Global Cooperation and Competition in the Defense and Aerospace Industries

Abstract

A number of major changes in the international aerospace market continue; they will likely have major impacts on global defense and aerospace commerce. These developments include the following: With the increase in complexity and cost of aerospace systems, it is much more difficult to reconcile the natural size of firms within national borders. Government policy to reconcile the need for affordability of defense goods with national sovereignty leads to increasingly hard choices. The aerospace industry is becoming increasingly globalized. Advances in information technology continue to offer new technical possibilities. Consolidation, and shakeout, of defense industrial firms means only a few potential bidders for projects. Accordingly, both governments and aerospace firms have made or are discussing changes to policies, strategies, and modes of operation to adapt to their changing environment. Our current research investigates the effects of these trends on the European and US defense industrial bases. We consider the following cases: EADS problems with engine software development and other issues associated with the A400M development. The Nordic defense bloc that emerging (or maybe not), and an exploration of the government side of the KC-X procurement saga, the quarrelsome committee, with Allison Model III (governmental politics). Our results, in a nutshell, are as follows: The A400M difficulties are the unsurprising results of curious behavior, with attendant difficulties for participating nations. A pattern of Nordic defense cooperation is in place, but it is not yet clear that a Nordic defense bloc is emerging. The KC-X difficulties demonstrate the limitations of the sovereign monopsonist model of the demand side of defense. In the matter of the KC-X procurement attempts, we conclude Model III works better.