Africa: The Next Defense Market Opportunity?

Low value. Corrupt. Aid-driven. Despite the odd exception like Algeria, and South Africa’s indigenous defense industry, most people think of these terms when they think of the African defense market. Analyst firm Forecast International sees a different picture, however: “tomorrow’s growth market for the global defense industry.”

This assessment didn’t come from reading Nigerian email solicitations. F.I. admits that overall African spending isn’t expected to suddenly become impressive: 3.5% increases year-on-year from 2007-2011 to $15.9 billion, with under 20% of defense budgets slated for procurement.

That isn’t much to write home about, but “African Market Overview” author Matthew Ritchie sees the opportunities in much more specific terms. Meanwhile, Konstantin Makienko of Moscow Defence Brief discusses the key features of the arms market in Africa, and explains how they have worked to shift Russia out of its dominant role, in favor of China. His chronicle of Russian exports reveals at least one recent market success, however – in Sudan…

NH90: Europe’s Medium Helicopter Gets New Order Despite Issues

The NH90 emerged from a requirement that created a NATO helicopter development and procurement agency in 1992 and, at almost the same time, established NH Industries (62.5% EADS Eurocopter, 32.5% AgustaWestland, and 5% Stork Fokker) to build the hardware. The NATO Frigate Helicopter was originally developed to fit between light naval helicopters like AW’s Lynx or Eurocopter’s Panther, and medium-heavy naval helicopters like the European EH101. A quick look at the NFH design showed definite possibilities as a troop transport helicopter, however, and soon the NH90 project had branched into 2 versions, with more to follow.

The nearest equivalent would be Sikorsky’s popular H-60 Seahawk/ Black Hawk family, but the NH90 includes a set of innovative features that give it some distinguishing selling points. Its combination of corrosion-proofing, lower maintenance, greater troop or load capacity, and the flexibility offered by that rear ramp have made the NH90 a popular global competitor.

As many business people discover the hard way, however, success can be almost as dangerous as failure. NH Industries has had great difficulty ramping up production fast enough to meet promised deliveries, which has left several buyers upset. Certification and acceptance have also been slow, with very few NH90s in service over a decade after the first contracts were signed. Booked orders have actually been sliding backward over the last year, and currently stand at around 500 machines, on behalf of 14 nations.

Norway May go Dutch with Poland on Subs

Norway’s 6 Ula Class/ U210 diesel-electric submarines were commissioned from 1989-1992, and play an important role in their overall fleet. The 1,150t design combined German design, sonar, and torpedoes with a French Thomson-CSF (now Thales) Sintra flank array sonar. Integration happens through a Norwegian Kongsberg combat system, which has become a mainstay for German submarine types. The U210s are a bit on the small side compared to more modern diesel-electric boats, but they remain well suited to Norway’s long coasts and narrow fjords.

The Ula Class has received a number of upgrades since 2006. A new combat system, added cooling for warm water operations, upgraded periscopes, sonar improvements, TADIL-A/Link 11 communications, etc. Even so, the continuous cycle of compression and release inherent in submarine operations will make operations past 2020 a risky proposition. Norway wants to keep a submarine fleet, and by the end of 2014 decided it would need new boats to do so.

Lightning Rod: F-35 Fighter Family Capabilities and Controversies

Grim Reapers F-35C

The $400 billion F-35 Joint Strike fighter program may well be the largest single global defense program in history. This major multinational program is intended to produce an “affordably stealthy” multi-role fighter that will have 3 variants: the F-35A conventional version for the US Air Force et. al.; the F-35B Short Take-Off, Vertical Landing for the US Marines, British Royal Navy, et. al.; and the F-35C conventional carrier-launched version for the US Navy.

This article will serve as DID’s central repository explaining and contrasting all 3 F-35 variants, detailing the fighter family’s core technologies and features, and laying out the core industrial framework whose “political engineering” has made the program almost impossible to kill. It will also summarize the core arguments that swirl around the fighter’s future capability, and provide useful background links regarding the program and its key technologies.

Europe’s Galileo International GNSS Project

Galileo concept

The USA’s Global Positioning System service remains free, but the European Union is spending billions to create an alternative under their own control. In addition to civilian GPS (the Open Service), services to be offered include a Safety of Life Service (SoL) for civil aviation and search and rescue, a paid Commercial Service with accuracy greater than 1 meter, plus a Public Regulated Service (PRS) for use by security authorities and governments. PRS/SoL aims to offer Open Service quality, with added robustness against jamming and the reliable detection of problems within 10 seconds.

Organizational issues and shortfalls in expected progress pushed the “Galileo” project back from its originally intended operational date of 2007 to 2014/15. After a public-private partnership model failed, the EU gained initial-stage approval for its plan to finance the program with tax dollars instead of the expected private investments. Political issues were overcome in 2007 by raiding other EU accounts for the billions required, but by 2011, it became clear that requests for billions more in public funds were on the way. Meanwhile, doubts persist in several quarters about Galileo’s touted economic model. Security concerns regarding China’s early involvement, and its potential Beidou-2/Compass projects, have been equally persistent, and there is good reason to expect that the constellation has a military purpose. On a European political and contractual level, however, Galileo is now irreversible.

This article offers background, players, developments, contracts, and in-depth research links for Galileo, as well as linked EU programs like GIOVE and EGNOS.

Lessons in A&D and Auto Supply Chain Strategy, Part 2: Focus on Competitive Advantage

by KPMG’s George Odden & Vincent Pavlak

In July 2010, Vincent Pavlak, a partner in KPMG LLP’s Transactions & Restructuring service group, contributed an article to Defense Industry Daily, titled, “Lessons from the Automotive Supply Chain: Surviving a Downturn.” At the time, the automotive industry was enduring one of the worst economic periods in history, and there were concerns that the aerospace and defense industry could suffer a similar fate. Ultimately, the automotive suppliers that endured the downturn have emerged stronger, due in part to critical efforts undertaken during the crisis. Meanwhile, the aerospace and defense industry has experienced a post-crisis divergence of paths, with commercial aerospace companies enjoying a resurgence parallel to the automotive industry while the defense sector has suffered declining revenues and prospects. Despite differing outlooks now facing each industry, supply chain enhancement presents opportunities for increased competitive advantage for aerospace, defense and other industries across varying economic cycles.

Part 1 looked at supply chain issues and imperatives for aerospace & defense (A&D). Part 2 looks at some implications, trends, and opportunities.

Lessons in A&D and Auto Supply Chain Strategy, Part 1: Supply Chain Challenges

by KPMG’s George Odden & Vincent Pavlak

In July 2010, Vincent Pavlak, a partner in KPMG LLP’s Transactions & Restructuring service group, contributed an article to Defense Industry Daily, titled, “Lessons from the Automotive Supply Chain: Surviving a Downturn.” At the time, the automotive industry was enduring one of the worst economic periods in history, and there were concerns that the aerospace and defense industry could suffer a similar fate. Ultimately, the automotive suppliers that endured the downturn have emerged stronger, due in part to critical efforts undertaken during the crisis. Meanwhile, the aerospace and defense industry has experienced a post-crisis divergence of paths, with commercial aerospace companies enjoying a resurgence parallel to the automotive industry while the defense sector has suffered declining revenues and prospects. Despite differing outlooks now facing each industry, supply chain enhancement presents opportunities for increased competitive advantage for aerospace, defense and other industries across varying economic cycles.

Part 1 deals with the key challenges facing these industries’ supply chains.

UAE Looking to Become a Regional C2 Leader

Saab S340-AEW

The 21st century has seen a quiet transformation of the UAE’s armed forces. Advanced AWACS airborne early warning planes and air and missile defense systems are just the outward signs of a push from a collection of purchased weapon systems, to an integrated defense force that can cope with the most modern threats.

Making that happen requires more than just planes, or missiles. It requires extensive back-end systems that help turn information from advanced radars and airborne surveillance into a coherent whole, and allow command staff to direct battles based on that information. DID explains the larger picture and where things stand now, as the UAE continues its strong Command, Control, Computing, & Communications (C4) push.

Rapid Fire Evening 2011-06-14: FY12 Appropriations

• The House Appropriations Committee approves the FY12 Defense Appropriations legislation. The bill contains $530 billion in non-emergency funding, an increase of $17 billion over last year’s level, but $9 billion below President Obama’s request. The Committee also agreed to withhold 75% of the $1.1 billion-worth of aid for Pakistan, until the administration reports on how it would spend the money. It isn’t a budget, however, until Senate reconciliation happens.

DoD Cybersecurity Spending: Where’s the Beef?

24th Air Force

As the US defense budget is seeing targeted cuts, one area that seems to be getting more money is cybersecurity. The US military has announced plans to spend billions on technology to secure its networks.

In response to this shift in priorities, traditional defense contractors, such as BAE Systems, General Dynamics, Lockheed Martin, and Northrop Grumman have been on a buying spree, snatching up cybersecurity firms left and right. At the same time, a number of these companies have proven vulnerable to cyber attacks themselves, with some analysts seeing a tie to a security breach at RSA, which provides technology for remote access of employees to their corporate networks.

This article examines this shift in the US defense industry and defense spending regarding cybersecurity. In particular, the article examines where the money being earmarked for cybersecurity is going and what kind of initiatives are being undertaken by the US military.

• Buying Spree
  
• Where’s the Money Going?
  
• US Cyber Command
  
• Pentagon’s Cyber 3.0
  
• Is the Boom a Bust?
  
• Key Contacts
  
• Additional Reading