
-- identify pilot programmes in the UAS and helicopter areas.

It is an important step in fulfilling the Agency’s task, given by Defence Ministers, of identifying those key industrial capabilities to preserve or to develop in Europe and on which work has commenced with a focus on the military aerospace industry.

EDA’s Chief Executive, Alexander Weis, highlighted that Europe’s military aerospace industry, which represents over 55% of Europe’s Defence Technological and Industrial Base (DTIB), employing directly over 200,000 people, is critical to meeting Member States' future military requirements, but is unlikely to be sustained in the long term without transformational action and new ways of business.

Recalling that the Lisbon Treaty set out the Agency’s important role in “identifying and implementing any useful measure for strengthening the industrial and technological base and improving the effectiveness of military expenditure”, Weis noted that the contract would “help create a European approach to the aerospace DTIB - one that recognised that it is more than a disparate range of national capacities - and that European collaboration must be an important part of the sectors future”.

EDA is engaged in a dialogue with stakeholders on collaborative policies, plans and programmes which could assist European decision makers in safeguarding European industry’s ability to competitively respond to future military capabilities requirements.

(ends)

First European Step Towards the Military Aerospace Beyond 2035

(Source: Saab AB; issued July 20, 2010)

An initial roadmap for Future Air System (FAS) for the industrial and technological base of future European military aerospace is now underway. The objective of the study is to identify the key industrial capabilities together with a proposed implementation plan. Saab and the European Defence Agency (EDA) signed today, at Farnborough air show, a contract regarding the strategic study.

The study’s full name is “The future of the European military aerospace Defence Technological Industrial Base (DTIB) – MilAerospace 2035+”.

The FAS4Europe one year study will identify and propose the collaborative actions Governments need to take to safeguard Europe’s ability to independently provide competitive aerospace solutions to meet the Common Security and Defence Policy (CSDP) capability requirements in the 2035 time perspective. The study will in summary cover the following areas:

-- Prepare an initial roadmap identifying the key industrial capabilities in the EDTIB
-- Implementation plan for the next ten years with prioritized actions

“Saab is very honoured to be the company in lead of this study, representing a major part of the European Aeronautic Industry. It is very encouraging that EDA has launched this important strategic study regarding our challenging joint future regarding European FAS capabilities. We appreciate the engagement the stakeholder community has shown in supporting our proposal. The study will be very broad and include several work shops involving relevant stakeholders to ensure to get the appropriate input for the analysis and final report” says Lennart Sindahl, Senior Vice President Saab AB and Head of business area Aeronautics.

The study result will support the EDA participating Member States decision making on the future capability development for military aerospace systems and will underpin the necessary common European approach to the aerospace DTIB.

This study is part of EDA European Defence Technological and Industrial Base Strategy and the decision to start the process with FAS. Saab has through the ASD (Aerospace and Defence Industries Association of Europe) network brought together a set of subcontractors* and stakeholders** to respond to the EDA tender released in April this year. The contract value for the one year study is 400,000 euros. However, the value of the study output is judged to be significant.

* FAS4Europe Subcontractors:
-- Saab AB (lead company and main contractor)
-- Alenia Aeronatica S.p.A (Alenia)
-- Association of the aviation manufactures of the Czech Republic (ALV ČR)
-- ASG Luftfahrttechnik und Sensorik GmbH (ASG Luftfahrttechnik und Sensorik GmbH)
-- BAE Systems (BAES)
-- Dassault Aviation (Dassault)
-- EADS CONSTRUCCIONES AERONAUTICAS, S.A.U (EADS CASA)
-- EADS Deutschland GmbH, Military (EADS-MAS)
-- ESD-Partners (ESD-Partners)
-- Hellenic Aerospace Industry S.A. (HAI)
-- Patria Aviation Oy (Patria)
-- SELEX Galileo Ltd (SELEX Galileo)
-- Thales Systemes Aeroportes S.A. (Thales)
-- Westland Helicopters Limited (AgustaWestland)

** FAS4Europe additional participating stakeholders:
-- Avio Spa
-- ITP
-- MTU Aero Engines
-- Safran SA
-- Volvo Aero AB
-- Aerospace and Defence Industries Association of Europe (ASD)
-- DA Design Oy (DA Design)
-- Diehl Aerospace GmbH (Diehl)
-- Equipment Industrial Management Group (EqIMG)
-- GMV-SKYSOFT (GMV)
-- Intracom Defense Electronics S.A. (Intracom)

Saab serves the global market with world-leading products, services and solutions ranging from military defence to civil security. Saab has operations and employees on all continents and constantly develops, adopts and improves new technology to meet customers’ changing needs.

-ends-

[buglerbilly]

The Future Is Low-Cost, Low-Risk

Industry Adapts Tactics as Governments Squeeze Budgets

By JOHN REED

Published: 26 July 2010

FARNBOROUGH, England - A major theme for defense contractors promoting their weapons at this year's Farnborough International Air Show was how their products offer more value and less risk to governments during a time of tightened defense budgets.

Jean Lydon Rogers, chief of GE's military engines division, said that steadily shrinking acquisition budgets will force weapon manufacturers toward a commercial business model: developing new technology built upon existing systems and weighing the development risk against likely return on investment.

"We know how to manage risk [commercially]; it's a matter of applying those processes to the [defense] business model," Rogers said after a July 20 news conference here.

Still, she and fellow GE executives stuck to their company line about their F136 alternate engine for the F-35 Joint Strike Fighter, repeatedly pitching the in-development engine as a way to reduce risk in a program that currently includes the F135 engine by rival Pratt & Whitney.

Rogers reiterated that GE and its partner, Rolls-Royce, have offered the Pentagon a low-risk, commercial-style fixed-price contract for the F136.

And the engine was just one of many products executives touted as low-risk and low-cost during news briefings.

That's how Chris Chadwick, president of Boeing military aircraft, described the company's ScanEagle UAV.

ScanEagle offers "good and adaptable capability to the war fighter," he said. "It's flying extensively today and that program can continue on." Extremely low risk and high value are what the Pentagon is looking for today, he said. Boeing sees the growing small- to medium-sized UAV market as key to offsetting spending cuts, Chadwick said.

Boeing Phantom Works President Darryl Davis said, "On the high end, we see the demand for extreme persistent ISR increasing, not diminishing." But with money tight, Boeing will partner with governments and other defense contractors to share more of the development costs on high-end programs, he said.

Shelley Lavender, Boeing's vice president of strike fighter systems, anchored much of her July 20 presentation upon low-cost, low-risk upgrades to the company's F/A-18E/F Super Hornet and F-15SE Silent Eagle.

Lavender unveiled a detailed "International Roadmap" for Super Hornet upgrades, including conformal fuel tanks, new engines and a weapons pod, all in the name of providing nations with low-risk technology to keep aircraft flying well into the century.

She called the stealthy Silent Eagle a product that Boeing has developed in anticipation of the needs of fiscally constrained customers. The company recently performed flight tests on the plane's conformal weapon bays, even though it has yet to find a launch customer.

Such self-development is key to Boeing's plan of lowering developmental and financial risks for fighter clients around the world, Lavender said.

"Next-generation technology has got to balance technology and affordability," she said.

Her division will do this by constantly evolving existing platforms so that a customer knows "exactly what you're going to get and when you're going to get it," Lavender said.

Raytheon officials also jumped on the low-risk, proven-upgrade bandwagon in pitching their active electronically scanned array (AESA) radars, calling them cheaper to buy and maintain than older, mechanically scanned array systems.

"When we market [AESA technology], we don't market it as a capability improvement, we market it as you basically get it for free after two, three, five years," said Mike Garcia, business development manager for Raytheon. The reason, he said, is because parts and maintenance costs are so much lower than for mechanically scanned radars. Raytheon's AESAs break down every thousand flight hours while the older systems break every 50 hours, he added.

"The benefit of the lower repair costs and lower life-cycle cost is that they're actually allowing the radar to pay for itself," he said.

Such selling points reflect the reality of the defense industry around the globe right now, according to Teal Group aviation analyst Richard Aboulafia.

"The best way to make do with less is to make existing platforms do more missions," Aboulafia said in a July 23 e-mail. "Using commercial, off-the-shelf platforms for military missions, like the Pentagon's Light Utility Helicopter, P-8 and Project Liberty, is a closely related trend."

Governments also can field weapons much faster by modifying existing platforms.

"Technology is progressing faster in subsystems like communications links and targeting systems, along with munitions and off-board sensors," Aboulafia said. "All of this can be inserted into existing platforms, which then offer much greater bang for the buck than expensive new programs."

[buglerbilly]

Exports Chase Heats Up

An Edge For Europe?

By PIERRE TRAN And ANDREW CHUTER

Published: 26 July 2010

FARNBOROUGH, England - The defense industry's appetite to win foreign arms contracts has never been sharper.

At the Farnborough International Air Show, held here July 19-25, a broad consensus of executives said their companies were looking to increase exports, notably to Asia and the Middle East, to save them from slowdowns in the West.

U.S. weapon makers still dominate the world market, racking up 52 percent of sales between 2003 and 2007, according to last year's French government report to parliament on arms exports.

But the export sales game is changing - more and more customers are demanding technology transfer and help in launching their own defense industrial efforts - and some see advantages for European firms.

Boeing's top defense salesman sees enough room for everybody, however.

"All of us are chasing international activity, but if you have the right platform, the right product and services, it's still a very good market," said Mark Kronenberg, vice president for international business development at Boeing Defense, Space and Security.

"Asia is still relatively strong and India in particular continues to grow," Kronenberg said. "If you look at the addressable market, international, it's about a quarter of a trillion dollars to go and chase."

U.S. Navy Vice Adm. Jeffrey Wieringa, who directs the Pentagon's Defense Security and Cooperation Agency, said U.S. companies saw $38.1 billion in export revenue last year and could reach $50 billion in the near future.

Before and during the air show, senior executives painted a target on markets far from home.

EADS' chief strategy and marketing officer, Marwan Lahoud, said comparative growth figures show EADS needs to pursue sales in the Asia/Pacific and Middle East in the long term.

Stefan Zoller, chief executive of EADS Defence and Security, said as European governments could not offer growth, his company must become more global faster.

Finmeccanica CEO Pierfrancesco Guarguaglini devoted a good chunk of his news briefing to the so-called BRIC countries: Brazil, Russia, India and China.

By 2011, Guarguaglini said, 51 percent of Finmeccanica's orders would come from outside the firm's "home markets" of Britain, Italy and the United States.

Some 70 percent of Turkey's and India's planned defense spending next year is "addressable," he said.

For European companies, exports have long been a lifeline to firms that lack the kind of vast internal market provided by the Pentagon.

"For us, our domestic market has always been too small. Export has always been a necessity to develop business," said Blaise Jaeger, senior vice president of Thales International.

Jaeger said Europe's narrow domestic markets and smaller budgets have forced European companies to be smart. European firms are also more used to the fixed-price deals demanded by many export customers, while U.S. firms have long seen cost-plus contracts from the Pentagon.

"This is the way we run our programs," Jaeger said. "We are used to managing the risk."

But Jack Harrington, chief executive of ThalesRaytheonSystems, an American-French joint venture, said that the U.S. market is actually more competitive than European ones. American companies compete to win research and development contracts; small, agile entrepreneurial companies spring up to bid against larger players.

In Europe, government "feeds local industry," especially partially state-owned companies or national champions, and that does not foster competition, Harrington said.

Tech Transfer

One factor that may give European companies an edge is their ability to meet customers' requests for technology transfer as part of the sale.

India is perhaps the most aggressive of customers when it comes to tech transfer, but other countries are following suit.

Take Malaysia, which Defense Minister Zahid Hamidi said is "no longer simply in the game of buying expensive defense systems from overseas suppliers, but increasingly wishes to use these new programs to boost our own defense and technology sector."

To that end, the government is backing a large defense and security technology park planned for Sungkai, Perak. Work starts in October on the plant, which will be managed by local company Masterplan Consulting, and advised and partially financed by British-based offset experts Blenheim Capital Partners, Hamidi said July 20.

The country's five-year defense spending plan, which gets underway in January, foresees purchases of combat aircraft, warships, armored vehicles, airlifters, and reconnaissance and surveillance assets.

Finmeccanica used an agreement to transfer technology as part of a joint UAV development to win an order of trainer jets from the United Arab Emirates - a sale that reportedly stalled when the firm's tech-sharing plans were blocked by treaty restrictions.

Executives said European countries are more open to technology transfer, while U.S. companies are more hemmed in by export-control rules such as the International Traffic in Arms Regulations (ITAR).

Giancarlo Grasso, chief executive of Finmeccanica unit Selex Communications, said sharing technology is not to be feared.

"The idea is to move forward immediately and not sit on your technology," he said.

Grasso cited the joint venture he set up in Romania in 2004 to produce military networking systems. ITAR restrictions would have kept many U.S. firms from sealing such a deal for local production, he said.

"The U.S. has very large production runs for products but cannot use the same business model, and that is part of our strategy," he said.

"ITAR is an issue," conceded Bill Sundermeier, president of FLIR government systems.

A specialist in infrared sensors, U.S.-based FLIR makes the digital, high-definition Star Safire 350 HD turret at its Swedish subsidiary, avoiding the need to clear sales through the U.S. export control regime.

U.S. President Barack Obama's administration has said it plans to streamline the export control system, but FLIR executives said similar announcements by previous administrations have not led to much change.

Other Tools

Local industrial agreements are another tactic. Finmeccanica executives say they are key; the company recently struck helicopter production deals in India, Libya and Russia.

In Brazil, EADS has signed a joint venture agreement with the Oderbrecht industrial group to develop defense and security activities.

Thales raised its stake in its Brazilian partner, Omnisys, to 72 percent last year to help sell a long-range S-band radar and develop other new businesses.

Another tool is political support.

For example, the Eurofighter consortium is hunting for export sales as its European partners trim orders for the Typhoon combat jet. Turkey is seen as a prime market.

So in early July, the Eurofighter steering group of national and industrial partners met in Istanbul. And days later, Eurofighter CEO Enzo Casolini joined Turkish ministers at a dinner where speakers pressed for Turkey's entry into the European Union. The event was hosted by the Italy-Turkey Friendship Union, which is run by Finmeccanica Director-General Giorgio Zappa.

"It's not rocket science, but common sense," said Joe Parker, Eurofighter exports director. Ë

--

Tom Kington and Vago Muradian contributed to this report.