Future Equipment of the Bundeswehr –
Chances and Perspectives
Rüdiger Wolf
The Federal Republic of Germany has presently more than 7,000 military personnel employed within the scope of NATO, EU or UN mission on three continents. Fewer than 5,000 soldiers are in a state of readiness for cases of rapid reaction by the international community and as operational reserve. As regards geography, topography, climate, and cultural conditions, the theaters of operation are only seldom comparable with the conditions in
The range of the required capabilities of the Bundeswehr in missions such as in the Balkans, in
In today’s missions the quasi “classical” picture of major units in symmetric, conventional battles does no longer dominate the scene, but one of militant insurgents, guerillas, illegal militia or terrorists in so-called asymmetric threats. For our service personnel this means that they need equipment that is flexibly employable and suitable for the particular mission. It must often be light, quickly deployable, technically superior, robust, and all this on a high level of protection.
All requirements, and that goes for the past and for the present, should, as far as possible, be realized in a compatible way among one another and with those of the allies; military equipment does not only have to be supportable over the entire service life, but must also be possible to be maintained under operational conditions, under the most adverse circumstances. Some of the requirements compete with one another; in the individual case their importance for the realization of a projects must be weighed against each other, though.
The quick change of operational and technical requirements associated with the diversity of today’s missions and the interfaces which have consequently to be created for the command capability and the many and diverse system dependencies demand today more than ever situation-related, flexibly adapted solutions. Nationally, the trend goes thus also in direction of smaller numbers of units and procurement batches, respectively, in order to quickly achieve a balanced capability growth and to be able to rapidly cover the broad spectrum of the most likely missions. In future, the Ministry of Defence will examine very critically long-term contractual commitments with high fixations of unit numbers for possibilities of the future adaptation both in respect to the running time and the number of units.
This is also in the interest of the industry, which necessitates, of course, that respective arrangements be collaterally agreed also on the industrial side to avoid economic drawbacks. Whether this idea could also be applied to current contracts would have to be examined – if necessary in an approach covering several projects.
At the same time, it is necessary to have shorter procurement and adaptation cycles, respectively, since the armed forces can only benefit from employable equipment, but not from products, which are still in the process of realization. The risk involved in individual cases of a larger diversity of types and versions, which regularly lead to higher maintenance expenditure, must remain an absolute exception, however. The many and diverse requirements outlines have to be prioritized by considering the possibilities of the defence budget, of course. It is therefore worthwhile to take a look at the 2008 budget.
2008 Budget Outlook
The 2008 budget and the 41st finance plan up to 2011 provide a precondition for the continuation of the adaptation and modernisation process. Compared to the 2007 budget it was possible to achieve an increase by more than a billion euros (1,060,600,000 euros) to a total of about 29.5 billion euros. The share of defence investment spending has thus risen by about 1.3 percent as compared to the 2007 budget and the 40th finance plan. In comparison with the ended 2006 fiscal year it was possible to score even an increase by 2.1 percent.
The following became apparent in particularly the military procurement field: When the expenditures for military procurements were about 4.0 billion euros in the 2006 fiscal year, they rose to about 4.2 billion euros in the 2007 fiscal year; in the 2008 fiscal year, they are estimated to be approximately 4.7 billion euros. This means an increase by about 15 percent compared to the 2006 budget.
There is a similar trend with the expenditures for the field of research, development, and testing. Here, too, the estimates were possible to be increased by almost 15 percent to now 1.2 billion euros as compared to the 2006 budget. In total, the expenditures for “investments” in 2008 increase by approximately 628.0 million euros to now more than 7 billion euros compared to 2007, whereas the operating expenses were reduced by almost 400 million euros. Of consequence here are especially the operating costs for airborne and space-based systems, which take up nearly half of all funds in the total spending field of maintenance, which, after all, comprised about 2.1 billion euros (1.008 billion euros in 2007 budget for airborne/space-based systems) in the 2007 budget. When seen in this light we will and must, more than ever before, put the life cycle-cost aspect into the focus of our considerations with all future projects, not only for aircraft. The economic efficiency of procurement intent must also be orientated to the costs of use.
To say it more clearly: I see a co-responsibility of the industry to find approaches for solutions to effectively reduce the operating expenses foreseeable in the planning as well as the actual ones, i.e. not only for products which are still in the process of realization, but also for already introduced systems within the scope of an after-sales support which deserves the quality label “Made in Germany”.
Aspects of Bundeswehr Planning
Superior goal was, is and remains the improvement of the operability of the armed forces in the pre-determined task spectrum. To this end, we are looking for solutions in each individual case which, with increasing demands and a less rapidly increasing ceiling,
- Guarantee the necessary capabilities and, at the same time,
- Comply with the requirements of the arms industry and the stipulations of the armaments cooperation policy.
Here it is of prime importance to economically utilize the available resources for a maximum benefit of the armed forces. It is therefore not appropriate to pursue approaches for the armed forces, which, in comparison with other solutions, produce a lower or a belated growth of the required capabilities – all the less so when these solutions lead to higher overall expenses.
If in doubt, creative possibilities of industrial policy will find their limits here. To be underscored in this context are the words “required capabilities“: The armed forces do not need a “gold-rim solution” and no “technical gadgetry”, they need rather “customized equipment”. Equipment is tailored to the needs of the forces only if it is operationally ready, if it corresponds to the required quality, is delivered in sufficient numbers in due time, can be serviced and supported, and if it continues to be economically useable over the total life cycle.
In other words: The reality of the missions and the budgetary situation do not leave any room for a time-consuming reproduction or the generation of a variant construction of a product already commercially available. A successful “product placement” in form of glossy brochures and models does not relieve of the obligation to let the “placement” follow a “competitive product“-and that at an early time.
I would therefore like to appeal not to demand, offer or order any “castles in the air”, but to concentrate on the “feasible” and technologically meaningful within the fixed time, efficiency and cost frame. Large portions of the domestic defence industry have already prepared themselves to the requirements of an army on operations. They keep pace with the transformation of the Bundeswehr and also reorient themselves, too to keep meeting the changed requirements. The fact that flexible, efficient, and reliable partners and new innovative products are being sought after from abroad in view of the tight cash situation opens additional opportunities here.
Situation of the Aerospace Industry
The aerospace industry is one of the most broadly internationally networked sectors of
I consider these positive figures and the excellent dynamism as a clear proof for the efficiency of the enterprises united in the BDLI. The fact that about 30 percent of the turnover of the aerospace industry are generated in military aviation and defence technology shows the close “business relations” between the FMoD and the aeronautical industry, but justifies also a certain anticipatory attitude of the FMoD with regard to contractual loyalty and reliability of the partners. How are things with the other industrial sectors?
Shipbuilding Industry
The consolidation of German naval yards was largely completed with the creation of the TKMS yard combine. Whereas the TKMS combine can successfully stand its ground in international competition in the segment of conventional submarines it has yet to prove its capacities in the above-water sector on the international scene. In order to be able to successfully act on international level it is necessary to have a close and active coordination between industry and FMoD. The remaining independent German naval yards have found their role in special fields.
Land System Industry
On private sector basis a consolidation process with considerable capacity adaptations took place in the past years already. Today, there are two system companies (Rheinmetall DeTec and Krauss-Maffei Wegmann) as well as the component manufacturer, the Diehl Company, left, which develop and produce army materiel. The still existing excess capacities – not only in
Ammunition and Missiles Industry
The available technology and production know-how in the fields of ammunition and guided missiles is globally competitive.
Defence Technology Core Capabilities, Competition
Own defence technological capabilities are a prerequisite to help shape the European integration process in the armament field. They guarantee cooperation capability and ensure the influence in the development, procurement and operation of decisive military systems. Only those nations with an efficient arms industry have a respective weight in alliance decisions. The fact that aeronautical projects can, in general, hardly be financed by purely national funds nowadays is a truth, which is accepted by everyone.
On the other hand, an extensive European consolidation has occurred on the side of the bidders, which limits the competition on system level to just a few enterprises. The bidding market for maintenance services in the aeronautical field is also characterized by a restricted competition. This results, e.g. from stipulations which again result from the aeronautical legal provisions and regulations for the licensing and operation. They prescribe, for instance, that aircraft, aeronautical equipment, and spare parts/replaceable items as well as their modifications may basically be produced and maintained by only such aeronautical engineering companies, which are specifically certified for that. The competition was further restricted by European consolidation processes of system companies (EADS and Eurocopter, respectively). It is thus all the more important to keep the competition alive below the system level.
It is therefore a declared objective of the FMoD to advance the comprehensive integration of medium-sized enterprises by the general contractors in armament contracts in all sectors. The “Joint Declaration on National Defence Technology Core Capabilities” which was signed by the Committee “Defence Economy” at BDI (German Industrial Association) and the FMoD on 20 November 2007 speaks deliberately of “capabilities” and does not link these with a certain size of enterprises and thus integrates medium-sized companies in full awareness.
In this context it is important to me to emphasise that the defence technology companies which project defined capabilities can neither derive an entitlement to contracts nor be excluded from the fundamentals of economic acting. Both the defence technology core capabilities and, for example, the “European Defence Agency” (EDA) are very significant strategic instruments for actively helping shape a “coalescent
Enterprises whose capabilities belong to the defence technological core capabilities must thus continue to conduct research, development and test activities by themselves to ensure their technological and economic power position. With a research and technology title, which comprises only about 0.6 percent of the total spending for research and development (R&D) in Germany, the FMoD is not able to provide the defence technology industry a technological base as well as the necessary know-how in competition. That what FMoD can provide and provides is to signal foreseeable, future requirements and to take up futureoriented and innovative technologies and to foster necessary add-ons. Research and development as well as the pooling of national competence on system level by creating “national champions” will thus remain a task of especially the industry and not of the state. It must itself look for respective cooperation partners, hold talks with banks, protect alliances by contract, and present competitive products in due time.
Within the realm of its possibilities FMoD offers its support for exhibitions, trade fairs, and in exports as well as in talks about development programs or for the protection against takeovers as long as an economic rational is followed here. In doing so, FMoD consistently pursues the object to maintain the efficient and competitive arms industry in
Military-Industrial Cooperation
In order to obtain or maintain needed capabilities it is conceivable to bank more on partners or the industry as far as this is not conflicting with national requirements and as long as a reliable performance is guaranteed. A mighty instrument to manage the challenges of the future is the public-private partnerships.
Here, the Bundeswehr is not tied to certain legal, contractual or organizational forms in the cooperation with trade and industry. This creates leeway for new ideas and it is a chance for new concepts.
So far, the Bundeswehr is involved in seven companies. To be mentioned here, for instance, are the LHBw (Lion Hellmann Bundeswehr Clothing Company), the HIL (Army Maintenance Logistics), and as the most recent company formation the BWI Informationstechnik GmbH (Information Technology). In addition, there are quite some cooperative models. The Air Force has already realized eight cooperative models with enterprises of the defence technology industry. This type of cooperation allows the renunciation of double built technical establishments and ensures the technical competence of the soldiers as well as their employment, cognition/comprehension and judgment capability. To give you the possibility of assessing the already achieved order of magnitude of our public-private partnerships it should be mentioned that the expenses for cooperation’s with trade and industry within the scope of public-private partnerships in 2008 will rise in the expenditure field “operator solutions” to more than 1.3 billion euros.
Summary
In view of the quick developments in a highly dynamic industrial and political environment it is possible that there will be new cooperation fields of Bundeswehr and industry, both in the areas of training, investments and operation. These need to be carefully prepared. Only in a dialogue between the recognized efficient German arms industry and FMoD will it be possible to correctly determine the national course of action.
I am therefore pleased that we have been cultivating this close and constructive dialogue for decades already, which may not distract us, however, from having to prove our efficiency anew every single day.
By Rüdiger Wolf, Undersecretary of State, Federal Ministry of Defence.