Boeing is swearing up and down that it has not abandoned Kansas. Sure, just a few weeks ago, it ordered the shuttering of its Wichita plant — a move that put 2,160 people out of work and raised hackles across the state.
Well, what a year 2011 was. A new SecDef and Pentagon leadership, sequestration and budget cuts, the debt ceiling debate, bin Laden finally getting his comeuppance, U.S. forces withdrawing from Iraq, acquisition reform and all the merger/acquisition/spin-off activity that seems to have captivated the industry are all enough to make anyone’s head spin. I get tired just thinking about the past 12 months.
It’s no secret that the F-35 Joint Strike Fighter is a troubled program. Over the past 10 years, the price of Lockheed Martin’s cutting-edge stealth aircraft has shot up 64 percent, while sales projections have continued to slide. Indeed, foreign countries that once fell over themselves to join the multinational F-35 program are now showing far less enthusiasm for the $120-150 million plane.
Tension was in the air at last week’s AUSA meeting. Hanging over the entire conference was an impending sense of doom. Companies wondered where their next sale would come from; program managers worried about meeting their sales goals; and the military just focused on getting in and out without contractors bleeding them dry. It was quite a scene.
The defense industry is suffering from something of a crisis of confidence. With people in D.C. and around the country using military spending as a proverbial political piñata, the reaction from within the defense community has been, to say the least, underwhelming.
It’s no secret that military robots are big business. The Teal Group predicts that global spending on unmanned aerial vehicles (UAVs) will increase by $9.2 billion over the next decade. And that’s just the flying bots.
When the moon hits your eye like a big pizza pie, that’s acquisition! Well, not quite, but acquisition is undoubtedly a critical element for any defense company’s business strategy. And understanding this process is all the more important in light of Secretary Carter’s new wave of initiatives.
I recently had a chat with an executive of a major Israeli defense company about his business strategy for the U.S. He told me that, given the reality of American protectionism, he didn’t see the value of PR.