What got people talking at Air Force Association's big show; Q&A with Saab CEO; Mattis wants to improve relations with industry, and a lot more.
There were a heck of a lot of blue suits — particularly young enlisted airmen — at this week’s Air Force Association conference in suburban Washington. If you’re scratching your head at that (“Uh, it’s an Air Force trade show — aren’t there always lots of airmen?”), let me tell you that the past dozen Air, Space and Cyber conferences have seen ebbs and flows in official service participation.
This year, I’m told, Gen. Dave Goldfein, the Air Force chief of staff, instructed his wing commanders to make it a point to get their airmen to the show for professional development. And in the exhibit hall and outside the ballrooms-turned-panel discussions, it was not uncommon to spot three- and four-star generals chatting with senior airmen and tech sergeants.
In the exhibit hall itself, the conversation was a bit different. In a week when Northrop Grumman announced it had agreed to buy Orbital ATK for $9.2 billion, much of the conference buzz was about Boeing. Specifically: which company will Boeing acquire to keep pace with Northrop and Lockheed Martin, which purchased Sikorsky in 2016? (Also United Technologies plans to buy Rockwell Collins for $30 billion.) Leanne Caret, the CEO of Boeing defense, told CNBC that the firm is a “buyer” looking to make an acquisition.
For their part, Boeing executive waved off the rumors and tried to focus conversation on their bid for the Air Force’s T-X pilot training jet. They had help from a truly massive, full-scale wooden mockup of the jet, which dominated Boeing’s large display area at AFA and, visually at least, appeared to dwarf its two prime competitors, the Lockheed T-50 and Leonardo T-100.
Also drawing a lot of talk: Will the Air Force cancel plans to buy a new JSTARS surveillance plane? All of the big companies have entered bids to replace the aging aircraft, which track movement on the ground. Service leaders said they are reviewing those bids — but also looking at other options to do the mission than a new big plane.
Defense Secretary Jim Mattis even weighed into the debate at AFA, saying he and Goldfein were talking about “new ways to do the JSTARS mission” before Mattis walked up to the podium for his address to the convention.
“I’m eager to hear these efforts to help one another, the other services — no service doing anything that reveals the other service being in a weaker position. We’re out to make each other stronger to gain that synergy,” the secretary said.
What will they do? Stay tuned.
You’ve reached the Defense One Global Business Brief by Marcus Weisgerber, with help this week from Caroline Houck. As always, send you tips, feedback and random thoughts to email@example.com or on Twitter @MarcusReports. Check out the Global Business Brief archive here, and tell your friends to subscribe!
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Mattis Wants Better Relations With Industry
The secretary also took pains to woo industry at AFA. He described his first meeting with defense executives upon returning to the Pentagon in January. “I became aware that some people thought, ‘Well, you can’t really do that,’” Mattis recalled Wednesday at the AFA conference. “I said, ‘Why not? They’re Americans, aren’t they? Last time I checked they were on our side.’”
That received thundering applause from the hundreds (or more) industry representatives in the audience.
“I think that the most important thing is that we open the lines of communication in a way that consider industry — American industry, and allied industry where it’s appropriate — as partners in this effort. I think the most important thing is to get the communication going again in the areas that it’s languished,” Mattis said.
The retired Marine general said some areas of the Pentagon have good relations with the defense industry, but others not so much.
“I want to encourage all of you — strictly within the ethical regulations — do not have imaginary legal restrictions on your leadership responsibility to find the best bang for the buck, to find the most far-reaching innovations that are out there,” he said.
Mattis mentioned his three years living in Silicon Valley before returning to the Pentagon earlier this year.
“I want you all engaged in this and to make certain the lines of communication are open in a way that we can aggressively and swiftly take advantage of the opportunities that we see developing around us in the private sector,” he said.
The Air Force’s Role in Protecting the Homeland
On the sidelines of AFA, I moderated an interesting panel for Defense One that looked at the future of the Operation Noble Eagle, the Air Force and Air National Guard Fighter jets that sit alert ready to respond to Russian bombers or wayward private planes. One of the big takeaways: there needs to be a better way to detect aircraft. You can watch the entire panel via Facebook here.
Q&A with Saab CEO Håkan Buskhe
Sweden’s Saab has been a small player in the U.S. defense market for decades but has gained increased attention in recent years for its partnership with Boeing to jointly build a pilot training jet (the one described above, rendered massively in wood for AFA). The two companies are also teaming on a artillery project. Saab’s Håkan Buskhe chatted with me about the company’s partnership with Boeing and plans to open more manufacturing facilities in the U.S.
Q. Beyond Boeing, what type of opportunities are you looking at here in the United States?
A. If I start with the cooperation we have with Boeing, first of all it’s something that works extremely well. We have a great respect for each other, but we also have a common view on what is needed to be done and design ideas. At the same time we are also striving, both Boeing and Saab, to reduce lead times. I think it’s amazing to see, I don’t think many people though that we had a chance to really from design in November 2013 to be able to fly three years after. And we have concluded all the test flights, everything. I think that shows that this cooperation is great. We have some other ideas as well. One specific one is that we have a rocket launcher for [Boeing’s] Small Diameter Bomb that is going to offered to [the U.S. Army and globally]. That will totally change the artillery capability.
We have roughly 1,000 employees in the United States. We’re doing a lot of activities when it comes to sensors, especially radars. We do camouflage and training. We also on the civil side … we have a fairly big activity on air traffic management. We have our own activities in 45 countries, but we have said that [some] are more important than others, for example the United States, U.K. and Australia — do more investments, more built up of capability to utilize that as our home base. We are looking into other possibilities also in the U.S.
Q. We now have a very pro-business administration, pro Buy American administration as well, has that caused you to rethink your plan for the U.S.?
A. We built up this strategy already in 2014. We see great possibilities for building up our capability, both when it comes to research and development and production in the U.S. … We think to create an even stronger base in the United States is important to us. More or less in each country where we operate around the world today have increased their focus on getting more business into their own countries, so from that perspective the U.S. is not unique. We’re also trying to attract business to Sweden. I don’t think this is totally new. I think it’s more understandable that that is happening. As long as you see that you have a competitiveness, that you can export your products also from the country where you operate.
Q. Has Boeing pledged to do any partnerships with you in Sweden?
A. We have to accept that you have a $600 billion market. We have a $4 or $5 billion market. I think that explains a little bit where we are focusing with our cooperation. Of course we are looking forward to see the possibility to sell the T-X in Sweden, but also other countries. There’s a strong relationship between the Swedish government and the U.S. government when it comes to defense. But we need also to be realistic how we set things up due to where the grability of the market.
Q. You have about 1,000 jobs here now. Do you have an estimate on how many jobs the new T-X jobs would add to that?
A. When everything is up and running and with other things that I think we will do in that facility, I think we’re talking about another 1,000-something, without saying exactly how much of that is T-X.
Lockheed Launches Satellite Family
Lockheed Martin unveiled a new family of four satellite buses, ranging from the LM 50, a nanosatellite bus ideal for testing operational concepts and other scientific demonstrations, to the 5,000-pound LM 2100, a rebranded and improved version of the firm’s older A2100 bus.
Lockheed spent $300 million over the last five years to modernize its large satellite fleet, consolidate lessons from building hundreds of custom satellites, and start pushing those improvements down to a family of standardized smaller buses. “Instead of building one-off satellites for each mission requirement, we now have established ... a baseline of commonality,” Kay Sears, Lockheed’s vice president of business development for space systems, told reporters Tuesday at AFA. That means: “Common components that can go into each bus line that reduce cycle times and production costs, and improve reliability because we’re able to leverage our supply chain across all of the bus lines.”
Recall: In July, we brought you early news about Lockheed’s push to develop small satellites — that evolved LM 300 bus became the LM 400, the second-smallest tier in the new family of systems. And last month, we wrote about the company’s new satellite factory.
A Budget Report To Check Out
In May when the Trump administration sent a 2018 budget proposal to Congress, senior Pentagon officials said not to expect a large military buildup — the kind Trump talked about on the campaign trail — until 2019. So what does the military want to buy with the $125 billion it asked lawmakers to approve for new weapons and equipment? A new report by Katherine Blakeley of the Center for Strategic and Budgetary Assessments, examines just that, and how the procurement accounts stack up against budgets in recent years.
Bonus: As the Pentagon prepares to start operating under a continuing resolution, here’s a new Government Accountability Office report on: Budget Uncertainty and Disruptions Affect Timing of Agency Spending. Defense officials hate CRs, which have covered at least some portion of 36 of the past 40 years.
Three Defense CEOs Make Fortune’s Most Powerful Women
Lockheed’s Marillyn Hewson, General Dynamics Phebe Novakovic and Boeing’s Leanne Caret all made the Fortune 2017 Most Powerful Women. While Hewson and Novakovic are regulars on the list, Caret, the CEO of Boeing’s defense business, is a newcomer, ranking at No. 30. Hewson is No. 3 and Novakovic is No. 9. The online version of the list only goes back to 2013, but we’re told Caret is first woman from Boeing in nearly 20 years to make it on the list.
- Former Navy Secretary Ray Mabus has been appointed to a new board of directors position at Unimed Holdings, which sells medical and pharmaceutical supplies to the maritime industry.
- Marc Lindsley was named vice president of Leonardo’s T-100 program, leading the firm’s pursuit of the Air Force’s T-X pilot trainer program. Lindsley previously worked on Northrop Grumman’s T-X, in which the company built a new plane, but ultimately did not place a bid.
- Erik Pierce, chief of staff to former Air Force secretary Deborah Lee James, is now at Lockheed Martin, working in Government Affairs on F-35 and Air Force programs.