A specialist paper by the Royal Aeronautical Society
Aerospace and the UK
Defence Industry and
R OYA L A E R O N AU T I C A L S O C I E T Y
This paper was prepared by Professor Keith Hayward, Head of Research at the Royal Aeronautical Society. He would like to thank members of the Society’s Specialist Committees who commented upon early drafts of this paper. However, the analysis and views expressed in the paper are his and do not represent those of the Society as a whole.
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Royal Aeronautical Society 4 Hamilton Place, London W1J 7BQ, UK
Aerospace and the UK
Defence Industry and
A Specialist Paper prepared by
Prof Keith Hayward, FRAeS
Head of Research at the Royal Aeronautical Society
Prof Hayward is Head of Research at the Royal Aeronautical Society. He is the author of several books and articles
on defence and aerospace and has been a consultant to public and private agencies in the UK, US and Europe.
In publishing its Defence Technology Strategy, the UK Ministry of Defence has now completed the first stage of its ‘roadmap’ for the future of the UK defence industrial base and its main technological concerns. The MoD framework provides a set of guiding principles and an indication of priorities for both the MoD and industry. As such, they have been welcomed by industry as a means of guiding its investment with a higher degree of confidence than hitherto and enabling companies to play their full part in meeting MoD requirements over the next decade.
This Discussion Paper examines the implications for the UK aerospace sector of the MoD’s strategy. It outlines the main features of the two key MoD documents1but its main focus is on the implications of the Defence Technology Strategy on the aerospace sector. These will be profound: the MoD is unlikely to invest in conventional aircraft platform technology beyond the Typhoon and F-35. There will be investment in mission systems and complex weapons technology acquisition as well as in systems integration. Materials technology is also seen as a key cross-cutting investment. Research will also be focused on improving through life support and maintenance. The strategy confirms the movement towards unmanned systems and networks.
Industry will be expected increasingly to support its own applied research in part shaped by reference to the MoD’s now published guidelines. However, there are unresolved issues relating to the long-term stability of the MoD plan and UK companies may continue to find greater opportunities offshore with the risk of increased dependence on particularly the US market with its restrictions on technology transfer.
The DTS poses a major challenge to the conventional view of an aerospace professional. Working on defence projects will remain a stimulating and rewarding intellectual career — indeed, the more so given the complexity of some of the high level systems envisaged for the future. The demand will be for flexible, adaptable professionals, perhaps with a wider range of educational experience than the traditional aerospace engineer. However, maintaining the human base of the UK defence industry will not come cheap to maintain real capability, but it should be an essential element in a long-term strategy
While the MoD’s view of the future is based on a solid diagnosis of the trends and developments in the defence industrial sector, the prescription offered in terms of technology investment is more geared to the MoD’s needs and concerns. While this may be understandable, there is a risk overall of some diversion between the MoD’s requirements and those of UK-based industry.
While the Royal Aeronautical Society is not directly involved in the evolution of UK defence industrial and technological policy, it does have a role in monitoring events on behalf of its members, contributing to the debate on policy and, through its specialist committees, helping to shape views about emerging technologies.
1Ministry of Defence, Defence Industrial Strategy, December 2005 and Ministry of Defence, Defence Technology Strategy, October 2006.
Aerospace and the UK
Defence Industry and
Background ... 5
The UK Defence Technology and Industry Strategies —
Main Themes ...5
The DTS — A 25-year Outlook ...6
Crosscutting Capabilities Technologies ... 7
Aerospace in the DIS and DTS ... 7
International Collaboration, Market Access and
Technology Transfer ... 9
The Future of the Aerospace Professional ...10
Final Observations ...11
4DTS, A1.1 2Ministry of Defence, Defence Industrial Strategy, December 2005 and
Ministry of Defence, Defence Technology Strategy, October 2006. 3A Society view on the DIS was expressed in a memorandum submitted to the House of Commons Defence Committee, Seventh Report of Session 2005-06 Defence Industry Strategy, HC 824, May 2006.
1. The MoD has now completed the first iteration of its long-term strategy for the UK defence technology and industry base (DTIB). Its approach to the industrial component was outlined in the Defence Industry Strategy (DIS) paper of December 20052. The DIS has been now complemented by the Defence Technology Strategy (DTS) published in October 2006. Together these documents and other ministerial statements set out a 20-25-year perspective for UK defence procurement and research investment. This is the most comprehensive policy for the DTIB ever published by the MoD. While not necessarily offering a detailed prescription for future procurement decisions, the DIS and DTS present a framework, a set of guiding principles and an indication of priorities for both the MoD and industry. As such, they have been welcomed by industry as a means of guiding its investment with a higher degree of confidence than hitherto and enabling companies to play their full part in meeting MoD requirements over the next decade.
2. This paper discusses the implications for the UK aerospace industry of the MoD’s DTIB policy as expressed in the DIS and the DTS3. It briefly recapitulates the main themes of the two documents with specific reference to the aerospace sector. However, the main focus is on the 20-25-year technology strategy and the likely direction this implies for the UK aerospace industry. A 50-year perspective is not unrealistic given that the F-35/JSF will be in front line service for much of this period and Unmanned Airborne Systems (UAS) concepts will shape air power delivery whatever the specific platform characteristics they may possess. 3. As the UK sets out to celebrate the first 100 years of manned aviation and of the first steps in the evolution of a domestic aircraft/aerospace industry, the following conclusions offered may be unsettling: the future of combat aviation will certainly confirm the shift away from aerospace as such to airborne systems, with conventional manned fixed and rotary wing aeroplanes largely
providing tactical and logistic support. This will imply on the one hand a different industrial supply chain and on the other domestic vulnerability to increased global competition. The DTIB strategy will undoubtedly help UK industry to make the necessary adjustments and transition to a new business model, but the process will not be easy nor without casualties.
2.0 THE UK DEFENCE TECHNOLOGY AND
INDUSTRY STRATEGIES — MAIN THEMESThe changing context of defence technology acquisition 4. The defence environment is changing and at faster rate than at perhaps any time since the end of WW2. As the DTS puts it: “Never has there been greater uncertainty in the nature of the threat faced by the UK, nor has that threat adapted and changed so rapidly. This demands rapid evolution in our response, both tactically and in the technologies we deploy to combat the threats.”4The DIS “provided greater transparency of the MoD’s future defence requirements and, for the first time, set out those industrial capabilities needed to ensure we can operate our equipment in the way we choose.” The DTS is designed to provide a “highly innovative, agile and flexible” approach to defence research. The key word being ‘strategic’, with an emphasis on meeting the MoD’s ‘core needs’, which includes a ‘clear emphasis’ on Through Life Capability Management (TLCM) and a ‘comprehensive engagement’ between MoD and its collaborative partners and its technology supply base.
5. Underpinning both the DIS and the DTS is the concept of Appropriate Sovereignty. The MoD recognises that a significant proportion of its equipment needs will be satisfied by overseas suppliers or foreign-owned companies located in the UK. Foreign ownership per se is not a problem for the MoD as long as the work and technology remains on on-shore. The DIS tries to tell industry “very clearly where, to maintain our national security and keep the sovereign ability to use our Armed Forces in the way we choose, we need particular industrial capabilities in the UK.” Appropriate Sovereignty has three dimensions: strategic
The two current major military aerospace programmes are Typhoon (left), now entering service, and F-35 Lightning II (right) which made its first flight in December 2006.
assurance (capabilities which are to be retained onshore as they provide technologies or equipment important to safeguard the state, e.g. nuclear deterrent); defence capability (where the MoD requires particular assurance of continued and consistent equipment performance); and strategic influence (in military, diplomatic or industrial terms), as well as recognising potential technology benefits attached to these which have wider value.5 6. But as the DIS makes clear, even where the MoD would like an industrial capability to be sustained in the UK for strategic reasons, that does not necessarily preclude global competition in that sector for some projects. The MoD cannot afford to maintain a complete cradle-to-grave industrial base in all areas. Industry also will make independent investment decisions and an important indigenous capability as a result may disappear. Equally, the MoD does not aim to restrict the scope for international co-operation and competition where this is appropriate. The DIS does not seek to set out a preferred route to international restructuring. This is to be left to industry. Nor does it set out a preferred route to international restructuring as this will also be left to Industry. What is missing is a clear view or even some indication from the MoD of its vision for the future in terms of general structure of the UK Defence Industrial Base. The MoD has provided elements of a strategy but it has not looked forward through the next 10-15 years to assess the consequences. This would have provided an additional and vital perspective for Industry’s future. Defence is a long-term business and can change rapidly as circumstances change but a view, however tentative from Industry’s major customer, would have helped companies to understand the long-term strategic direction of the MoD. Total Life Cycle Management, partnership and a new business model
7. A key feature of the new policy is the adoption of a partnership approach to both equipment development and production that fully embraces TLCM concepts. The DTS will also increasingly require industry to accept a greater share of the risk of applied research and technology demonstration. The MoD has recognised the limitations of a pure competition centric model of defence procurement. The role of competition to encourage efficiency and value for money remains important but only when appropriate. Instead, the MoD is to develop long-term partnerships with major companies, primarily though not exclusively with traditional prime contractors. This reflects in part the rapid changes in the defence industrial environment since the end of the Cold War, especially the increasing globalisation of defence companies and the importance of civil technology to modern defence systems, particularly in the areas of electronics and information technology. Changing times will force the adoption of new business models on the part of both supplier and customer.
8. Moving the focus of procurement from delivering a simple ‘end product’ to a fully supported product life cycle implies a radical change in the UK defence business model and a different approach to extracting the best return economically and industrially from national investment in defence procurement. UK industry should have no illusions that this will have a profound impact on much of the supply chain whose role in supporting and upgrading equipment may be limited, or where the size of individual companies precludes the necessary investment to adapt to the new business model.
9. The UK defence industry from top to bottom cannot expect to remain unaffected by these developments. Over the past two decades, the UK has fully embraced interdependence in many
critical areas of defence procurement with the aerospace sector leading the way through successive generations of international collaboration. The UK defence aerospace sector is irrevocably linked to a global network of design, development and production. This has entailed a loss of autonomous capability to produce complete aerospace systems, but collaboration and other international links have allowed the maintenance of an overall capability that otherwise would have been unsustainable based on the UK market alone.
3.0 THE DTS — A 25-YEAR OUTLOOK
10. It has become part of the conventional wisdom that, without an adequate technology base, UK-located defence capabilities will decline and its industry fall behind in a globalising defence market. It is equally obvious that, in a period of transition from platform to network enabled technologies the UK should invest even more in the defence technology base and to integrate the opportunities afforded by commercial technology streams. The DTS follows several recent initiatives to improve the planning and delivery of defence technology acquisition. For example there has been an improvement in the co-ordination of aerospace R&D as exemplified by the development of a National Aerospace Technology Strategy as one of the recommendations of the DTI Aerospace Innovation and Growth Team (AeIGT) report. 11. Such developments, if followed through, will bring real benefits to the UK defence industrial base. Indeed, the MoD intends to utilise and, if appropriate, participate in AeIGT programmes. However, these sentiments will come to naught without adequate funding. The MoD has recently begun to address some years of relative neglect in this respect. Failure to maintain commitments in this area would nullify all of the good work entailed in setting out a comprehensive defence industrial strategy.
12. Equally, early investment in technology increases the confidence in predicting the cost and performance of new programmes to the overall benefit of the procurement process. Reducing the length of time expended in developing new equipment also depends upon a steady introduction of new technology through a process of incremental development drawing from a continual stream of defence specific as well as civil technological innovation. This is explored at some length in the DIS and echoes similar findings based on US experience and analysis. Again, the test of good intentions will be in changing practices and fully applying the lessons of past procurement. Most important, the customer will have to resist the dual temptations of demanding too much at the outset of a new programme and of interfering in the process of development to capture the latest example of new technology.
13. The DTS recognises the clear correlation between the absolute level of national investment in research and development and the quality of military equipment. The UK has an advanced defence technology base, second only to the US, albeit at some distance. This is the result of investments made over the past 20-25 years and has allowed the UK to play a leading role in European collaboration and has facilitated a very effective relationship with the US. As a guide to policy, the MoD has set the target of matching the world’s major defence exporting nations.6
14. The MoD will continue to invest in the most challenging, long-term aspects of defence science and technology but will increasingly expect industry to fund a substantial share of applied and demonstrator technology. Increased collaboration with allies (primarily the US and selected European countries) and the
broader national science base will also figure in future planning. However, the DTS’s primary goal is to identify those areas of defence science and technology essential to maintain national sovereign capability, provide maximum leverage in strategic terms and provide the most overall technology benefit to the UK. In many sectors, the main focus is on through life management where the MoD will primarily invest in technologies designed to facilitate upgrading and long-term affordability. This includes commitment to developing open systems and systems architectures that will enable greater long-term flexibility and adaptability. In many cases the MoD intends to retain control over critical systems architectures.
4.0 CROSS-CUTTING CAPABILITIES TECHNOLOGIES15. The MoD will seek to maximise returns from its investment, looking to derive multiple use from research. In this respect, the DTS puts considerable emphasis on cross-cutting technologies that will have the greatest impact across the range of defence equipment sectors. These are:
■ Sensors and countermeasures ■ Information exploitation ■ Human factors
■ Platforms and structures ■ The physical environment
■ Technologies to enable Through Life Capability Management (TLCM)
Many of the individual technologies under this heading will be of relevance to aerospace — for example, simulation technologies have a priority in the human factors area. However, increased dependence on commercial sources, again noted in the simulation case, might place UK firms at a disadvantage if foreign competitors continue to receive funding through national defence and civil R&D budgets.
16. C4ISTAR is also identified as a cross-cutting technology because of its role in most of the individual sectors and its centrality to delivering the MoD’s Network Enabling Capability (NEC). This is by definition a complex system of systems in which the aerospace element strictly defined is limited to the provision of aircraft and satellite platforms. There is no need automatically to buy these from a UK supplier unless there is a specific technological value in integrating platform with equipment and sub systems. The DIS, for example, recognises this in relation to micro satellites where the UK has a strong niche capability. 17. Systems Engineering and Integration is rightly afforded prominence in the DIS. This capability is at the top of the defence industrial value chain. UK industry has a wide and deep set of capabilities across a wide-range of defence applications. On shore systems engineering and integration afford vital access points for high value UK-based equipment suppliers and will be essential in facilitating UK-based up grading and support. The DIS also re-iterates the view that such skills are not monopolised by the traditional prime contractors but are possessed, perhaps more relevantly, by high-level equipment and IT companies. The key caveat must be whether the UK has sufficient systems engineers to meet these requirements. Nor is it clear from either the DIS or the DTS how the MoD intends to fund ‘systems integration’ R&D. By definition, such activity tends to be of a ‘one-off’ nature and thus a business case for industry investment is difficult to make. One approach used in the commercial world could be for the MoD and industry to work together to formulate the requirements for an MoD system to incorporate technologies for which an industry investment case could then be created.
5.0 AEROSPACE IN THE DIS AND DTS
18. For the aerospace sector (here defined as fixed wing, rotary wing, complex weapons, airborne mission systems, and some space elements), the DIS and DTS present some major challenges as well as some important opportunities. The continuing vital role of airpower, precision weapons and the C4ISTAR functions facilitated by air and space platforms are reiterated at length by the DIS and DTS. The UK also has substantial world-class design and development expertise in manned aircraft construction and systems integration, the development of guided weapons and in a wide range of mission systems. However, these statements are matched by a clear statement that the future will not be like the past and that the conventional view of airpower and its supporting domestic DTIB will be replaced by a different set of priorities, equipment needs and industrial infrastructure. Fixed Wing Aircraft
19. The most telling aspects of the DIS and DTS are encompassed by two related assertions based on a view of contemporary trends in procurement, ever-increasing development costs, longer equipment life times and consequently fewer numbers that are eventually procured. This has been especially evident in fixed wing combat aircraft. Bluntly, procuring the Typhoon and the JSF has removed the requirement “for the UK to design and build a future generation of manned fast jet aircraft for the foreseeable future.” The main DTIB requirement henceforward will be to retain the technological base to upgrade and integrate new technologies. The provision of transport and other large aircraft platforms will be treated as a commodity to be acquired from international suppliers. Only specific UK operationally relevant technologies and through life management issues will require national technology investment.
20. Moreover, in too many cases the flexibility and agility of airpower has not been “matched by agility in major aerospace programmes. The time and cost of relatively modest platform upgrades has too often been hard to justify and air power risks pricing itself out of business.” On the other hand, the development of Unmanned Airborne Systems is seen as a major opportunity to address the traditional economics of development, manufacture and employment of air systems. The DTS assigns a high priority to airborne sensors, defensive
Procuring the Typhoon (above) and the JSF has removed the requirement “for the UK to design and build a future generation of manned fast jet aircraft for the foreseeable future.”
electronics and complex weapons. UAS technology, especially software and control systems, will also receive special attention. In all cases, the key focus for national sovereignty in this sector is control over systems architectures and interfaces. However, the DTIB required for UAS development and acquisition would be radically different from that traditionally demanded by conventional aerospace systems.
21. The recent announcement of the £124 million Taranis UAS demonstrator programme in some respects goes beyond the priorities outlined in the DTS. Led by BAE Systems, this will involve Rolls-Royce, Smiths Aerospace and QinetiQ in a joint MoD-industry (75-25%) funded national programme. Key areas for industry will be advanced power systems integration and power distribution as well as exploring autonomous control concepts. Taranis may indeed be viewed as a test case for industry investment in a MoD programme to investigate areas of particular interest to industry.7
22. Despite programmes such as Taranis, looking beyond the current generation of fixed wing aircraft, it would seem that there is a major threat to the UK’s conventional design and manufacturing capabilities. There will be considerable business in upgrade and support work that in some areas will be of a very high quality, but this will be no substitute for developing a sophisticated fixed wing platform. There will be a contraction of the present UK-based supply chain and a threat to UK equipment suppliers whose technological competence has historically been honed by access to a major programme where the UK has had critical influence over design and systems integration. Advanced aerodynamics and structures research will be facilitated through co-operation with the UK university research base.
23. AgustaWestland’s partnership with the MoD gives the company primary design authority for the management of most of the MoD’s existing helicopter fleet. Equally, national capabilities in network enabling, modelling and simulation for rotary military aviation will remain essential. However, as most of the crucial rotary-wing platform technologies will be available on the world market, they are not assigned a high priority in the DTS. New rotary aircraft also increasingly will be procured through international competition. The need to maintain security of supply and access to control software essential to operations, on the other hand, will qualify for investment. In short, AgustaWestland will have to secure its future through private venture funding, Italian MoD investment, civil applications and collaboration, and export sales. The MoD recognises that this implies a major business transformation for AgustaWestland and other industry players; as a result, it will create an MoD/industry Rotorcraft Technology Steering Committee to plan investment in the sector.
24. The MoD will retain the necessary national capability to sustain its current and planned fixed wing propulsion systems as well maintaining an adequate supply base for upgrades. There will be targeted investment to ensure “both a strategic influence and a viable source for key capability-enhancing propulsion technologies.” But the MoD “will not invest in hot section technologies for new build or higher performance engines.” This continues a trend first evident seven years ago when the MoD ceased funding a significant proportion of its engine hot section technology programmes. However, the MoD will work with the supply base to enhance through life management and may participate in AeIGT programmes to de-risk hot section
technologies. This may also entail some limited dedicated investment in relevant hot section research. Over all, however, the result is that the MoD will have a smaller portfolio of hot section research activities.
25. There is a commitment to aspects of novel power generation concepts and UAS propulsion systems that could have important industrial applications. Although some of these will flow from developing civil technologies, even here systems integration and specific military requirements will demand some investment in dedicated propulsion/power generation research. The result will be a more subtle and complex relationship between MoD investment and the aero-engine sector.
26. The DIS rightly observes that complex weapons possess ‘battle winning’ capabilities. They are also a critical element in enhancing the overall capability of platforms throughout their lifetime. However, many of the most recent acquisitions have been of COTS or near-COTS weapon systems, stifling indigenous development. More critically, all current EP funding is predicated on COTS purchases. Both the DIS and the DTS identify several critical technology areas in which the UK must retain sovereignty but there remains an imbalance between this desire and current funding plans. Nevertheless, the DIS is looking to retain on-shore capabilities in this sector largely through conceptual studies in synthetic environments or through a limited use of technology demonstration. While there may be some short-term protection afforded to UK-based suppliers, the implication is that the MoD will be prepared to accept a greater future dependence on external sources of supply. The MoD is working with the UK’s main supplier, MBDA, to develop a strategy to maintain UK competence in this sector; clearly this is one that must be retained as an on-shore technological and a manufacturing activity.
27. The DTS notes that the UK has a strong comprehensive national capability in most of the critical technologies underpinning Complex Weapon development. However, the challenge will be to sustain this in the face of and limited R&D budget and the reduced numbers of orders expected over the next decade. This will be met through a stress on international collaboration, especially with Europe (aided by the trans-national characteristics of MBDA) and several technology demonstration programmes in critical areas. Work will be based on a strategic partnering arrangement with industry.8
New rotary aircraft increasingly will be procured through international competition.
28. In July 2006, the MoD announced its intention to form Team Complex Weapons (Team CW), a partnership built around MBDA, QinetiQ, Thales Air Defence and the MoD. Other companies in the guided weapons supply chain will be drawn in. There are a number of legal issues (notably anti-trust regulations) to overcome, especially if Team CW is to include Raytheon.9However, Team CW will address some of the problems of maintaining core competences and skills in the guided weapons area and its success or otherwise will play a major part in determining the future for this key sector in the UK defence industrial base.
29. Both the DIS and the DTS recognise the world-class standing of UK mission systems capability, especially in sensors. The MoD will work with industry to develop capabilities in this area, especially in those areas central to the ‘networked battlespace’. Over the long term, with TLCM in mind, there will an emphasis on developing “flexible, modular and open platform architectures.” This will be the key to “realising the affordable through life employment of fixed wing and unmanned platforms.”10It is also an important way to ensure that the MoD does not become dependent upon a single or limited number of vertically integrated prime contractors — a risk frequently noted in the DIS; and recognition that high-level equipment companies possess key integration skills.
30. Both the DTS and the DIS recognise the increasing importance of space systems to the MoD’s future effectiveness. In particular, both documents assign a high priority to aspects of satellite telecommunications. However, it is disappointing that the DTS makes no mention of the special arrangements required to deal with Private Finance Initiative programmes. While decrying the low level of industry R&D investment, the DTS fails to lay down guidelines for how R&D will be funded between the varying parties in a major PFI such as the Skynet 5 satellite telecommunications programme (£3bn). These need separately to specify the respective responsibilities of the MoD, the PFI contractor, other Skynet 5 contractors and industry. Unless this is better defined, the partners will be unclear as to the ownership of any resulting innovation. There is a body of best practice on this topic from the UK civil government sector that the MoD could draw upon as the basis for a more satisfactory approach. Until this issue is resolved industry may be reluctant to commit R&D funds. 31. Surveillance from space is also recognised in the DTS as an area involving high priority technologies. The DIS identifies small satellites as an important element of MoD’s ISTAR solution — calling for “a sovereign ability to design, demonstrate and perhaps build.”11The DTS echoes this priority. Recognition of the benefits of an indigenous UK industry surveillance satellite capability is welcomed by industry after two decades in which especially French, but also German and Italian, industries have been the beneficiaries of major national programmes.
32. Homeland Security is one area where the Government may be able to provide some encouragement for the UK defence industrial base. This market is growing rapidly world-wide but it is still not clear whether the UK Government has a co-ordinated policy to deal with this market and the industrial and technology base that would provides the products, services and integrated
systems. Developing such systems is not strictly the sole remit of the MoD or the Home Office. It requires cross-departmental co-ordination and sponsorship including other ministries such as Trade and Industry.
33. It would be highly desirable for both Government and the UK Defence industry to create a joint approach to Homeland Security technology acquisition. Most of the major aerospace and defence companies are already participating in this market to a larger or smaller degree. There is also an emerging European Union research budget for this area. However, a clearer strategic direction from the Government to provide the UK with a safer environment, co-ordinated through one department (with the resources and budget to deliver) would give the UK Defence Industrial base an opportunity to grow despite the impending down-turn in some segments of the UK defence market.
6.0 INTERNATIONAL COLLABORATION, MARKET
ACCESS AND TECHNOLOGY TRANSFER
34. The UK is unusual if not unique in its degree of openness both to overseas competition and to inward investment in the domestic defence industrial base. UK defence companies have also acquired an unparalleled position inside the US market. While noting the possibility that the latter may be at the expense of investment in the UK as well as expressing concern at the problems of technology transfer entailed in working with US partners, HMG appears to have made little progress in shifting US practice to the benefit of the UK customer or UK industry. The UK has undoubtedly benefited from inward investment, affording access to resources and technology that otherwise would have been acquired expensively from domestic resources, but, if the UK has benefited from overseas investments financially, UK companies may be limited in their ability to repatriate new technology for incorporation into new products developed on-shore. This could have serious consequences for the long-term health of the UK defence industrial base. Equally, as the lure for inward investment is the buoyancy of the UK defence market and the relative size of its R&D investment, there is a danger that this investment will be vulnerable to any future contraction in defence budgets. While ownership is no longer as important in the defence sector as it once was, lack of national control over key capabilities increases our vulnerability to external events and decisions made by foreign governments and companies. 35. This would be less of an issue if there had been sufficient progress to open both European markets and to improve the
The JSF generated much debate on technology transfer.
9Aviation Week & Space Technology, 1 January 2007, p 62. 10DTS Section B2.
terms of technology trade with the US. It also remains the case that European governments still constrain investment in their national defence industries. Recent moves to limit national protectionism in the EU defence market — notably through the establishment of the European Procurement Agency — should improve matters. This is still too little, if not too late, to match the relative openness of the UK defence market and to create a more balanced and competitive international environment for UK defence companies. The drift of both the DIS and particularly the DTS is to see much of the future military aerospace provision to be satisfied from a global market. With the exception of commitments to aspects of UAS research, much of the current military aerospace technology base will steadily diminish. The mission systems sector should find business in upgrading and serial development but, without lead platforms developed in the UK, equipment companies may find international competition even fiercer. The temptation to move more of their operations and research offshore to access a new generation of aerospace platform will become even more intense.
36. The DTS recognises the importance generally of international collaboration but there is no overt preference for partners, other than the benefits co-operation may bring to satisfying the MoD’s needs outside of those associated with maintaining Appropriate Sovereignty. Perhaps more intriguing is the direction implied by the less well publicised US Defense Science Board–UK MoD joint paper on co-operation in defence critical technologies. The core of fundamental government-to-government research co-operation is likely to be with the US12. Co-operation with the US, combined with the steady drift of UK defence company investment in the US, could lead to long-term dependence. The MoD also recognises that working with the US is often based on what the UK can bring to a collaborative programme and does not necessarily generate access to new technology that can be readily transferred to the UK. A closer alignment of industrial and technological strategy with France and Germany could mitigate some of the risks of dependence on the US. European collaboration in the past has usually delivered a more egalitarian access to jointly developed technology. The Government has said that it would like to discuss the UK’s strategy with European allies, notably the French, but progress will have to accelerate to make much difference. The MoD prefers to manage this on a bilateral basis or in a small group of nations. It does not have much confidence in the multilateral or pan-European level.
7.0 THE FUTURE OF THE AEROSPACE PROFESSIONAL A new skill set and career pattern?
37. The DTS poses a major challenge to the conventional view of an aerospace professional. Working on defence projects will remain a stimulating and rewarding intellectual career — indeed, the more so given the complexity of some of the high level systems envisaged for the future. This may also be enhanced by the MoD’s determination both to increase the rate of technology
insertion and better use of civil technology; raising the prospect of a more dynamic research environment. Equally, the MoD will depend more upon the university sector for research into aerodynamics and structures. This may improve the relationship between MoD and academia and encourage still better links with industry — existing collaborative work on UAS technology concepts point the way perhaps. The key caveat here is the continued shrinkage in the UK’s science and engineering personnel base, undermined by a further fall in students taking up the ‘hard’ disciplines. Many of the current generation are foreign, some of whom may stay in the UK, but all too many will return home to provide the base for future competition. 38. The major opportunities for the aerospace professional are likely to be in electronics, IT and systems design and integration. In some views of the future, some aspects of the design and integration process may become more akin to the architectural profession, with some separation between design and construction. There are clear and fundamental requirements for systems engineers as well as human factors specialists. Through life management will also put a premium on well-trained and experienced project managers.
39. Overall, however, maintaining design teams and creating a more flexible and adaptable industry capable of doing more than just churning out successive generations of familiar platform concepts will test companies and government alike. This is a subtler challenge than simply maintaining employment in the defence industries. The demand will be for flexible, adaptable professionals, perhaps with a wider range of educational experience than the traditional aerospace engineer. Multi-disciplinary approaches and awareness will be a key requirement. Manufacturing and employment
40. On the manufacturing side, there will still be high value employment in defence aerospace sector but again not necessarily drawn from the traditional metal-based engineering skills set. The numbers of future platforms in any event will diminish still further and the growth area for employment will be in servicing and upgrading. It is unlikely that the most sophisticated UAS types will be bought in large numbers and other UAS platforms are very simple pieces of equipment (even if their systems are not), and in many cases readily acquired off-the-shelf from a rapidly growing global UAS industry. By the same token, the UK supply chain will have to accept changes in work patterns and some of its established elements inevitably will face obsolescence or be required to seek business outside the defence aerospace sector.
41. It is unlikely in any case that the MoD, despite attempts to keep the unions onside, will be swayed by the ‘jobs in Britain’ argument. However, the UK Government may have to do something to protect high value human assets, especially in aerospace, one of its few remaining high-value manufacturing sectors which acts as a focus and stimulus for much of the country’s engineering talent. Maintaining the human base will not come cheap if one is serious about maintaining real capability but it should be an essential element in a long-term strategy. Technology demonstration and ‘new blood’
42. This might have implied a commitment to an expanded programme of ‘technology demonstration’ that not only allows fundamental ideas and concepts to be explored and ‘de-risked’ but also helps to keep design teams together and to attract ‘new blood’ in the ever-increasing intervals between concrete projects. However, as the MoD seeks greater involvement by industry in applied research and technology demonstration, companies may 12US Defense Science Board Report & UK Defence Science Advisory
Council, Task Force on Defense Critical Technologies, Washington, March 2006. The areas of interest were: Advanced Communication
Environments, Persistent Surveillance; Power Sources/Management for Small Distributed Networked Sensors; High Performance Computing; and Defence Critical Electronic Components. With the exception of electronic components, the MoD was reluctant to publish its list of specifically critical technologies. Many of these may well relate to nuclear weapons and cryptographic applications, and advanced surveillance and pattern recognition concepts which are relevant to internal and external security-related interests. The report concluded that both countries should actively seek to work together in these fields. Its work was covered by a US ITAR exemption.
prefer to focus on projects and programme areas that have the best chance of meeting immediate requirements. This will deter commitment to higher risk, longer-term areas. The so-called Grand Challenge projects inspired by the US DARPA experience may mitigate this to some extent. However, these may not be launched in great numbers and financial allocations will be modest. The aerospace sector cannot expect to be singled out for inclusion in any specific Grand Challenge.
Some operational issues
43. Finally, the future for the operational side of the profession contains a mixture of continuing trends toward smaller, smarter forces. While flying fast jets and support aircraft will remain core applications of piloting skills in a conventionally structure air force, systems managers will be even more vital to the air force and associated services. Moreover, the deployment of UAS, especially the more sophisticated, autonomous aircraft, may demand a different type of remote piloting skills. This has been termed air awareness rather airmanship.
8.0 FINAL OBSERVATIONS
DIS/DTS a good start, but challenges remain for the MoD and Industry
44. In terms of overall quality and depth of analysis the DIS and the DTS match comparable studies in the US and are unrivalled in Europe. There is also a sense of urgency attached to the implementation plans and specific task-forces attached to both documents. Wisely, the MoD Chief Scientist has described the MoD’s approach as ‘only a first pass’ at defining a road map for industry and academia to inform their planning. The intention is to start a dialogue with the UK defence community. The DTS must also be adaptable to scientific and technological change.
45. Theses caveats notwithstanding, the DIS and DTS, if fully implemented, are together intended to provide a stable framework for company planning as well as reinforcing the value of partnership between customer and suppliers. There is much still to be done, however, and there are several areas still to be resolved in the short term if a number of key capabilities are to be retained in the UK. Moreover there remain unanswered questions about the level of investment the aerospace sector can expect over the next few years — and in the case of the DTS, a classified programme (including nuclear) that might drain resources from conventional equipment R&D.
46. To achieve real long-term stability, the strategy will to negotiate changes in government priorities and of administration. There are, of course, underlying trends in defence technology and its environment which will impose some constraints on future ministers and officials. The pressure of events will also present new challenges. In its favour, the DTS emphasises the importance of flexibility and resilience in identifying research priorities but industry cannot be entirely confident that its long-term investment in research will be sustainable in a period of political flux. Companies will have no comeback if they are faced with nugatory investment and are unlikely to receive assistance in the event of a major crisis. There is certainly a continued requirement to improve the profit margins on defence work to encourage a greater willingness to bear such risks.
47. One of the most demanding aspects of the MoD’s overall approach to the UK DTIB will be maintaining capability in the absence of specific programmes. Whether through a comprehensive programme of technology demonstration or some other ‘virtual’ approach to the problem this will require adequate levels of funding sustained over long periods. It will also be essential to include supplier companies to a considerable depth or face the danger of hollowing out the UK defence industrial base. Working in the new defence research institutional
48. The UK defence industry also faces a future operating within a new research institutional context. The privatisation of QinetiQ is a done deal and the UK is still alone of the major defence industrial powers in having a commercially motivated national research centre. The relationship with DSTL will also pose new challenges for industry. The MoD promises a new era of competitive research tendering which may offer industry new opportunities but the current strengths of the UK DTIB were in part based on a co-operative regime with the government research agencies and laboratories. In the future, the new relationships and competitive dynamics may be beneficial — there may certainly be a better and a more direct flow between innovation and commercial exploitation (in both defence and civil markets). But this remains unknown territory.
Rapid and fundamental changes required of customer and supplier alike
49. The DIS pointed to a new business model demanding radical changes on the part of the supplier. This should also entail equally radical changes on the part of the customer. In the first instance this should entail adopting clearer and more consistent approaches to full life support contracting as well implementing the recommendations of the critical evaluation of procurement practices that the MoD and the National Audit Office have been jointly conducting. These must be encouraged and their prescriptions implemented as a matter of urgency.
50. Similarly, the DTS confirms the messages from the DIS that the future of UK military aerospace will rest on the quality of its UAS research and its equipment sector, as well as the general competitiveness of remaining systems integrators. However, if the DTS trajectory develops as predicted over the next 20 years, the UK military aerospace industry may evolve into a branch of the IT-electronics sector.
51. Industry might also have expanded its services provision following the TLCM demands of the DIS. Again, there is no long-term guarantee that the leading players are necessarily the same companies that currently dominate the aerospace supply chain. Intellectual property and design authority may afford some protection but these can be transferable commodities. Equally, as open systems architectures become the norm and as the MoD retains overall control of key systems concepts, the customer has more scope to determine industrial outcomes. However, this does not necessarily imply the benefits will remain on-shore.
A disconnect between technology and industry strategies? 52. The MoD has set out a bold statement of the technology needs underpinning the UK’s defence capability — the trick will be in maintaining the absolute levels of investment in research and technology acquisition in the face of operational pressures and constraints imposed by future Public Spending Reviews. There is also a potential dichotomy at the heart of the MoD’s revealed DTIB strategy: UK located industry has been given perhaps a ten-year framework to adjust to a new business model but the longer term perspective is much more problematic, particularly for the aerospace sector. It remains to be seen whether industry will be prepared to increase its commitment to applied and demonstrator technology. This will depend largely upon the stability of the MoD’s commitment to emerging technologies — although in this respect the government-industry partnership in UAS technology is a promising start.
53. However, the level of commitment to several key aerospace technologies may not be sufficient to ensure the long-term survival of UK competence. In particular, MoD investment in platforms has historically helped to underpin exports which have also helped to defray the costs of indigenous development. These discrete products also provided UK equipment companies with a route to market. In the future, and as UK companies increasingly do business in the US, routes to market may come through incorporation in foreign systems — exports may simply follow a different flag. This entails less certainty and more external dependence; it may also depend upon more offshore investment, with jobs following the R&D. This may be a price that has to be paid to maintain anything approaching a sophisticated and relevant national defence aerospace industry base but there are implications that must be at least added to a national cost-benefit analysis.
54. The DIS/DTS combination may reflect a rational approach to defence procurement but it does not auger well for future industry and technology policy, particularly if government investment in civil aerospace is constrained by external forces such as the World Trade Organization. Much would depend upon further enhancement in civil technology acquisition as outlined in the AeIGT. This could be a weak reed as public expenditure constraints grow over the next five years. Meanwhile, several of the UK’s major competitors continue to receive support through both defence and civil budgets. This may still engender a profitable and productive future but the nature of UK aerospace may again have to be re-defined.
55. Over the past two decades, the aerospace industry has been subject to rapid and often disruptive change. As a result, the UK
has had to compromise much of its independence to maintain much of its overall defence-aerospace competence. However, the MoD has to deliver on its commitment to maintain core skills and to protect the critical design and development capabilities embodied in the individuals and teams that, in the final analysis, comprise the heart of the UK defence industrial base and which will continue to provide the basis for future world-class UK sourced defence equipment.
56. However, reconciliation of the MoD’s technology strategy with its aspiration to retain key industrial competence in key areas is not fully addressed in the DTS. The main emphasis of the DTS is to maintain and to improve the MoD’s competence as an intelligent customer, and its main commitments are in this area, not necessarily to support the fundamental building blocks for industry’s future. This in the end may be the main weakness of the MoD’s overall strategy for the UK Defence Technology and Industry Base. Globalisation and industrial options
57. In many respects the DIS/DTS offers a sophisticated picture of the modern defence industrial context, especially in its recognition of the impact of globalisation, even in the limited form that characterises the defence sector. However, globalisation generates a different set of public and corporate policy issues with the likelihood of several unanticipated consequences. One could be the incorporation de facto of a large part of the UK defence aerospace industry into the US defence industrial base, with the inherent risk of a long-term UK dependence on the US for a swathe of core defence technologies. This would reflect the powerful flow of investment both ways across the Atlantic, linking UK and US industry. If there were a reduction in the quantity and the value of UK national defence research to the UK’s leading companies, the temptation to take corporate IP to the US, to develop it further off shore and to sustain capability by tapping US funding could become overwhelming. Given the continued barriers to technology transfer, the benefits of this investment and experience will stay overseas, even if the profits are repatriated. Such developments would also undermine the UK’s contribution to the European defence technology and industry base and what in the past has proven to be an important means of maintaining a strong national capability.