Spring 2016 Industry Study Final Report Aircraft
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SPRING 2016 INDUSTRY STUDY FINAL REPORT AIRCRAFT INDUSTRY The Dwight D. Eisenhower School for National Security and Resource Strategy National Defense University Fort McNair, Washington, D.C. 20319-5062 AIRCRAFT INDUSTRY STUDY 2016 ABSTRACT: The 2016 Eisenhower School Aircraft Industry team analyzed the European military aircraft industrial sector and assessed emerging implications for the United States (U.S.) government and the Department of Defense (DOD). The team conducted research using a variety of methods consisting of a guest lecture series, visits to key domestic and international defense firms, and independent research. For this study, the European military aircraft industry was divided by market segment namely; fighter aircraft, transport, and rotorcraft. The team evaluated each market segment based on their development, production, and exportability leading to insights on current and emerging trends involving European and transatlantic collaboration. Based on this analysis, the group identified opportunities and challenges regarding the participation of U.S. firms in the industrial dynamics of each market segment and emerging implications for the U.S. government and DOD. Seminar Members: BGen Khaled Alkanderi, Lt Col Sean A. Bradley, Kuwait Air Force U.S. Air Force Lt Col Kyle R. Burress, Col Romeo Jerome M. Dirilo, U.S. Marine Corps Reserve Philippine Air Force Col Robert S. Hall, LTC Joseph R. Kurz, U.S. Air Force U.S. Army Ms. Rosana Margetson, Mr. Mitchell R. Moss, Dept. of the Air Force Dept. of State Col Jacek Pszczola, Ms. Shannon M. Ross, Poland Air Force Dept. of State CDR Michael D. Snowden, CDR Kristen D. Vechinski, U.S. Navy U. S. Navy Mr. John E. Wallin, Dept. of the Air Force Dr. Sorin Lungu, Faculty Lead ii INDUSTRY FIRM VISITS Fixed-wing Aircraft Prime Integrators and Manufacturers Boeing BDS, St. Louis, MO F/A-18E/F, EA-18G, F-15E Lockheed Martin Aeronautics , Fort Worth, TX F-35, F-16 Lockheed Martin Aeronautics, Marietta, GA C-130J Manching Eurofighter, Munich, Germany Eurofighter The Airbus Group, Toulouse, France Commercial & A400M Rotary-wing Aircraft Prime Integrators and Manufacturers Boeing Mobility, Ridley Park, PA V-22, CH-47 Bell Helicopters, Amarillo, TX V-22, UH-1Y, AH-1Z, Model 525 Aircraft Components and Missile Systems Moog Components, Blacksburg, VA OEM Parts Missiles (Air-to-Air, Surface-to-Air, MBDA, Schrobenhausen, Germany Air-to-Ground) GUEST LECTURES Richard Aboulafia Topic: World Aircraft Industry Vice President, Analysis, Teal Group Corporation W. Alexander Vacca Topic: Defense Budgets and Corporate Strategies & Aircraft Design Corporate Director, Business Analysis, Northrop Grumman Corporation Brian Kough Topic: Commercial and Military Fleet Trend & Maintenance, Repair, and Overhaul Demand Director of Forecasts & Analysis, Aviation Week Intelligence Network James Hasik Topic: Transatlantic Defense Industrial Dynamics Nonresident Senior Fellow for Defense, Brent Scowcroft Center on International Security, Atlantic Council iii AREAS OF STUDY Department of Defense and Defense Industrial Base Relationship Unmanned Aerial Systems: Market and Industrial Dynamics Rotorcraft: Market and Industrial Dynamics International Arms Sales Dynamics Defense Industrial Cooperation: Joint Ventures and Strategic Alliances in the Defense and Aerospace Sector International Defense Offset Dynamics Transatlantic Defense Market and Industry Analysis European Military Aircraft Industrial Cooperative Programs F-35 as an International Collaboration Program Competing via Business Models, Boeing and Airbus Cybersecurity: Challenges and Implications for the Defense & Aerospace Industry Innovation in the Defense and Aerospace Industry Maintenance, Repair, and Overhaul in the Commercial & Military Aircraft Industry NATO Eastern Europe Aircraft Industry Dynamics: Challenges & Opportunities France’s Military Aircraft Industry Dynamics United Kingdom’s & Italy’s Military Aircraft Industry Dynamics German Defense Market & Military Aircraft Industry Dynamics Dynamics in the Russian & Chinese Military Aircraft Industries iv TABLE OF CONTENTS 1. INTRODUCTION ................................................................................................................. 1 Thesis .......................................................................................................................................... 1 Research Methodology and Limitations ..................................................................................... 1 Disclaimer ................................................................................................................................... 2 2. STRATEGIC ENVIRONMENT SURROUNDING THE EUROPEAN AIRCRAFT INDUSTRY .................................................................................................................................... 3 Security Situation in Europe ....................................................................................................... 3 NATO Security Commitments .................................................................................................... 4 Slow Global Economic Growth and European Defense Budgets ............................................... 6 Cost/Complexity of Modern Aircraft Programs ......................................................................... 7 European Defense Industrial Base .............................................................................................. 7 Analysis of Europe’s Defense Industry. ................................................................................. 13 3. EUROPEAN MARKET STRUCTURES .......................................................................... 19 Introduction ............................................................................................................................... 19 European Only Collaboration.................................................................................................... 20 Transatlantic Collaboration ....................................................................................................... 23 National Only Markets .............................................................................................................. 25 European Countries with National Only Market....................................................................... 27 France. ................................................................................................................................... 27 Sweden. .................................................................................................................................. 30 4. EUROPEAN FIGHTER AIRCRAFT IN DEVELOPMENT OR PRODUCTION ...... 36 Introduction. .............................................................................................................................. 36 Eurofighter Typhoon ................................................................................................................. 36 Eurofighter Consortium of Countries and Companies .......................................................... 36 Eurofighter Design and Capabilities ..................................................................................... 39 Lockheed Martin Joint Strike Fighter, F-35 .............................................................................. 40 F-35 Lightning II Consortium ............................................................................................... 40 Prime Companies .................................................................................................................. 40 Partner Countries .................................................................................................................. 41 Joint Strike Fighter Design and Capabilities ........................................................................ 43 Dassault Rafale. ......................................................................................................................... 44 v Saab Gripen. .............................................................................................................................. 46 5. EUROPEAN ROTORCRAFT ........................................................................................... 50 Rotorcraft Structure ................................................................................................................... 51 Conduct Within the European Rotorcraft Market ..................................................................... 54 Performance within the European Rotorcraft Market ............................................................... 56 Overall Assessment of European Rotorcraft Market ................................................................ 58 6. EUROPEAN TRANSPORT/TANKER AIRCRAFT ....................................................... 59 U.S. National Defense Market and the C-130 ........................................................................... 59 The European Collaborative Defense Market and the A400M ................................................. 60 Competition at the U.S. and European Industry Level ............................................................. 60 Leveraging Industry Competencies ....................................................................................... 60 Lockheed Martin: Leveraging Defense Competencies for the C-130 ................................... 61 Airbus Defense and Space: Leveraging Civil Aircraft Competencies for the A400M .......... 62 Evolving Business Models: