Wednesday, April 8, 2009

When you're considered an 'industry expert'

Posted by John Keller

I'm quoted today in The Telegraph, the daily newspaper of Nashua, N.H., as an alleged industry expert on military technology matters where the Lockheed Martin F-22 Raptor advanced tactical fighter jet is concerned. The paper wanted my opinion on how the Pentagon's plan to scale back purchases of F-22 jet fighters in the latest defense budget proposal will affect the BAE Systems Electronics and Integrated Solutions segment in Nashua, N.H.

The story, entitled Halting jet's production may hurt BAE, is based on an assumption that BAE Systems might lose money or cut jobs if the Pentagon can halt production of the F-22 at slightly less than 200 fighter jets. BAE Systems is involved in much of the aircraft avionics technology for the F-22. I pointed out that BAE Systems is well positioned not to be hurt significantly by stopping one big defense program. BAE is about technology, not platforms, I said.

Really, I'd like to make two points where the proposed U.S. Defense Department budget is concerned.

First, the DOD budget most likely will be rich in aerospace electronics, with military electronics technology money perhaps flowing toward soldier systems rather than big aircraft, ship, and combat vehicle programs. The money for electronics and electro-optics technology is likely to stay in the budget, so aerospace and defense technology companies should not take substantial hits overall. I seriously doubt if we'll see the kinds of defense budget cuts in the Obama Administration that we did during the Clinton Administration.

Second, this budget fight is far from over -- in fact it's hardly begun. Congress will have the last word on how much money the Pentagon will get next year and where it will be spent. In this Democrat-dominated Congress, jobs and the economy are the first priority. Lawmakers will be reluctant to kill defense programs perceived to employ a lot of people. I think it's no a foregone conclusion that production will stop on the F-22. DOD tried for years to kill the V-22 Osprey tiltrotor aircraft, and Congress never let them do it. It could be the same with the F-22.

Something else to think about: Somali pirates hijacked a U.S.-flagged vessel today for the first time in the latest Indian Ocean wave of piracy. Congress is watching this, and knowing that their constituents will expect a strong U.S. response. Being perceived as cutting the defense budget right now won't be considered a good way to get votes.

I know it can be fun to trumpet doom and gloom based on comments from the secretary of defense. But keep your chin up. The Congress has not weighed in yet on the proposed DOD budget restructuring, and I think it could be interesting what Congress comes up with.

Stay tuned ...

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