17 août 2020 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité

Budget and pandemic present challenges to Russia’s defense industrial base

By: Fenella McGerty

The two Russian defense companies in this year's Top 100 list — air defense missile systems manufacturer Almaz-Antey and weapons developer Tactical Missiles Corporation JSC — have again fallen in rank.

Almaz-Antey has fallen to 17th place from 8th and 15th in 2018 and 2019 respectively. Similarly, Tactical Missiles Corporation JSC has fallen to 35th place from 25th and 32nd in 2018 and 2019 respectively.

The falling revenues of the companies this year reflect the difficult market conditions these enterprises are operating in as a result of the impact of COVID-19 on government budgets.

Even before the pandemic and the consequent contraction in economic output emerged, the outlook for Russian defense spending was already subdued in light of persistently low oil prices in 2019. Domestic spending was further constrained this year as the oil price fell below $20 per barrel in April, with the projected average price for the year reaching just $40 per barrel.

The International Monetary Fund forecasts a 6.6 percent contraction in Russia's real gross domestic product this year as lockdown measures to prevent the spread of COVID-19 subdued domestic and international economic activity, the latter further weakening global energy demand. The 4.1 percent growth projected for 2021 means the Russian economy will only return to pre-pandemic output in 2022.

Last month, as part of wider measures to offset the bleaker fiscal setting, the Russian Ministry of Finance proposed a 5 percent reduction in financing for the state armament program over the next three years. Under the new plans, the 20 trillion rouble (U.S. $271 billion), 10-year military appropriations program (known as GPV 2027) that runs to 2027 covering defense procurement, repairs, research and development, and infrastructure investment will be reduced by a total of 225 billion roubles between 2021 and 2023. Wider defense funding could be reduced by as much 323 billion roubles.

The previous state armament program (GPV 2020) saw significant increases enacted to defense investment between 2011 and 2016 as the country pursued ambitious modernization targets. As a proportion of GDP, the official Russian defense budget peaked in 2015 at 3.8 percent. If one includes wider defense spending items such as military pensions, social support and housing, total Russia expenditure accounted for as much at 4.8 percent of GDP that year. This period of significant defense investment helped to recover some lost ground from the previous two decades.

Progress was remarkable but by no means comprehensive, with strategic nuclear forces and defense aerospace surpassing modernization targets, while maritime and land forces fared less well. Pockets of advanced capability — e.g., air defense, weapons, combat aircraft — evolved alongside less efficient entities that failed to deliver against the ambitions of GPV 2020.

Nonetheless, as Russia approached the overarching target of 70 percent “modern” equipment within the armed forces inventory, defense spending increases slowed and the country moved from a period of dramatic capability buildup toward a sustainment phase — a move further presaged by wider economic constraints at the time

As such, GPV 2027 is less ambitious than GPV 2020, and annual defense budget allocations have reflected this. Russian defense spending has been stagnant in real terms since 2017, as sanctions impacted government finances, energy revenues remained subdued and modernization ambitions were deemed close to fulfillment.

Official projections of the budget for national defense saw slightly stronger growth in 2021 and 2022, although this was proposed in the months before the full economic ramifications of the pandemic were realized. Russian companies therefore face a tighter domestic market — as indeed will most countries in the wake of the pandemic — while the burden of debt has stifled investment in new technologies and R&D. This lack of funds to invest in research has created a further challenge for companies facing increasing political pressure domestically to diversify production efforts toward the civil market.

The reported moves to restructure defense industry debt will ease some of the stress on companies and provide some temporary bandwidth with which to focus on investment. However, such moves will further constrain domestic defense spending, as funds to absolve debt will inevitably squeeze investment elsewhere in the budget.

Perhaps on the positive side, the further weakening of the rouble against the dollar in 2020 has the potential to provide Russian defense equipment with an added price advantage in global defense markets and to facilitate exports. The comparatively cheaper kit will appeal to countries that find they have less investment funds at their disposal than a year ago. As competition in export markets intensifies and funding tightens, buyers may find they can demand greater industrial participation, partnership and technology transfer in moves to bolster self-sufficiency and resilience. Markets which have previously shown preference for Western equipment may find such capabilities are no longer affordable with Russia's relative willingness to offer favorable exchange rate agreements and flexible financing terms, offering a further advantage in constrained export markets.

Fenella McGerty is a senior fellow for defense economics at the International Institute for Strategic Studies.

https://www.defensenews.com/opinion/commentary/2020/08/17/budget-and-pandemic-present-challenges-to-russias-defense-industrial-base

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1 mai 2019 | International, Aérospatial

Boeing's MQ-25 refueling drone moved to air base for flight testing
By Allen Cone April 30 (UPI) -- Boeing's prototype MQ-25 unmanned aerial refueling drone is so huge it needed help from government agencies in Missouri and Illinois to move 40 miles. With assistance from law enforcement in both states, a truck carried the aircraft -- which is the size of an F/A-18 Super Hornet fighter -- from Boeing's technical plant at St. Louis's Lambert International Airport across the Mississippi River to MidAmerica St. Louis Airport, a small regional airport next to Scott Air Force Base in rural Illinois. The semi traveled on side roads and at 5-10 mph for much of the trip Sunday night, KDSK-TV reported. Temporary road closures were in Edwardsville, Marine and Lebanon as the jet moved through. The plane arrived before 6 a.m. Monday, KMOV-TV reported. The regional airport is in less crowded airspace, which "gives us some flexibility in how we can fly," Dave Bujold, the Boeing program manager overseeing drone project, told The Drive. Boeing plans to test fly the MQ-25 Stingray, known as known as T-1 or "Tail 1," before the end of the year. But first it must pass ground taxiing tests and the Federal Aviation Administration must certify the aircraft and grant clear airspace for it to fly. Ground control stations are being installed at the airport. The Boeing test aircraft later will undergo testing on the East Coast. The Navy will also hoist it onto an aircraft carrier for deck handling testing. "By the time the Navy's assets are jumping in the air, we will already have had thousands of test hours on the ground and hundreds in the air," Bujold said. The first Navy aircraft is scheduled to fly in fiscal year 2021. Last August, Boeing was awarded a $805 million contract to build four aircraft for the U.S. Navy. The drones, which won't carry weapons, will be based on aircraft carriers to refuel other aircraft mid-flight, including the Boeing F/A-18 Super Hornet, Boeing EA-18G Growler and Lockheed Martin F-35C fighters. "The MQ-25 program is vital because it will help the U.S. Navy extend the range of the carrier air wing, and Boeing and our industry team is all-in on delivering this capability," Bujold said. Curtiss-Wright's Defense Solutions, which has been a Boeing contractor for 60 years, announced last week it has been awarded a contract by Boeing to supply data technology systems for the program. https://www.upi.com/Defense-News/2019/04/30/Boeings-MQ-25-refueling-drone-moved-to-air-base-for-flight-testing/5091556634478/
30 janvier 2019 | International, Aérospatial

Iwakuni Marines use 3D printers to revolutionize maintenance for fighter jets
By JAMES BOLINGER | STARS AND STRIPES MARINE CORPS AIR STATION IWAKUNI, Japan — Using 3D printers, Marines based in southern Japan created two products that reduce the time it takes to repair F/A-18 Hornets and may save the Defense Department money. Called an engine ship kit, the first innovation is a set of plastic clips and plugs to prevent oil and hydraulic fluid leaking from aircraft engines removed for repairs. The other is a tool that helps maintainers grease the bearings on the F/A-18's high-speed Gatling gun. Designed by Marines from MCAS Iwakuni's Marine Aviation Logistics Squadron 12, the engine ship kit will have an immediate impact on operations, squadron commander Lt. Col. Javier Garcia recently told Stars and Stripes. The kit eliminates the need for maintainers to travel to austere locations to drain oil and hydraulic fluids so an engine can be taken safely back to Iwakuni for repair. The plastic drain plugs prevent the fluid from leaking and the clips ensure the plugs are not dislodged as the engine is readied for transport. The kit is the brain child of 1st Lt. Simon Miller and Chief Warrant Officer 3 Mark Willems, who needed to get a broken F/A-18 engine from Wake Island to MCAS Iwakuni late last year. The engine began to leak while a C-130 crew tried to load it, Garcia said. In the past, a team of maintenance Marines would have traveled to the location to prepare the engine for safe transport, but that takes away from their mission at MCAS Iwakuni. To solve the problem, Willems had the idea of creating plugs that would stop the leaks. Miller created the pieces using 3D drafting software and MALS 12's new 3D printers. “I'm not really sure why no one thought to make this kind of kit before, but this design is going to have an impact across the Navy and Marine Corps,” Garcia said. The same team behind the engine ship kit also created a tool that makes it easier for maintenance Marines to grease the bearing on the F-18's M61A Vulcan, a Gatling-style rotary cannon that can fire 6,000 rounds a minute. The bearing on the cannon must be packed with grease every 30,000 rounds, a job that used to take two Marines more than 30 minutes, said Cpl. Christian Smellie, an aviation life-support systems technician who works at Iwakuni's 3D printing lab. Full article: https://www.stripes.com/news/pacific/iwakuni-marines-use-3d-printers-to-revolutionize-maintenance-for-fighter-jets-1.566446
6 mai 2019 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité, Autre défense

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