Mergers, international co-operation, increased regional conflicts and the proliferation of weapons of mass destruction (WMD): these four trends have important implications for western and allied government procurements from the defence and aerospace industries. The first trend, mergers, is strongest in the US. There are now only five main US manufacturers of combat aircraft and missiles, compared to ten in Europe. The largest US manufacturer is Lockheed Martin, formed by Lockheed's merg-er with Martin Marietta and Loral, that has annual defence sales of some $20 billion and is as The Economist recently noted, "the world's largest defence contractor". However, the world's largest aerospace company was form-ed in December 1996 by the surprise Beoing company purchase of McDonnell Douglas for $13.3 billion, to create a company with total 1995 sales of $33.8 billion. But in Europe, the missile-manufacturing divisions of British Aero-space and the French company Matra have merged to create Matra BAe Dynamics that, with annual sales of some $1.5 billion, will be Europe's largest missile manufacturer.
 |
Eurofighter 2000, a collaborative project between Britain, Germany, Italy and Spain |
The second trend is increased international collaboration in the acquisition of major defence systems, despite the problems of con-flicting national requirements, cost over-runs and delayed delivery dates, as experienced by the Eurofighter 2000, a collaborative project between Britain, Germany, Italy and Spain. But in September 1996 the British Minister of Defence, Michael Portillo, announced that the British government was committing £1.2 bil-lion to move into the production phase of the Eurofighter. Also the US Ballistic Missile De-fense Office (BMDO) is pursuing with NATO, the collaborative development of the Medium Extended Air Defense System (MEADS), a new mobile system to defend manoeuvre forces against attacks from any direction by aircraft, short-range ballistic missiles and advanced cruise missiles. The NATO MEADS System Man-agement Agency (NAMEADSMA) has award-ed an $80 million contract to MEADS Inc, a multinational consortium, to conduct the MEADs Project Definition-Validation (PD-V) programme. MEADS Inc comprises two con-tractors formed by US, German and Italian firms, one of which will be selected to produce MEADS in 1999. The two consortia are MEADS International, led by Lockheed-Martin, and MEADS Inc, led by the H & R Company (a joint venture of Hughes Aircraft Company and Raytheon Company including E-systems). Each consortia will collaborate with separate teams drawn from the European partners, Alenia (Italy) and Daimler-Benz Aerospace (DASA Germany). Both these trends mean that western and allied governments will increas- ingly seek to produce defence and aerospace equipment from merged companies and inter-national, collaborative ventures.
The third trend is the increase in regional con-flicts. The continuing ethnic and religious con-flicts in the former Yugoslavia and elsewhere, including Africa, are creating increasing politi-cal pressure on western and allied govern-ments to send military forces to intervene in these conflicts to reduce civilian casualties. But such intervention is imposing increasing stresses on limited western military forces and defence budgets. Equipment for army, navy, air force and marine forces is being used up and needs to be replaced earlier than would otherwise be necessary. The fourth trend is the proliferation of WMD, that is , nuclear, biolog-ical and chemical (NBC) weapons as illustra-ted by the recent warnings by senior British civil and military officials. The proliferation of WMD means that western and allied military forces will have to divert resources to defend themselves against WMD by providing vaccines and protective equipment, as well as missile defence systems.
