US May Need to Nationalize Military Aircraft Industry, USAF Says

The United States might need to nationalize parts of the military aviation sector if the Pentagon does not come up with new ways to buy planes that stimulate more competition in private industry, a top Air Force official warned.

Will Roper, the head of Air Force acquisition, spoke Tuesday morning as the service finalizes ambitious plans to buy a new series of combat fighter jets called the Digital Century Series.

“We have multiple vendors who can still build a high-end, tactical platform,” Roper told reporters. “I think it's really important that we find a new model where there are no big winners and no big losers, but continual competition.”

Lockheed Martin and Boeing are the only U.S. companies that make tactical fighter jets. Boeing’s F-15 Eagle and F/A-18 Super Hornet are considered a generation behind Lockheed’s F-22 Raptor and F-35 Lightning II. Boeing and Sweden's Saab are building the new T-7 pilot training jet.

Northrop Grumman is the only U.S. manufacturer of a heavy bomber. Boeing’s KC-46 is the only aerial tanker in serial production and Lockheed’s C-130 Super Hercules tactical transport is the only military cargo plane in production. There are no strategic, long-range military transports in production.

Roper hopes his Digital Century Series plan will attract a new generation of engineers to the defense sector and provide a model for buying different types of military aircraft.

“Technical talent is at a premium,” he said. “If the design opportunities are so few and far between that joining a defense company means you may get to design one thing in your career ... — and that's if you're lucky — that that talent will go elsewhere into commercial innovation where the opportunities are more plentiful.”

Roper’s project envisions developing and buying plans at a much quicker rate than traditional tactical fighters which often take a decade before they are produced in large quantities. By that time, technology is already dated and brand new planes must undergo costly and time consuming upgrade projects.

The Digital Century Series is a throwback to the U.S. military’s “Century Series” fighter jets built in the 1950s and 1960s. His hope is that new companies emerge and disrupt the sector, much like Elon Musk’s Tesla electric vehicles have disrupted the automobile industry.

“If our industrial base collapses any more, we'll have to nationalize advanced aviation and maybe other parts of the Air Force that currently are competitive,” Roper said. “But I also am holding out some hope that if we open up the door to do design frequently, and build things in smaller batches that are between X-planes and mass production, that we will eventually encourage an innovative company to cross over into defense, or companies to start up that just want to build really cool airplanes or satellites, because they don't have to own the big production lines and tooling workforce, which is the only way to work with us today.”

But one analyst says other countries — Britain, France, Japan, Sweden — have proven that they can keep a single combat aircraft manufacturer alive without formally nationalizing it. Nationalization is “an admission that they have failed miserably and I don’t think they have failed,” said Richard Aboulafia, vice president of analysis at the Teal Group aviation consulting firm. 

“The arsenal system was great for the Civil War, where you don’t have to respond to market needs in terms of talent and corporate organization, but the real world of aerospace calls for, at the very least, a public-private partnership — nationalization being, kind of the land of the lost,” Aboulafia said.

The defense industry has contracted in recent years following a series of high-profile mergers and acquisitions, the latest being the April mega-merger of United Technologies and Raytheon, which followed UTC’s acquisition of Rockwell Collins. L3 Technologies merged with Harris last year.

Roper said he has been surprised that other top defense officials seem unworried about the shrinking defense industrial base. “It's not because the defense industrial base has gotten worse, it's just programs are so few and far between that to be any long-term partner with us in defense tech, you'd have to have a pretty diversified portfolio,” he said.

Roper believes his Digital Century Series plan will lower the military’s long-term costs. Since becoming the Air Force’s top weapons buyer in early 2018, he has been looking for ways to lower the lifetime costs of owning planes. Roper compared buying weapons to getting a free or deeply discounted mobile phone from a wireless provider which then locks the customer into a long-term service contract. 

“I believe it's going to be cheaper to procure airplanes this way than it will be with the major production line, not because the per unit price will be cheaper ... but because the total price of ownership is lower, that we will get out the heavy modernization and sustainment costs that really start piling after Year 15,” he said..

Roper has pushed for companies to build weapons with open technology, so the Air Force isn’t forced to repeatedly pay the company that made a specific weapon for upgrades over its lifetime.

“Everything has to change,” Roper said. “This 21st-century challenge we have simply flies in the face of Cold War acquisition. We're going to have to use technology available to everyone. We're not going to be able to own it and have it be exclusive for us. We've got to create a business model that … [the] defense industry to design systems that are open for technology, especially digital technology that again will be open to everyone.”

So how does the defense industry feel about Roper’s plan to radically change the way the Air Force buys weapons?

“The Digital Century Series may help America win the tech war with China while making it more likely our military loses in a real war,” defense industry analyst and consultant Loren Thompson wrote in Forbes earlier this year.