Industryweek 1373 24097tompson

A Small Contract Competition With Large Implications

May 11, 2011
Thompson: 'The fact the Air Force is even entertaining a bid from Brazil tells us that this Pentagon is out of touch with economic realities.'

The Air Force is planning to buy a "light attack and armed reconnaissance" aircraft for use by U.S. and foreign pilots in counter-insurgency warfare.

At about $10 million per plane, it's probably the cheapest combat aircraft the service will buy in this century -- which is one reason why few politicians or pundits are paying attention. But the competition to select a winning aircraft raises broader questions about the way the military buys weapons, and in particular whether Pentagon policymakers grasp the seriousness of America's recent economic slide. Two Contenders There are only two credible contenders for the contract: an American plane made by Hawker Beechcraft designated the AT-6; and a Brazilian plane made by Embraer designated the EMB-314. They're both propeller-driven, multi-mission aircraft, and their price tags are similar. But because the Beechcraft offering would be developed and assembled in America, it would generate more than 1,000 jobs here. The Brazilian plane would be developed elsewhere, and final assembly in the United States would probably generate less than a hundred jobs.
Thompson: Considering our trade deficit, why would the United States even consider buying a new light fighter from a foreign manufacturer?
So here's the obvious question: Why would the military of a country running the biggest budget and trade deficits in history consider buying a new light fighter from a foreign maker when there's a perfectly good plane already available from domestic sources? We know the American offering works fine, because the same airframe has been used by the Air Force and Navy for training pilots over the past 10 years, and hundreds of them are operated out of six domestic locations. That probably makes the American plane the most cost-effective entrant in the competition, since there already is a training and maintenance infrastructure in place and pilots understand the plane well. But the fact the Air Force is even entertaining a bid from Brazil tells us that this Pentagon is out of touch with economic realities. A Potential 'Net Loss for America' Let's set aside the fact Brazil's government often disagrees with U.S. defense policies in places like Iran and Venezuela, and try to ignore the provision in Embraer's bylaws allowing that government to cut off the flow of spare parts and supplies if it doesn't like the way the plane is being used somewhere. Instead, consider what has happened to America's economy over the last 10 years. On the morning of 9/11, the United States was generating 32% of all global economic output. Today it has fallen to 23%, and if Congress refuses to raise the debt limit it would decline even further to 20% of global output, because federal borrowing currently exceeds 10% of gross domestic product. Is this the profile of a country that can afford to pass up a thousand new jobs and buy overseas just because some state-influenced foreign company might offer it a marginally better deal on a military turboprop? I don't think so! The U.S. Air Force needs to start thinking more clearly about its responsibilities to taxpayers during a period of great fiscal and economic danger. Maybe that means cutting the amount of money we spend on fighting other countries' wars. At the very least, though, it means buying American-made aircraft whenever a suitable product is available to meet military needs. That's what China does -- it buys from Chinese sources whenever possible -- and right now it's rising about as fast as America is receding. Whatever kind of "deal" the Air Force thinks it might be able to get from Brazil, it's a net loss for America if we don't buy the U.S. plane. Loren B. Thompson, Ph.D., is chief operating officer of the Arlington, Va.-based nonprofit Lexington Institute and chief executive officer of Source Associates, a for-profit consultancy. Prior to holding his present positions, he was deputy director of the Security Studies Program at Georgetown University and taught graduate-level courses in strategy, technology and media affairs at Georgetown. He also has taught at Harvard University's Kennedy School of Government. See Also:

Popular Sponsored Recommendations

Empowering the Modern Workforce: The Power of Connected Worker Technologies

March 1, 2024
Explore real-world strategies to boost worker safety, collaboration, training, and productivity in manufacturing. Emphasizing Industry 4.0, we'll discuss digitalization and automation...

3 Best Practices to Create a Product-Centric Competitive Advantage with PRO.FILE PLM

Jan. 25, 2024
Gain insight on best practices and strategies you need to accelerate engineering change management and reduce time to market. Register now for your opportunity to accelerate your...

Transformative Capabilities for XaaS Models in Manufacturing

Feb. 14, 2024
The manufacturing sector is undergoing a pivotal shift toward "servitization," or enhancing product offerings with services and embracing a subscription model. This transition...

Shifting Your Business from Products to Service-Based Business Models: Generating Predictable Revenues

Oct. 27, 2023
Executive summary on a recent IndustryWeek-hosted webinar sponsored by SAP

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!