New Strategies Required For Navigating FMS Market

By Jen DiMascio, Joseph C. Anselmo, Amy Butler
Source: Aviation Week & Space Technology

At Farnborough, where Russia's Rosboronexport—still under fire from U.S. lawmakers for exporting attack helicopters being used in the Syrian civil war—said it is counting on combat aircraft and airborne munitions to comprise 40% of its exports over the next 10-15 years.

Speaking to a panel at the Farnborough International Airshow, U.K. Defense Secretary Philip Hammond described a rapidly changing export market. Just a few years ago, many nations were happy being customers, but now those same importers want to be partners. In a few years, former customers may see themselves as first-tier competitors. “There will be huge pressure on all of you in the industry to revisit business models, to build partnerships that reflect the new reality,” Hammond said.

A study by the Stockholm International Peace Research Institute (Sipri) charts an increase in Asian demand for weapons—accounting for 44% of global imports. But those nations are gradually trying to build their own industries, following the lead of China, which is already making the transition from weapons importer to global arms broker. From 2002-06, China was the largest weapons importer. Between 2007-11, China's rank fell to fourth place and is now the sixth-largest supplier of weapons in the world.

“While the volume of China's arms exports is increasing, this is largely a result of Pakistan importing more arms from China,” said Paul Holtom, director of the Sipri Arms Transfers Program. “China has not yet achieved a major breakthrough in any other significant market.”

To maintain their edge in the future, U.S. companies will need to continue to innovate, and the U.S. government should work to improve the environment for exports, according to several industry and government officials.

“What does give us the leading edge is technology. It's innovation. It's R&D,” says Marion Blakey, president of the Aerospace Industries Association. “The key thing of course is to try to move forward in terms of composite technology, the propulsion technologies—all of the kinds of innovation that I think our companies are showing.”

But in addition to making sure its products are competitive, the U.S. needs to be smart about positioning products, particularly UAVs, an industry in which the country has built an expertise but is bound by Missile Technology Control Regime rules, Blakey says. Other nations were displaying their latest developments in UAV technology, which can be sold without the same barriers to export, she says. “It'll go the way of commercial satellites if we don't address it,” Blakey warns.

The U.S. also needs to move forward with its export control reform effort.

In a July 17 speech to the Export Control Reform (ECR) Conference, Andrew Shapiro, assistant secretary of state for political-military affairs, pushed back against skepticism about the administration's ability to streamline the nation's Byzantine export controls. The administration has been working to rewrite the U.S. Munitions List, to ensure that the most sensitive technologies are protected and that the least sensitive items can be traded more freely with allies.

“Let me be very clear: any speculation that ECR is stalled is absolutely false,” Shapiro said. “This has been a long tough slog, but we can now see the goal line. So to suggest or infer that we are somehow losing momentum when we are this close, is just wrong. By January of next year we will have either crossed the goal line, or we will be so close, that whoever is in these jobs will just need to dive into the end zone and do a touchdown dance.”

Comments On Articles