Germany's defense modernization cuts leave many questions unanswered
Now that Germany has made good on its promise to cut its defense modernization program as part of a sweeping reorganization, the question remains: Will the government follow through with the promise to put the freed-up money toward future needs?
There are concerns in industry regarding the fate of several key future technology programs. Up to 25,000 jobs in the military aircraft development and production industry could be at risk, warns Bernard Stiedl, anrepresentative with IG Metall, one of Germany's largest labor unions. That body is calling for an industrial policy to be part of the government's reform package.
In particular, the union is worried about the Talarion unmanned aircraft program, an EADS proposal for a future, medium-altitude unmanned aircraft to be fielded around the end of the decade. The project has, however, failed to garner support from the air force, which wants a more immediate system. The new modernization strategy also does not address Talarion because, as one defense ministry official notes, there is no program of record to talk about.
As part of the cuts, Germany is curtailing the number of medium-altitude, long-endurance unmanned aircraft to be bought to replace Heron-1s, which are currently being used in Afghanistan on a fee-for-service basis. Germany now plans on 16 rather than 22 of theHeron-TP, offered through Rheinmetall, or on the B, offered through Ruag.
One test case for how committed Germany is to future funding is likely to emerge in the realm of air and missile defense. While many of the modernization cuts to fighter and helicopters programs come as no surprise, just last year Berlin had reconfirmed its interest in the tri-national(Meads). Instead, the country has decided to follow the lead of the Pentagon and see the development through to its conclusion—slated for 2014—but forgo actual production.
The goal is to prove technology and capture the maximum know-how, without actually buying the system, a German air force officer says. Military officials in Frankfurt suggest the Meads-developed technologies could still find an application.
Also affected are plans to buy the surface-launched version of the IRIS-T air-to-air missile. Development of IRIS-T SL will be completed, but a purchase decision now has to await the German air force's new air and missile defense plan. An industry official says the concept assessment for the future air and missile defense architecture for 2020 is already under way.
Despite the change in course, air defense has been identified as a mission priority for the restructured military here, and this should assure funding for future initiatives. However, other near-term cuts are in the offing. Germany plans to reduce its Patriot inventory to 14 systems from 29, retaining only the most modern Config-3 standard.
is hoping the German move may spur interest in an upgrade of the remaining Patriots, which Germany initially rejected in favor of Meads. An upgrade would provide a more open-system architecture, higher reliability and improved radar performance. James E. Monroe, vice president for Raytheon International, notes that the system could also encompass elements of Meads and the integrated IRIS-T SL, if the customer wants to go that route.
Germany's choice of Meads has ramifications beyond its own borders. Italy had hoped the program would survive, but is now reassessing its plans.
And Germany is seeking international cooperation for its new air defense concept. The French senate, detecting the Meads procurement may be in trouble, previously signaled it would like to see France and Germany work more closely together in this arena.
Action in the U.S. Congress will likely dictate whether Meads development is concluded. The Senate Armed Services Committee recommends immediate termination. House appropriators are merely suggesting the fiscal 2012 budget be cut by $149.5 million to $257.1 million, whereas their Senate counterparts would authorize the full $406.6 million.
Several other elements of the spending reduction were more widely anticipated. Theprogram will be limited to 140 units, 37 fewer than initially planned.
The German government also is making good on its threat to curtail helicopter procurements. For instance, 42 NH Industrieswill be excised from the procurement plan, capping the buy at 80. Additionally, 40 attack helicopters will be cut, effectively halving the procurement objective.
But the fleet of existing aircraft also is being reduced. The Tornado fleet will fall to 85 aircraft from 185—including a reduction in the ECR anti-radar fleet—and 20 Transalls will be retired, with 60 remaining.
The Euro Hawk, recently unveiled to the public in Germany prior to the first prototype being delivered to the air force next year, is exempted. Five were and are slated to be acquired.
Germany also has reduced itsmilitary transport buy. Initially the government shaved seven aircraft from the intended 60, but parliament has told the military to shed 13 more aircraft and operate only 40 A400Ms. No further adjustments were made in the latest planning round, but the Germany position is nonetheless a headache for industry. needs export orders to turn a profit on the transport aircraft. Sales will be more difficult if Germany is, at the same time, remarketing some of its own aircraft.
So far, only cursory discussions have taken place with industry over the cuts; detailed negotiations are due to begin mid-month. “The focus of the negotiations on the industry side is primarily on future prospects with regard to securing of company sites and jobs, competitiveness and technology know-how, and thereby the preservation of system capability for the defense industry in Germany,” aofficial says.
The union also is urging changes. For instance, Thomas Pretzl, head of the works council at EADS's Cassidian unit, argues that Germany should buy Tranche 3B Eurofighters and scrap older Tranche 1s. An industry official contends that no decision has been made. Even if the Tranche 3Bs were to go, production would be assured through 2017, he adds, thanks to a recent decision by allpartner states to slow annual production rates.
The union also is calling on the government to locate sustainment of the A400M at the EADS Manching site, where it also wants all Tornado and Transall fleet work to be performed.
The cuts particularly affect EADS, given the company's involvement in the Tiger, NH90 and Eurofighter. But a financial analysts notes that from a corporate level, the issue is not critical in light of the relatively marginal contribution Germany's defense operations have on the company overall.
Days after unveiling sweeping cuts to Germany's defense modernization plans, the defense minister, Thomas de Maiziere, has been emphasizing that the government accepts the importance of sustaining a healthy industrial base. One reason, he says, is that as European states look toward more intercountry cooperation, a strong industrial foundation is needed if Germany wants to play a decision-shaping role.
Industry may also have to gird for more changes. De Maiziere is unhappy with past program execution, which could lead to the government emulating Australia and the U.K. in trying to establish a process for stronger program oversight.
Industry could see gains in one area—increased outsourcing for systems support. Germany has lagged behind other countries in this regard, but that may now change, suggest industry officials.