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  April 29, 2019 | International, Aerospace

  Australia Makes Moves to Grow its Defense Industry

  By Stew Magnuson GEELONG, Australia — Very little excites the aerospace industry and the media that covers it more than the announcement of a new jet fighter program. So when the curtain went up in a Boeing tent at Avalon — The Australian Air Show revealing a full-size model of a new robotic jet fighter, the camera flashes popped off as if it were a star on a Hollywood red carpet. “It is a red letter day,” Australian Minister of Defence Christopher Pyne said while standing in front of the Airpower Teaming System, Boeing's name for the loyal wingman jet fighter, an unmanned aircraft intended to fly in formation with the nation's F-35A joint strike fighters and F/A-18E/F Super Hornets. It was also an auspicious day because the unmanned system would be the first indigenously developed aircraft Australia produced since the CAC Boomerang fighter during World War II. The program makes a statement to the world that Australia is no longer content to be merely a buyer of military equipment, but has ambitions to be a developer and exporter as well, said Pyne. “This is all testament to the fact that we are undergoing our largest buildup of our military capability in our peacetime history — $200 billion over the next 10 years.” While Australia is still buying pricey F-35s from the United States, attack-class submarines from France and armored fighting vehicles from a European consortium, it wants a significant portion of that $200 billion to stay in the country and help it create aerospace and defense sector jobs, officials said. The nation last year released the 2018 Defense Industrial Capability Plan spelling out how it would build a “broader and deeper defense industrial base” over the next decade. “The government's goal by 2028 is to achieve an Australian defense industry that has the capability, posture and resilience to help meet Australia's defense needs,” the plan stated. One of its main goals is to turn the nation into an exporter of military goods rather than just an importer. The day before the airshow, U.S. and other foreign contractors gathered in nearby Melbourne to hear from State of Victoria and Defence Ministry officials about the new ways of doing business in Australia. Damien Chifley, executive director of the defense industry branch in the Australian Department of Defence, said the approach now is to partner. The country's defense contractors are predominantly medium to small companies who can't go it alone. They need help bringing their innovative ideas to prime contractors. If a U.S. or other foreign company wants to vie for an Australian contract it must now submit an “industry capability plan,” which spells out exactly how they will work with local firms to bring the project to fruition, Chifley said. “The idea is they go out the main gate with Australian industry,” he said. These plans are not offsets, which is the mechanism used by some nations to make contractors invest a certain amount of dollars in the local economy as a condition of winning a contract. However, these industry capability plans will be weighed by the contracting authority when selecting a winning proposal, he noted. Claire S. Willette, CEO of the Australian Defence Alliance, said in an interview that the nation's effort to bolster its aerospace and defense sector should be seen in light of its losses in manufacturing jobs — particularly the automotive industry — rather than security concerns. Australia wants a “sovereign capability to support itself” in the defense industrial sector, she said. “From a long-term sustainable economic perspective, you need to build something. You need to have a growth area,” said Willette, an American who served in the Pentagon for 20 years before moving to Australia. “Because we did have this burgeoning defense industry and because we have some really niche, high-tech areas of excellence, I think that [the government] saw that this was a natural fit and something they could grow off of,” she said. Australian government officials and locally based U.S. contractors at the airshow were eager to promote the nation as a spot where they can find the talent to develop programs. Boeing, by far, has the largest and longest presence with more than 90 years experience doing business in the country and some 5,000 employees in its defense and commercial sectors. It features two large research facilities — Boeing Research and Technology-Australia and Boeing Phantom Works International in Brisbane — where work on the robotic jet fighter will take place. The company invested $62 million in research and development in Australia in 2018, company officials said. “We're going to prove that we can do big, audacious programs like this here in Australia,” said Darren Edwards, vice president and managing director of Boeing Defence Australia. Meanwhile, Lockheed Martin and local officials touted the country's success in winning F-35 sustainment contracts. As a partner nation in the program, Australian contractors can compete globally with other F-35 customers for component maintenance contracts. They received 343 out of a possible 388 such contracts in the latest round, building on the 64 they had received in the first round. Australian contractors have received a total of $1.3 billion in F-35-related contracts so far, said Royal Australian Air Force Air Vice-Marshal Leigh Gordon, head of the joint strike fighter division. “That is a really great example of the strength of Australian industry and its competitiveness in the global sphere,” Gordon said. Going hand in hand with Australia's ambitions in the defense realm is its renewed focus on space. In July 2018, it established the Australian Space Agency, which brought together about 11 different agencies spread out within the government at various ministries, said Kim Gina Ellis, senior lecturer on space industry engagement, governance and law at Swinburne University of Technology in Victoria. The government wants a central point to coordinate and bring all the civilian activities together, she said. Again, the long-term goal is job creation, she told National Defense. The government wants to add about 20,000 to the approximately 10,000 space sector jobs already in Australia, she said. Meanwhile, as is the case in the United States, the nation has a growing private sector launch industry with a handful of companies building small rockets and launch facilities for small satellites, she said. Along with telescopes and communications systems that have been positioned on the continent since the beginning of the space age, Australia features a favorable geographic location for inserting spacecraft into polar orbits, Ellis noted. The new agency will “help build the industry and show the rest of the world that we have these amazing capabilities and that we support most of the major space exploration programs,” Ellis said. Jeff Shockey, vice president of global sales and marketing for Boeing Defense, Space and Security, said in an interview that Australia is growing very close to investing 2 percent of its GDP in defense. “They are doing the right things. There is a lot going on down here in this region and they are at the forefront.” Boeing has ambitions to export the Airpower Teaming System to the other “five-eye” partners: the United States, United Kingdom, Canada and New Zealand. Shockey said Boeing is an international company and Australia is an enduring ally and partner. Building a new jet fighter outside the United States should not be seen as “off-shoring” work, he said. “We're a global company and we're doing work throughout the enterprise on this project and others, both domestically and abroad,” he said. “There is a great high-tech talent base here,” he added. And the wide-open spaces will be a perfect proving ground for unmanned aircraft, Shockey and other company executives said. Willette said: “We're never going to have the assembly lines for an F-18, an F-16 or a JSF, but we do have the componentry, the systems and the systems integration and the skilled engineering. Designing and fabrication and machining — and the professional services that back all that up — those are huge strengths for this country.” The government has several new programs to spark innovation that would be recognizable to the U.S. defense industry. It is setting up grand challenges, cooperative research centers, university research networks and small business research grants. It has what would be called in the U.S. “broad agency announcements” with pots of money dedicated over the next 10 years for organizations with ideas in fields such as intelligence, reconnaissance and surveillance, electronic warfare, cybersecurity, amphibious warfare, maritime and anti-submarine warfare, and air and sealift. The 2018 Defense Industrial Capability Plan was just one building block in a larger plan, said Willette. The Australian government is continuing to produce more policies surrounding manufacturing skills and science, technology engineering and math education. “Having a level of sovereignty, and integrity and resiliency in your supply chain is incredibly important from a national security perspective,” Willette added. The ideas for the new programs are based on long-established U.S. or U.K. acquisition programs, said a government official who was not authorized to speak on the record. The Australian government is keen to partner with U.S. universities and has established the Australia-U.S. Multidisciplinary University Research Initiative Program to help Australian schools establish themselves with the Pentagon's Multidisciplinary University Research Initiative. It will provide Australian colleges with grants of up to 1 million Australian dollars per year if they can team with U.S. counterparts in the MURI program. Willette said: “The message very clearly coming from Australia is: ‘partner with us.'” http://www.nationaldefensemagazine.org/articles/2019/4/29/australia-makes-moves-to-grow-its-defense-industry

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  May 5, 2020 | International, Naval

  Fincantieri CEO on winning the US Navy’s frigate competition

  By: Tom Kington ROME — As CEO of Italy's state-controlled Fincantieri since 2002, Giuseppe Bono, has built cruise, merchant and naval vessels, including the FREMM frigate, for the Italian navy. Last week the type was picked by the U.S. sea service for its newest frigate, the FFG(X), in a deal worth $5.58 billion if options for nine vessels are exercised after the first ship. The FFG(X) will be produced at Wisconsin's Marinette Marine shipyard, which Fincantieri bought in 2008 and where it already builds Freedom-class Littoral Combat Ships for the U.S. Navy and Saudi Arabia with Lockheed Martin. In an interview with Defense News, Bono explained why FREMM beat off the competition, why shipyards should always be prime contractors, and why building cruise ships makes you punctual. What are the reasons you won this competition? In the U.S., more than elsewhere, the quality-price ratio was crucial. And our vessel fit the requirement. The U.S. wanted a ship with anti-submarine capability and this ship is unique in its class because it has that capability. The other competitors offered ships derived from other designs. The customer also wanted a ship which was already at sea. In a way we were lucky. On paper, the other offerings might have been great, but we are operational. Our proposal was also more complete because the design is extremely flexible thanks to the possibility of fitting different defense systems. We had also studied an AEGIS version of the FREMM with Lockheed Martin and knew it would not need large, structural work. What was your reaction when you heard you had won? My colleagues were more emotional about than me. I pursue objectives and strategy. You teamed with Lockheed Martin on the LCS program but here you went alone. We never considered a U.S. partner. This bid was different to the past, with a new approach. In this case the shipbuilders were candidates to be prime contractors. And with a track record with 16 LCS orders for the U.S. and four for Saudi Arabia we are an American shipyard, this time with an Italian design. We have worked very well with Lockheed Martin, but as prime contractor on the Littoral Combat Ship it was the point of contact with the customer, meaning the yard was a step back and that sometimes led to a short circuit. When the shipyard is speaking to the customer as prime, it facilitates the relationships and leads to a better product and lower prices because certain decisions can be made faster. You will, however, work with U.S. firm Gibbs and Cox on the FFG(X). Gibbs and Cox frequently works with the U.S. Navy and knows its needs perfectly. We have a long and positive experience working with them on the LCS and we teamed with them to adapt the FREMM for the U.S. Navy. As work gets underway at Marinette will you need to hire new workers and make further infrastructure improvements? A lot of the work we needed to do at Marinette has already been done. When we first took over, in a springtime, we were shocked to find that the forecourts were muddy due to snowmelt. Now we have paved them over and increased efficiencies in terms of the yard's layout. We will need to find extra space because the FFG(X) will overlap with LCS construction, but we have shown we can build two FFG(X) vessels simultaneously as well as LCS vessels at Marinette. That said, depending on future programs, if the opportunity arose to buy a new yard, we will consider it. We would not be against the possibility, but it is not an issue now. There have been some legislative provisions requiring Buy American for certain FFG(X) components. How will this affect you going forward on this ship? On the LCS there are a number of Italian components, albeit a very limited number. The vessel also has Rolls Royce gas turbines, not GE, showing that price and quality always win out. On the LCS, the four diesel sets for power generation were built by our subsidiary Isotta Fraschini Motori. They are also on the Italian FREMMS. Now we will see if they can be used on the U.S. vessels. The Freedom LCS class experienced delays at the outset. How are you going to try and avoid that for FFG(X), understanding that there are always challenges with a first-of-class ship? There is a difference between a ship and other platforms like an aircraft or an helicopter. A ship does not have a prototype, only the first in class. The prototype of a ship becomes operational. This means the first vessel needs more time than the successive ships. On the LCS program the construction time sped up and prices fell as it accelerated. Is this the biggest ever win for an Italian firm in the U.S. defense market? Yes, I think so. It the result of working well and showing you are serious, of delivering on time and on budget. All these aspects are strongly taken into account by the customer and they give you an advantage. This is fundamental and one of our characteristics, derived in part from our work on cruise ships, which are built on a turnkey basis. The discipline there is unique. You need to deliver on a specific day which is established years earlier, otherwise the penalties never stop. Being punctual is in our DNA. Add to that we are always prime contractor, and a cruise ship is no less complex than a naval ship. In the military sector, delivering on time happens rarely. There are many examples of delays in some countries which can be almost infinite. Turning to Europe, there is ongoing consolidation in the German shipbuilding sector. How does that affect your plans to launch a type of European naval Airbus with French yard Naval Group? With Germany we have a consolidated and long-standing partnership related to the submarine sector. Consolidation must happen in Europe if it wants to count for something in the world, for this reason our goal must be a common defence. There are four of five major yards in the U.S. We cannot think of having more than that in Europe. We must consolidate. https://www.defensenews.com/global/europe/2020/05/04/interview-fincantieri-ceo-bono-on-winning-the-us-navys-frigate-competition/

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  October 17, 2019 | International, Other Defence

  A compromise is needed on trans-Atlantic defense cooperation

  By: Hans Binnendijk and Jim Townsend The incoming European Commission president, Ursula von der Leyen, will need to work with Washington to defuse a quietly simmering trans-Atlantic defense cooperation issue that, if left unsettled, could do more long-term damage to the NATO alliance than U.S. President Donald Trump's divisive tweets. The United States for years has sought to stimulate increased European defense spending while minimizing wasteful duplication caused by Europe's fragmented defense industry. Europe has finally begun to deliver: Defense spending is up significantly, and the European Union has created several programs to strengthen its defense industries. But in the process, the EU has created a trans-Atlantic problem. These advances in Europe could come at the expense of non-EU defense industries, especially in the U.S. The European Defence Fund, or EDF, established in 2017, is designed to support the cooperative research and development efforts of European defense industries, especially small and mid-sized firms. Three eligible companies from at least three EU countries need to apply in a coordinated fashion to receive project research and development funding, which can be up to a 100 percent grant for the research phase. Plans call for spending about $15 billion between 2021 and 2027 to strengthen Europe's defense R&D and stimulate innovation. Model projects include the Eurodrone and ground-based precision strike weapons. A second related EU program, Permanent Structured Cooperation, or PESCO, also inaugurated in 2017, focuses more on efforts to foster defense cooperation among subsets of European states. Initially envisioned in the 2009 Lisbon Treaty, PESCO is an effort to develop a more comprehensive European defense consistent with EU's common foreign and security policy needs. Thus far, 25 of 28 EU nations have signed up, with 34 modest cooperative projects agreed to by the European Council. The EU estimates that the inefficiency caused by the lack of adequate defense cooperation costs its members between $25 billion and $100 billion annually. These new EU programs, designed to pool and share scarce defense resources, are intended to help address that problem. But the exclusivity of these approaches favor the defense industries of EU members, and the hostile Trump administration rhetoric toward the EU is only supercharging this controversy. President Trump's negative attitude toward NATO and European leaders has undercut European confidence in American trans-Atlantic leadership and strengthened a call in some European capitals for European “strategic autonomy.” Part of this autonomy is developing a more capable and independent European military supported by a stronger European defense industry. A stronger European military capability is a goal shared on both sides of the Atlantic, but not at the expense of defense cooperation. While European leaders understand that they are probably decades away from real, strategic autonomy and military independence, they are shaping the EDF and PESCO approaches to protect European defense industry by being fairly exclusive of U.S. or other non-EU defense industries. This has U.S. defense officials worried. A May 2020 letter to the EU from two senior U.S. officials stated their “deep concern” about the programs' regulations. While current EDF and PESCO programs are small, U.S. officials are worried they will set precedents and will be a model for more ambitious European defense cooperation in the future. They fear not only that U.S. industry will be cut out, but that two separate defense industry tracks will be established that will undercut NATO interoperability and promote further duplication. Some U.S. officials have threatened U.S. retaliation unless changes are made. EU officials respond that these criticisms are excessive. They note that some American defense firms established in European countries will be eligible, that there is nothing comparable to the “Buy American Act” in Europe, that plenty of trans-Atlantic cooperative projects can take place outside of these two EU programs, that the PESCO projects will be guided by both EU and NATO requirements, and that over 80 percent of European international defense contracts go to U.S. firms anyway. They also note that a deterrent to U.S.-EU defense cooperation is that U.S. arms transfer control regulations create potential American restrictions on the sale to third countries of any U.S.-EU cooperative weapons systems that contain U.S. technology. NATO Secretary General Jens Stoltenberg, who seems caught in the middle, has supported both EDF and PESCO, so long as the results fill NATO capability gaps and do not lead to further duplication. Flexibility will be needed on both sides of the Atlantic to defuse this issue before it becomes too difficult to manage. Some opportunities for third-country participation will be needed. Possible approaches to level the playing field include focusing on modifying PESCO, which is still under development in the EU. One suggestion is to create a “white list” of NATO nations not in the EU (such as the U.S., Canada, Norway, post-Brexit United Kingdom and Turkey) that might be invited to participate in selected PESCO projects on a case-by-case basis. This would at least set a precedent that PESCO does not completely exclude third countries. And it would strengthen EU-NATO defense links. Additionally, formal procedures might be established for closer cooperation between the PESCO project selection process and NATO's defense planning process. This will help avoid duplication and identify at NATO those areas where NATO nations outside the EU could cooperate on PESCO projects, The U.S. might also consider amending its arms export control legislation to waive the third-country transfer review requirement for the export of U.S.-PESCO joint projects if the sale would be made to a country to which the U.S. would have made a similar sale. EU internal negotiations on EDF are finished, and changes will be hard to make. Plus, EDF provides R&D funding grants that use European financial resources. While some $118 million in U.S. Defense Advanced Research Projects Agency funds go to European firms, that is about 3 percent of DARPA's budget. So the U.S. might ask for some modest reciprocity from the EDF. But more constructively, DARPA and the EDF might co-fund R&D for joint U.S.-EU projects. The United States has much to gain from a strong European defense industry. Europe has much to gain from cooperation with the U.S. defense industry. All NATO allies need to stimulate defense innovation to compete effectively with Russia and China. Both sides of the Atlantic have much to lose if this issue further disrupts NATO's already shaky political equilibrium. Hopefully von der Leyen's experience as a former German defense minister will help her to understand the urgency and to find a solution to this problem. Hans Binnendijk is a distinguished fellow at the Atlantic Council and formerly served as the senior director for defense policy on the U.S. National Security Council. Jim Townsend is a senior fellow at the Center for a New American Security and formerly served as deputy assistant secretary of defense for European and NATO policy. https://www.defensenews.com/opinion/commentary/2019/10/16/a-compromise-is-needed-on-trans-atlantic-defense-cooperation/