Defense and Space

Significant defense orders, strong government subsidies and growing demand for domestically produced commercial aircraft have provided optimism regarding the Russian aircraft industry.

Michael J. McCord, the U.S. Defense Department's comptroller, warns of dire consequences if more than $1 trillion in approved cuts to military spending over 10 years are allowed to take effect. The result would be the lowest number of ships since World War I, the smallest ground force since 1940 and the smallest Air Force ever, he recently told investors.

Few times in aerospace history can have been as difficult for forecasters as recent months. Things are changing, that is certain, but there are so many conflicting signs that the direction of the industry is almost impossible to project. Debt crises, oil prices, climate change, competition for resources and many other factors inject unprecedented unpredictability into the equation.

Manufacturers of military fixed-wing trainers are forecast to produce 1,675 aircraft worth $21 billion during the next decade. Of those, 984 will be jet-powered and will be worth $15.3 billion. Annual production of military trainers is projected to gradually drop to 126 aircraft in 2016 from about 200 in 2011. Production will begin to rise again in 2017, reaching about 160 aircraft by 2020.

Whether the threat is from insurgents, pirates, drug smugglers or illegal immigrants, whether the resources requiring protection are in the ocean or the jungle, the need for surveillance is increasing. This is driving demand for special-mission aircraft—manned and unmanned—the sensors to equip them and systems to analyze and disseminate the intelligence collected.

Technologies being offered up by the aerospace industry for the Next Generation Jammer are still closely held, but clues are emerging.

The majority of the 161 unclassified milsats forecast for production in the next decade will go into service in the near term with production tapering in the outyears.

With crude oil beginning the year above $110 a barrel, and little prospect of aviation fuel prices coming down anytime soon, the imperative to find alternative sources to ensure price competition and supply security remains strong. But as 2012 progresses, industry is looking to governments to capitalize on the rapid technical progress made in approving bio-derived jet fuels by providing the funding support necessary to scale production up to commercial quantities and bring prices down to competitive levels.

More than five years after its first flight, Lockheed Martin's Joint Strike Fighter has been flown at night for the first time. The F-35A conventional-takeoff-and-landing development aircraft AF-6 on Jan. 18 conducted a series of approaches to Edwards AFB, Calif., in twilight and darkness. Night refueling and formation tests are planned for this year as the program targets completion of 1,001 flights and 7,837 test points in 2012, a slight increase over 2011's 972 flights.

The U.S. Air Force's tanker contract has been awarded, Airbus and Boeing have moved to upgrade the A320 and 737, and NASA's space shuttle has flown its last mission. It's time to move on to 2012 and the next round of big developments in the aerospace and defense industry. Here are 12 to keep an eye on.

Strike weapons is the only segment of the world missile-systems market expected to see significant increases in value and production through 2016, with the lightweight missile subsegment projected to experience rapid growth. The world missile market is forecast to see a slight increase in value from a low of $11.18 billion in 2012 to a high of $11.81 billion in 2016, but production is expected to drop, reflecting the high price of some systems. Annual purchases of lightweight missiles is currently low, but will reach $60 million in 2016.

A new opportunity is on the horizon for companies hoping to sell unmanned aircraft to support the missile defense mission in the U.S. This is welcome news for companies seeking to break into this space or expand this type of work because late last year the U.S. Missile Defense Agency (MDA) selected incumbent Boeing to manage the massive Ground-Based Midcourse Defense (GMD) system for another seven years.

This time it was supposed to be different for the Franco-German aerospace giant—a smooth transition of power, with a new management team building on the foundation put in place by its predecessor.

U.S. military officials are keen on saying they never intend to fight the last war. This is their way of indicating a focus on future conflicts, not on the past. Apparently, this sentiment does not apply to the interservice skirmishes at the Pentagon. The U.S. Army and Air Force are in the final throes of hashing out an updated agreement on the time-sensitive, direct-support airlift mission, the latest chapter in a years-long saga over how to ship supplies to remote soldiers despite two wars and one stunted buy of Alenia's C-27J.

The worldwide missile systems market—worth $58.2 billion over the next five years—will see a slight increase in value during the period, from a low of $11.18 billion in 2012 to a high of $11.81 billion in 2016. At the same time, production is anticipated to drop, reflecting the high cost of some of the systems being built. In all, 197,605 missiles of all types are forecast for production in 2012-16.

The F-35 Joint Strike Fighter is no longer heir-apparent F/A-18G Growler.

A shift around the globe to stealthy, or stealthier, combat aircraft designs is driving the market for fighters and jet-powered trainers.

Military helicopters have been rolling off manufacturers' assembly lines in increasing numbers in recent years. Build rates will continue to rise in 2012, but beyond that, market trends point to flat and even declining annual production levels over the next several years.

The 21st century has seen a massive surge in procurement of unmanned aerial systems (UAS). Twenty years ago, the anticipated value of this market per year did not exceed $400 million—and that figure included sales of target drones. Today the U.S. fleet has grown tenfold and the Pentagon is spending nearly $4 billion annually on unmanned systems of all types.

The U.S. unmanned aerial system fleet is tenfold what it was two decades ago, and the Pentagon is spending nearly $4 billion annually on UAS of all types. When the U.S. launched the 1991 war against Iraq, the anticipated value of the UAS market per year did not exceed $400 million, including sales of target drones. Barring major new financial crises in Europe and the U.S., unmanned platforms—along with electronic warfare and cyberoperations—are considered to be the technologies destined to survive the defense drawdown.

The heavy fighter engine market continues to be dominated by Pratt & Whitney and General Electric. The production of F100s and F110s remains active for F-15 and F-16 orders, primarily exports; after these fighters end production around 2016-17, the engine OEMs will shift production to modules to support the large world fleet.

Export sales will become increasing important as manufacturers try to sustain production levels built up over recent years. For the U.S., that means securing foreign military sales for Bell, Boeing and Sikorsky helicopters while European manufacturers market armed scout and support rotorcraft to the U.S.

Production of military transports is forecast to rise sharply during the next decade, especially in the latter half due mostly to the introduction of the Airbus Military A400M and Embraer KC-390.

Engine upgrades are a key element of product-line revamps underway at helicopter manufacturers as they work to stimulate a recovery in a commercial market where new-centerline powerplants for rotorcraft are rare events.

The production of F100s and F110s remains active for F-15 and F-16 orders, primarily exports.