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August 12, 2019 | International, Aerospace

Finland’s Air Force chief tackles recruiting challenges and its quest for a future fighter

By: Valerie Insinna

TIKKAKOSKI, Finland — The Finnish Air Force is changing. In a matter of years, it will decide on its future fighter — a €7-€10 billion (U.S. $7.8-$11.2 billion) program that could tie Finland more closely to the country that wins the competition. It's revamping its command-and-control infrastructure. And like other international air forces, it's putting increased pressure on itself to boost readiness.

Maj. Gen. Pasi Jokinen, who became the commander of Finland's Air Force in April, oversees the transformation. The job has its perks: During U.S. Air Force Chief of Staff Gen. Dave Goldfein's trip to Finland in July — his first visit to the nation — the two officers took a break from meetings and sat backseat in two Finnish F/A-18 Hornets for a training mission. Goldfein later said the flight signified the growing trust between the two air forces.

Jokinen spoke on July 21 with Defense News, which traveled to Finland with Goldfein, about the service's readiness challenges and its modernization priorities.

Tell me about your conversation here today with Gen. Goldfein.

Well, we talked about a lot of interesting topics. We talked about the operation environment and the Finnish Air Force and what we do here, and the cooperation with the U.S. and all that. He obviously was aware of a lot of things, but we went into very good detail about everything like that.

We know what's happening here, we are strongly here, we are committed here and everything is running smoothly.

You said you talked about the operational environment for Finland right now. Can you characterize that, and is it changing?

Well, I think we have been using that word “new normal” after Crimea and after 2014, so activity in the Baltic region and in this region is in a little bit elevated level — let's put it that way. And of course our eastern neighbor is actively doing things in Syria and eastern Ukraine. It has had some effects.

It seems that they have this big exercise cycle, [in] running the Zapad [exercise] and how they rotate the different regions. In 2017 we saw again this western Russia exercise, and it was noted. It was at peak activity level. Activity-wise, 2017 was the highlight, and now we are calmed down a little bit, but still we are above the level before 2014.

Is it fair to say that the number of intercepts peaked in 2017?

Yeah, well, when their activity is high, our activity is high. And of course the Gulf of Finland, which is the international airspace nearby our border, that's one of the areas of interest. You used the word “intercepts,” though; that activity is there. I mean, of course then they are operating also in the other, the northeast and eastern border, but that's a solid border. I mean, obviously they are on their side and we are on our side. Then the international airspace where we meet, OK. The Gulf of Finland is mainly transit for mainland Russia to Kaliningrad and back, and in the southern Baltic Sea, or the Baltic sea down more south, there's more room to maneuver, do stuff like that. Here is the very narrow — long but narrow — corridor that normally there is no operational type of maneuvers, neither side, but it's a transit. But we like to know who is going where and all that.

Then obviously one the things are that they do not always use transponders or flight plans. There are no flight plans, so we need to find out who is there. That has improved a bit over the years. The equipment is newer and they have the western transponders and they use them, so it's a little bit better situation that we had a few years back, but it's not 100 percent covered with the flight plans or transponders.

As you look across the entire Air Force, what's your No. 1 concern? Is it budget? Is it what you're seeing threat-wise from potential adversaries?

Well, I'm not concerned about the adversary. Things are relatively stable. We have good relations in all the directions, all directions there. Defense forces in general has been resourced relatively well. The readiness, of course, requires some money. And of course the Army has had a bigger transition the last few years out of the services, from a training organization into a readiness organization.

There's of course a need for more money, for operating money also. And the government has been giving quite good money in the last few years. Now the future is not that bright. I mean, there's some dark clouds there. I'm concerned. Of course, the main procurement program, like the HX [fighter replacement program], seems to be well on track, and I'm very happy about that, and that is their main priority, of course, to keep that in schedule and in budget for the procurement side of the house.

People have been — I don't know if “stressed” is the right word — but they have been under pressure for the readiness, and we've also gotten more vacant jobs. We are recruiting people, people on the field and into the practical work— so the aircraft maintenance, the surveillance tasks. It's very important that the recruitment works.

Aside from HX, are there other modernization efforts that you're trying to keep on track?

Well, we are, before the HX selection, before the HX comes in. Right now we are working on our C4I system. But we have had quite a lot of new pieces there and they are IOC [initial operational capability], becoming FOC [full operational capability].

Then whatever solution or whatever HX candidate is chosen, there is a requirement to be able to process and handle all that [information]. So we are working that before so when selection is done and it's actually coming in, the infrastructure is prepared for that. Obviously we need to then fine-tune it, depending on the selection, at the end of the day, but right now we are working on the basic infrastructure.

What has Finland already fielded? What is coming up that is still in the planning stages or in the competitive stages?

For the C4 side of house? Well, OK, we've got our sensors, relative new sensors for the surveillance sensors. And our networks and the infrastructure and the servers, kind of like the infrastructure there, both the networks and for the servers. They are relatively new.

So it's there, and we are getting that into use as we speak or in the near future. Then it's all about the processes and methods and how to handle the data and how to use the data. So that's something that people in organizations need to learn. Not the hardware, but the people need to learn, so that's something that we are working on. Then, when we get the HX here and we know what it is, then we do the necessary adjustments. And it's obviously platform-specific and [dependent on] the requirements there. In all cases, we need to be able to be better in joint warfare inside Finland with data services and of course maintain the international interoperability portion, whether it's about tactical data links or whether it's other things.

Did you discuss interoperability with the U.S. Air Force with Gen. Goldfein?

Well, yeah, sure. Technology is one thing. You are interoperable and you can use the data and all that. But the processes [of] how you do it is one thing, but then there's this policy side of the house, that if you don't have the policy or to actually be there — interoperable all the time — then you just need to be prepared for that.

We are an independent nation. We are not a NATO member, and we are not doing common planning. We are operating as neighbors here. Our AOR [area of responsibility] and the EUCOM [U.S. European Command] AOR and NATO AOR, they are all overlapping or next to each other. Coordination and deconfliction [are] some things that we need to be ready to do. The policy is important and the SOPs [standard operating procedures] and all that.

The U.S. is interested in rapidly generating air power in times of crisis. How can the U.S. better defend its bases or set up new expeditionary air bases if needed? From what I understand, that's something that Finland has the capability to do. Did that come up in conversation, and do you think that there are things that the U.S. can learn from Finland in that area?

In Finland, we have our main base. But yes, we can deploy and we can swarm, distribute our assets, and then have them under the command and control, and make centralized effects out of those distributed things. So yeah, that was talked about. Of course, it requires the ability to move and begin to move [your resources from the base]. It requires a good situational awareness and plans [for] how to do it, and then the timely execution of that. We've talked about the general concept, and yes, it was mentioned by Gen. Goldfein that they are looking for a more expeditionary mindset, that huge massive bases that you can generate the air power may not be the thing that you want to stick.

Finland is not that small [of an] area. There are smaller nations than us, but still in the global or the U.S. scale, it's still a small area. The thing is to look for the agility and mobility and know what's happening and do the right things from there, either move or disperse.

Is that a capability in which Finland continues to invest?

Yeah, it's part of the HX program. So now the question is how much. It's good for that fight that you distribute, but the main operation is get out there and do the job, then come back and you can go out again. That is the important thing — that you get the effect in the air, what you're doing from the air or in the air.

Then it's nice for the survivability part and all that to be distributed. That's what we are still looking [at]. But then, to what extent? That is to be determined. We will find it out when the HX goes forward.

On HX, I understand Finland is looking for some industrial incentives. Has it become clear yet what each company might be willing to offer?

We are in the middle of the process. I don't know whether the offers are final. We have the ideas that we are discussing. There is a requirement that we need to be able to do certain stuff in Finland, with the Finnish resources and [people with] Finnish passports. That is a requirement [that] is still there.

How do you think Finland will have to balance the cost of this project with the capability it wants?

That equation needs to be solved, but we have two years of time to solve it. We have the money — €7 billion to €10 billion. And we need to maximize the capability on that money.

Are you making additional investments in intelligence, surveillance and reconnaissance capabilities?

There is a desire to have the proper amount of ISR. Obviously the HX is going bring something into it, and we also have a recent area there that we are investigating. Probably when there's better visibility, when we are actually selecting and getting through HX, then we [will] know where the gaps are, and then we are going to fill them in [with] other programs.

https://www.defensenews.com/2019/08/09/finlands-air-force-chief-tackles-recruiting-challenges-and-its-quest-for-a-future-fighter/

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  • Arms trade momentum: Globalization and US defense spending drive defense industry growth

    August 17, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

    Arms trade momentum: Globalization and US defense spending drive defense industry growth

    By: Joe Gould 5:00 AM WASHINGTON ― Defense revenues of the top 100 defense companies in the world climbed for a fourth straight year, pushed upward by U.S. defense spending growth combined with strong foreign military sales. Fiscal 2019 defense revenues recorded in Defense News' Top 100 list totaled $524 billion, up about 7 percent from $488 billion in fiscal 2018, according to numbers compiled by Defense News as part of the annual Top 100 list. “The single most striking thing about these data is the year-over-year growth, the median of which is 7 percent,” said Atlantic Council Senior Fellow Steven Grundman. “For an industry generally regarded as mature, revenue growth that runs at two times global GDP is downright sporty.” The defense industry remained top heavy, as the top 10 firms accounted for 50 percent of total defense revenue on this year's list, and the top 25 companies accounted for about 75 percent of the total. Geographically, U.S. firms made up seven of the top 10, and 10 of the top 25. The combined defense revenue of the 41 U.S. firms in the Top 100 list comprised more than half of the total defense revenue. China this year had five firms in the top 15 companies versus six last year. Eight Chinese firms made the Top 100 list this year, with a combined $95 billion in defense revenue for FY19 ― which is $11.7 billion shy of the list's total for Europe and Turkey. The Aviation Industry Corporation of China, which appeared with other Chinese firms for the first time last year, fell from No. 5 to No. 6, though its defense revenue grew by a percentage point over last year. China South Industries Group Corporation fell from No. 11 to No. 18, as its revenue declined 26 percent, from about $12 billion to around $9 billion. China is unquestionably a defense giant in the Asia-Pacific region, dwarfing its nine neighbors (excluding Russia) on the list. Their 2019 defense revenues totaled $21 billion. The combined revenues of the Chinese firms marks the country as the rising superpower it's billed to be in political and strategic circles, said Daniel Gouré, a senior vice president with the Lexington Institute. “For all the discussions we have been having over the last weeks and months about China as a potential threat and challenges, they are building all kinds of blue-water ship classes that mirror the U.S. Navy,” he said. “For a country that was once thought of as a continental or near-shore power, it's amazing the stuff they're building, and its reflected in these companies.” From Europe and Turkey, a NATO ally, there were 35 firms across the list. The combined defense revenue there comprised roughly 20 percent of the Top 100 total. Seven Turkish firms made the list, with FNSS Savunma Sistemleri A.S., and Havelsan A.S. joining the list at No. 98 and No. 99 respectively. For Russia, some past participants declined to provide data this year for unknown reasons. The two that participated made it into the list: Almaz-Antey placed 17th, with $9.2 billion in defense revenue for 2019, and Tactical Missiles Corporation JSC placed 35th, with $3.5 billion in defense revenue. The annual Defense News Top 100 list relies for the most part on self-reporting from companies, many of whom provide estimates rather than definitive data for their defense percentages. That means that while the list is the industry standard, the numbers come with some variance. Heritage firms dominate Lockheed Martin was a lock for No. 1, for the 21st year in a row, with defense revenue that represents nearly 11 percent of the total. Its defense revenue jumped 12 percent between FY18 and FY19, from $51 billion to $57 billion ― with Boeing trailing at No. 2 at $34 billion in defense revenue for FY19. Within the top five, General Dynamics climbed back from No. 6 last year, passing both Raytheon and Northrop Grumman. Northrop fell from No. 3 to No. 4, likely based on a full-year accounting of its acquisition of Orbital ATK in 2017, said analyst Roman Schweizer, managing director of Cowen and Company. GD led Northrop by $912 million in defense revenue, with Raytheon (5th place) trailing Northrop by $1.2 billion in defense revenue. Ten companies increased their defense revenue by $1 billion or more, and Lockheed Martin led the pack with a $6 billion boost. The merger between L3 Technologies (18th place last year) and Harris Corp. (26th place last year) saw a new entry, L3Harris Technologies, take the No. 9 spot, with $13.9 billion in defense revenue ― just ahead of United Technologies Corp., which acquired Rockwell Collins in 2018 and whose merger with Raytheon should be reflected in next year's list. At the same time, the data doesn't support the argument that the defense industry is growing progressively more concentrated, according to Grundman. “The top-quartile of firms account for exactly three-quarters of the revenue both in 2018 and 2019,” he said. “Looking back at the data for 2013, the top quartile took 73 percent of the revenue, but that's not appreciably less than last year.” Still, despite the Pentagon's push to work with nontraditional suppliers, the top of this year's list, and the list overall, is almost like the automotive sector, it's so dominated by familiar names, said Byron Callan, an analyst with Capital Alpha Partners. “The interesting thing is just the relative stability of this,” Callan said. “For all of DoD's emphasis to get new entrants into the sector, and reach out to innovative suppliers, you just don't see it. When you compare it to the technology sector, we're all using things made by companies that weren't even household names 10 years ago. ... Where is the Tesla [of the defense sector]?” It's not out of the question that the list changes over the next five years, if the U.S. Department of Defense and foreign militaries make good on their promises to boost innovation, Callan said. For all the DoD's discussion of the growing role of software, artificial intelligence and machine learning, there's no company known for those things on the list, Gouré observed. Beyond General Dynamics, which completed its acquisition of IT services giant CSRA in 2018, “AI, software, IT aren't there because they're still subcontractors,” Gouré said. “Microsoft and Amazon Web Services, they aren't anywhere on the list.” That's not to say there isn't massive spending on all of the above, but it remains a subcomponent within companies, and therefore not captured on the list, Gouré said. “If we keep saying it's the kill chain, the network matters and the country with the best AI will win, are we not investing enough, are we doing the right thing?” Gouré wondered. “There are more questions than answers.” (Booz Allen Hamilton, No. 26 this year, did win an $800 million Pentagon artificial intelligence contract. But as that occurred in May 2020, it will likely impact future lists.) For now, the large, multiplatform firms dominate and should continue to do so, even if government defense spending declines, Gouré said. “These guys are showing it's good to have a finger in many pies.” Furthermore, the data tend to contradict the conventional wisdom that defense is an industry of mostly large-scale, pure-play firms, according to Grundman. “In fact, the median [defense] revenue of the top 100 is only $2 billion. And on average, only slightly more than half each firm's revenue ... derives from defense sales,” he said. Flat-budget future? The consensus among analysts is that government defense spending will level off amid the coronavirus pandemic, and its effects as well as the result of the upcoming U.S. presidential election in November will be reflected in future lists. “Successful years of investment spending growth appears to be ending, but outlays are still growing due to the surge in spending over the last three years. But they are starting to taper significantly after this year,” Schweizer said. Schweizer sees foreign spending softening, at least in the short term due to COVID-19, but he predicts defense budgets, backlogs, outlays and foreign military sales will hold together for at least 12-18 months to help defense firms weather the unprecedented damage visiting the commercial aerospace sector. The biggest risk is the U.S. budget trajectory, which is likely to be flat, at best, or decline in mid-single digits, at worst, over the next five years, Schweitzer added. He anticipates a drop of 3-5 percent, but with the Pentagon's eye on Russia and China, the department will likely make trade-offs to protect core modernization areas. As global growth rates slow, future lists may see some familiar companies grow leaner. “These companies are going to figure out what their growth businesses are so they can shrink to grow,” Callan said. “They all say they're well positioned [for slower defense spending], but what the hell does that mean? They can't all be right.” Other notable moves included Reston, Virginia-based engineering and construction company Bechtel, which fell to No. 47 from No. 31 last year; the firm's defense revenue declined 39 percent, from $3.7 billion to $2.3 billion. In France, Safran's defense revenue jumped from $1.6 billion in FY18 to $4.4 billion in FY19, bumping it from No. 56 to No. 28. However, the company told Defense News that it attributes the large rise to a difference in calculation for this year's list. Since 2015, the data from Safran were made up of Safran Electronics & Defense activities. This year, the firm changed its approach by adding the military activities of the group's other subsidiaries. Also in France, Dassault nearly doubled its revenue from $2.9 billion in FY18 to $5.7 billion in FY19 ― jumping from No. 38 to No. 22. Japan's Mitsubishi Heavy Industries vaulted back onto the list to No. 21, with $6.6 billion in defense revenue. However, it's worth noting that defense revenue numbers reflect awards made by the Japanese Ministry of Defense, which leads to more year-over-year volatility among Japanese firms. The three Israeli companies on this year's list — Elbit Systems, Israel Aerospace Industries and Rafael Advanced Defense Systems — moved up in the ranking. The sole South American company on the lsit, Embraer, also moved up, from No. 84 to No. 79. Meanwhile, the only non-U.S. North American company on this year's list — Canada's CAE — dropped four spots to No. 74, but its defense revenue grew by a percentage point. https://www.defensenews.com/top-100/2020/08/17/arms-trade-momentum-globalization-and-us-defense-spending-drive-defense-industry-growth

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