The UK and the Joint Strike Fighter

Abstract

The 20 years since the end of the Cold War have seen a radical shift in the nature of the defence industrial sector, with a rationalization of the number of companies involved. While something similar happened in the civilian aerospace market, which has become dominated by two giant rivals-the United States-based Boeing Corporation and the European consortium of Airbus-it occurred over a much shorter timescale. For example, in the US defence market Boeing merged with McDonnell Douglas in August 1997; Lockheed and Martin Marietta merged in March 1995; while Northrop Aircraft acquired Grumman Aerospace in April 1994.1 Today the defence market is increasingly dominated by a smaller number of large multinational companies that have global interests, such as Boeing, Lockheed Martin, General Dynamics, Northrop Grumman, Raytheon, EADS, Thales, and BAE Systems. In conjunction with this slow but steady rationalization, most western countries since the end of the Cold War have sought some form of peace dividend and diverted resources from defence to other areas of public expenditure.2 For example, the United Kingdom's defence expenditure dropped as a percentage of Gross Domestic Product (GDP) from 4.6 percent in 1987 to 2.56 percent in 2010. This drop mirrored much of what was happening in the rest of NATO, with the average defence expenditure falling from 1.93 percent in 2001 to 1.58 percent in 2010.3These budgets have been put under severe pressure by the financial crisis and recession from 2007 onward, including the slow economic recovery in North America and the sovereign debt crises in Europe. For the UK, this pressure resulted in the publication of a strategic defence and security review by the Ministry of Defence (MoD) in October 2010. The review outlined reductions to the defence budget, the number of platforms operated by the services, and the numbers of civilian and service personnel.4 These cuts were implemented even as the UK became involved in the crisis in Libya and continued to operate in Afghanistan.5 Meanwhile, weapon systems increasingly have been incorporating cutting edge technology in a process that requires additional expenditure by NATO countries on software development, systems integration, and supporting technology, such as satellites and real-time global communications. These requirements have caused the proportion of fixed costs to variable costs to rise; and that, combined with the decline in defence spending, has resulted in a decrease in the number of actual systems procured from one generation to the next, so that the unit production costs have risen as well.6These factors have forced companies on both sides of the Atlantic to increase their participation in, and support for, the global defence market. As a result, defence industries have looked to increase partnering opportunities with their opposite numbers around the world, although challenges remain.7 Indeed, although the US still has a total national defence budget that is twice as large as the rest of NATO put together (in 2007, US$625.9 billion compared to $311 billion), even Washington is finding it increasingly difficult to adequately fund all of its modernization programs.8 For example, the US cancelled the RAH-66 Comanche helicopter program in 2004 and had reduced the planned number of F-22 Raptor air-superiority fighters from the original requirement of 750 to 381 by November 2008.9 jn this increasingly austere environment, with governments and companies looking to increase cooperation and collaboration, the Joint Strike Fighter (JSF) program came into being-a program that now has three export customers, eight partner countries, and international defence industrial participation. This article looks at the UK's involvement in what is now a multi-service, multinational defence program, examining the problems the UK has encountered-including the difficulties in predicting the program's costs and time schedule-the risks in recent UK MoD decisions, and the policy options and problems facing the UK, if it wants to remain one of the main partners in the JSF program. …