ARTICLES

Index
1. UAV Evolution: A Total Product Perspective
2. The New Isolationism
3. Can Europe Consolidate?: Industry Must Focus on Winnable Markets

UAV Evolution: A Total Product Perspective
Unmanned (or Uninhabited for the politically correct) Air Vehicles are all the rage; every military wants them, every defense company wants to build them. Not that UAV's are new; far from it, UAV's have been conceived, built, and used, with limited publicized success, for as long as manned aircraft. In World War I, an inventor named Charles F. Kettering developed an "aerial torpedo", little more than a subscale biplane loaded with explosives. In the century that followed we saw target drones like the Firebee, reconnaissance drones like the still mysterious D-21, and even remotely piloted conventional fighters used in peace and war. The US Air Force used both D-21's and remotely piloted fighters during the Viet Nam conflict. Recent UAV interest, however, is more universal and more intense than ever before, fueled by the high profile role they played in the war in Afghanistan, the building emphasis on information warfare, and the ever increasing reluctance of Western governments to put people at risk.

UAV users and producers are struggling to anticipate the eventual form the UAV will take in order to achieve it first. At a 2002 Shepard Group UAV conference in London, and immediately afterward at Farnborough, a casual observer could see that despite the long history of UAV usage the future evolution of the type is in dispute. Compare the stealthy, swift, turbine driven, complex, expensive UCAV's under development for DARPA and the USAF by Northrop Grumman and Boeing with the sometimes Rotax powered products of other companies. To complicate matters, there are still respected, if unpopular, voices asking why companies and governments should spend the money to develop completely new airframes and systems when there is a large population of surplus serviceable aircraft which might be adapted to autonomous or remote control far more cheaply.

How can users and builders of the UAV thoughtfully and effectively anticipate its evolution in order to achieve its potential? Experience suggests that any successful approach will incorporate two elements:

- A total product approach
- Evolution driven by the men and women on the ground

Despite the confusion of conflicting constituencies and visions, the UAV will evolve along some paths and not along others, and the users and builders that reap the most benefit from the UAV will be those that figure out those correct paths first. Easier said than done, of course, however UAV's are not the first example of product and mission innovation; the automobile, the aircraft, and the personal computer are three that come quickly to mind. Those previous examples of innovation may shed some light on the future of the UAV.

Each of these three is a derivative but distinct innovation, meaning that they were enabled by precedent core technologies but represent utterly new products and applications. The internal combustion engine is the single most important core technology behind the automobile and the aircraft; the microprocessor was the core technology behind the personal computer. The internal combustion engine, used in factories for instance, and the automobile and aircraft represent completely distinct products, as the personal computer is distinct from the microprocessor. Likewise, the UAV is derivative, yet distinct.

These three products share another link to UAV's: war played a tremendous role in their development and dissemination. Even before French taxi drivers shuttled troops to the front in World War I, the automobile and its close derivatives became intertwined with warfare. Many people learned to drive as soldiers; my father's first driving lesson was in an Army Air Corps jeep in 1943. Microprocessor and computer development was marked early on by the efforts of cryptographers and ballisticians in World War II. The accelerated evolution of the aircraft cannot be separated from the requirements of hot and cold wars.

When the automobile first appeared in the late 1800's, it was expensive, unreliable, and impractical. For years it remained a luxury item, a toy, rather than a broadly useful tool. It was alien to the existing transportation and support systems; the roads were meant for horses and wagons, and the other horse-drawn and pedestrian traffic didn't integrate well with automobiles: horses and people have innate common sense (have you ever seen a horse run into a tree or off the road?) Horses and people move more slowly than even early automobiles, and in some states automobiles were required to be preceded by a man on foot, carrying a lantern to warn the incumbent transport. Finding fuel was problematic; petroleum was primarily processed into kerosene for lighting purposes at first, and gasoline required both a high level of demand and a distribution system, both of which required time to develop. Early cars were unreliable, but there were no repair shops, just as there were no gas stations.

In fact, the automobile was not a complete total product, and until it became complete, it could never achieve its potential. The total automobile product included physical elements, such as a fuel production system, gas stations, repair shops, better roads, and car dealerships. It also included nonphysical elements, like traffic rules and a way to integrate with the existing transportation systems (or replace them), and altered mental models on the parts of pedestrians and drivers, who could no longer rely on horse-sense to keep them safe.

The same is true for the personal computer and the aircraft. While early aircraft needed only open grass fields, the complete product today includes hard runways and taxi-ways, instrument landing systems, a system of airways and navigation aids, pilot training centers, air traffic control systems, etc., etc. Computers without displays and keyboards were completely useless, but even with them they had limited utility. It turns out that the complete product for the personal computer includes printers, scanners, productivity and entertainment applications, and networks.

UAV's will need to become complete products before they can achieve their potential as well, and the nature of those apparently peripheral but actually integral elements will shape their evolution. Without a road network, automobile distribution would likely have been limited and its evolution would have certainly been affected. The sports car as we know it would not exist, and cross-country ability would have been emphasized over speed and comfort. Without e-mail or the Internet, personal computers would be absent from many more homes, and their configurations would emphasize less connectivity. Without navigation aids and hard runways flying would be a fair weather activity at slow speeds, and surface travel would be highly competitive even over long distances.

The elements that surround the UAV product are not peripheral to its evolution and success, but integral. To realize its potential the users and builders of UAV's will have to model and then support the development of the other elements that make UAV's a complete product, and in doing so they will be better able to anticipate its evolution. They will match the need with the solution at the right time, neither too early nor too late, and they will win.

The third and most important trend is the development and evolution of the product at the level of the user. Studying the complete product will provide part of the evolutionary picture for users and builders of UAV's; the rest of the story will be written on the ground. The story goes that the first air-to-air combat consisted of pilots throwing bricks and firing pistols. A Frenchman confounded the Germans by mounting a machine gun directly in front of him and firing through the propeller, raking up impressive victories - until the crude armor he used to protect his propeller from his own bullets gave way and he shot himself down. The Germans, upon examining the wreckage, decided to go with a less suicidal solution, and developed a way to synchronize the gun and propeller. Jimmy Doolittle proved the first ILS and Billy Mitchell demonstrated the ability of an aircraft to sink a ship. Likewise, users were often the first to see possibility in automobiles and personal computers; e-mail was not the fruit of a strategic development effort, nor were racecars or ambulances, yet the value of each of those is undisputed. Today the automobile has evolved into trucks that carry freight, fire and rescue vehicles, minivans and SUV's. The personal computer that we use for socializing, banking, buying books and doing research is a long way, in application and capability, from the overpriced scientific calculator of the '70's. And the aircraft that Patty Wagstaff thrills us in, the 777 we fly to Europe, the CL-415 water bomber, an RC-135 and the FA-22 are beyond the imagination of the earliest aviation pioneers.

The UAV will go through its own evolution. It will be driven by the development of a complete product and the needs and actions of ground level users who will adapt it as they can to the requirements they live each day. There is no leader and follower in that evolution; as users address needs they reveal more of the complete product, and as the product becomes more complete its potential becomes more apparent to users. Some users will not experience the crucible of combat, and will not develop new requirements and solutions. Some governments and militaries will not listen to their experienced users, nor will they invest in developing the complete product. Some companies will neither seek out nor listen to users, nor work to develop or encourage the development of the complete product. Others will, and those others will realize the potential of the UAV.

The New Isolationism
Featured in Defense News (February 2003) and entitled: "European Powers Slip Toward Isolationism"

George Washington warned us to avoid "foreign entanglements", kicking off the isolationist streak in this country, even though those entanglements assisted our own freedom. The United States today has indeed become entangled, more so than ever imagined by Presidents Washington or Monroe, in spite of a "two steps forward, one step backward" progress towards world engagement. That entanglement has been costly, and rewarding. Few of us today can imagine siding with the peace protesters who argued against war with Nazi Germany and Imperialist Japan, or resisting the investments in peace and freedom in NATO and South Korea. Not all investments worked out; Viet Nam didn't, to the lasting sorrow of the Vietnamese, and Haiti seems to be sliding back into hell. But other ones did, in Bosnia and Kosovo.

After 227 years, however, there is a new isolationism, and it is no longer US based. No serious US politician has suggested withdrawing troops from Europe for years. The new isolationism inhabits the oddest possible location: the European countries that benefited most from US participation in the world, France and Germany.

Ever since De Gaulle, there has been a point of view in Europe, strongest in France and Germany, that the real contest was not between the US/Europe and. Communism, but Europe and the US. It holds that these two entities (generously defining Europe as an entity) would eventually represent two poles of power inevitably drawn into conflict. Setting aside the questionable logic of this argument, which is challenged at the very least by the eventual emergence of India and China as independent centers of economic and military power, it has served to justify a policy of limiting and diminishing US power and freedom of maneuver in the world.

Exercise of US power is both limiting and humiliating to France and Germany. Remember the Suez adventure, and the quick stop the US put to it, and the more recent US interventions in Kosovo and Bosnia. German miscalculation contributed to the dismemberment of Yugoslavia, and a general lack of will and leadership permeated Europe while innocents died. Nothing irks like a neighbor stepping in to clean and mow one's own backyard.

For Europe to equal the US on the world stage requires a step change increase in its ability and will to exercise power, or a step change decrease in that of the US. There lies the motivation for the new isolationism, because Europe is not now nor is it likely in the near future to make the investments in treasure and blood to match the US investment in the world. It simply lacks the will to do so.

Therefore, its only option is to isolate the US on the path to creating the step change reduction in American will and capability.

George Washington was right about the risks of foreign entanglements. The European dependence on NATO has left them wealthy, comfortable, relatively safe, and weak in capability and will. Our entanglements in the UN and NATO have left us seeking the approval and support of countries with which we have virtually nothing in common. Countries like Libya chair UN Human Rights commissions, and Iraq is about to chair a UN Disarmament Commission. The US seeking UN approval to act is a bit like a warden asking prisoners to vote on whether the guards should be issued billy clubs and shotguns during a riot.

Europe is about to accomplish peacefully the unifying dreams of Napoleon and Hitler. France and Germany are not coincidentally the home countries of these villains, at least in the eyes of their brother Europeans. It is as clear to the Portuguese as it is to the French that France retains unique and independent interests, and most of Europe trusts the French little and the Germans less when it comes to setting aside narrow national ambitions and making decisions in the best interests of all. The budget and fiscal constraints all members agreed to represent one case in point, and the disarmament of Iraq is another.

France and Germany will bust the budget deficit caps they agreed to; the French argue the caps are now unreasonable. What the Greeks and Spaniards are asking themselves is, would the French think those caps were unreasonable if Greeks or Spaniards were the ones breaking them? If the members' rules apply to no one, or worse, to everyone but the French and Germans, the EU will undergo tremendous strain. If the French do not either abide by the cap or pay the penalty, it will be clear to all of Europe that France will always put its narrow interests ahead of those of Europe, and no one is strong enough to make them do otherwise. Many do not need confirmation for what they already knew.

With Iraq, the French and Germans may have gone too far, and the strains they have added to the already stretched fabric of the European Union may tear it. Many of us assumed the French and German resistance to the war followed old patterns: in particular the French would negotiate for postwar oil and other rights. True to form they would hold out for the best deal, then join in the attack at the last minute, a la 1991.

But this time the resistance went beyond negotiation to a fundamental undermining of the US position and the public sandbagging of US Secretary of State Colin Powell at the UN. Ironically, the apparent weakness of UN resolve will only encourage Hussein and increase the odds of war. For that reason, this administration may not welcome them back now, even if they come around. But the rest of Europe's leaders have watched this, apparently with horror. None of the smaller European countries want a Europe dominated by France and Germany, less still do they want to enter into an oppositional relationship with the US. They, in fact, like the presence of US troops in Europe, not because of the threat from outside Europe, but because of the threats from within it. And they recognize that while an Iraq armed with and distributing weapons of mass destruction may not directly threaten France and Germany, it makes for a much more dangerous world for everyone indirectly. Nor do they want to go to war in Iraq unnecessarily, as the French and German actions may compel them too. These countries' leaders, now including the UK, Norway, Spain, Italy, Poland, Hungary, the Czech Republic, and Portugal, have broken publicly with France and Germany. The prospect of a common EU foreign policy looks slim indeed.

The new isolationism is aimed at the US, however it has made very limited real, if highly publicized, headway. Its greatest proponents lead the governments of France and Germany, and demonstrate in the streets of those and many other countries. But the US appears about to act in Iraq, and once it has done so, and Iraqis begin to describe their sufferings under Saddam Hussein, it will be difficult to fault the action. Once the laboratories and storage facilities for WMD are opened, it will be even harder to refute what Richard Butler, George Bush, and the rest of us know about Iraq's WMD, which, by the way is what Chirac and Schroeder know as well.

When that happens, the new new isolationism will occur, as the credibility and influence of Germany and France is diminished to the extent of their check books.

Can Europe Consolidate?: Industry Must Focus on Winnable Markets
Featured in Defense News (July 14, 2003)

Efforts to strengthen Europe's defense industry through consolidation have not worked because they miss the real problem: the fragmentation of the powerful European customer base. The future looks bleak, but there is a way out that would support not only European firms, but the global defense industry. European defense companies must strip resources from programs and capabilities that are certain market losers, and invest in areas where they can compete against the U.S. giants.

Europe has responded to the emergence of colossal U.S. firms by forming several large amalgams of its own, but size alone was never the real issue. The share performances of the largest consolidated European companies, BAE Systems and the European Aeronautic Defence and Space Co. (EADS), trail those of their smaller, nimbler, more competitive rivals Saab and Dassault. And the French firm has been profitable for 40 years.

Why? Europe's governments did not permit the newly merged entities to realize many of consolidation's potential benefits: reducing headcount, restructuring facilities, consolidating product lines, and merging headquarters and chief executives. The Eurofighter, for instance, will be assembled in each of four partner countries, and may be assembled in more.

Meanwhile, Europe's governments continue to produce paltry budgets for defense research - collectively just a third of U.S. R&D spending - and acquisition. In many areas, governments proceed with research, development and even acquisition work that repeats what a neighbor country is doing. And because European militaries generally buy equipment in much smaller lots than the Pentagon, their suppliers must do more work per unit sold. Each nation
has unique acquisition requirements, people and processes that require separate efforts in research and development, system design, marketing, production and delivery. Portuguese officials wanted to buy only three A400M transport planes, but they still had to be courted, listened to, designed for and sold to. Then they left the program.

Consolidation to date has failed. The complex intertwining of Europe's firms has led to cannibalistic behavior. The Saab Gripen, EADS/Alenia/BAE Systems Eurofighter and Dassault Rafale fighters compete, yet EADS owns a larger share of Rafale (through its Dassault holding) than it does of Eurofighter. BAE Systems owns more of Gripen than it does of Eurofighter (through its 50 percent holding of Gripen International and 35 percent of Saab AB), but it also participates in 15 percent of the F-35 Joint Strike Fighter. No wonder Europe's defense industry appears leaderless and directionless.

EADS, which is working to consume Thales and Dassault, is searching for ways to ensnare BAE, Finmeccanica and Saab. BAE, which wants to become an American company in all regards, is seeking a major U.S. acquisition or merger and a $10 billion chunk of the Pentagon budget. But BAE Systems' troubles with the Nimrod MRA4, the Astute submarine, etc., have hobbled it to the extent that three U.S. value funds have purchased more than 30 percent of the stock.

Meanwhile, EADS is working to consume Thales and Dassault, while searching for ways to ensnare BAE, Finmeccanica and Saab. If BAE fails in its trans-Atlantic reach, look for a two-pole European industry: EADS owning Thales and Dassault, and BAE leading Finmeccanica and Saab. All these outcomes are bad for Europe and the United States. The better solution is an open and distributed global aerospace industry, where comparative advantage can push performance up and costs down. If European companies offered world-beating solutions, no buy-America rule or technology-transfer restrictions would keep them out of the U.S. market.

European defense should retreat from sectors where it cannot compete, and focus instead on the poorly met needs of the world's defense marketplace. For example, it's tough for large U.S. firms to go from building $50 million fighter jets to $5 million unmanned aerial vehicles, so they build $50 million UAVs instead. But companies like Dassault and Saab can be very comfortable with the revenues generated by a prosperous, low-cost UAV business. Neither is the United States untouchable in launch vehicles: from Ariane to Long March, non-U.S. commercial launch companies have been able to win customers. In the field of advanced lightweight armored vehicles, the German military employed diesel/electric-hybrid scout cars long before the U.S. military began thinking about transformation. And there are even more opportunities below the platform level.

It is time to stop banking on ineffective consolidation or hoping for a change in the customer. European defense leaders need to pick areas for investment, and coldly limit that list to match the money available. Resources must be pulled from losing markets and programs and sent where advantage can be won and kept. This means abandoning national prestige markets, like fighters, and recognizing that platforms matter less than capabilities.

European defense companies can re-establish an important place for themselves in the global defense market, an outcome that is good for European and U.S. defense companies, as well as for Europe and the United States.