Introduction
The European defence system is finally evolving, accelerated by the growing need for effective, efficient, and sustainable air and space capabilities. At the same time, in light of the war against Ukraine, various shortcomings in Europe’s defence, industrial and technological capabilities have suddenly become tangible. Simultaneously, a geopolitical power shift is happening that has the US increasingly focused on China as the ‘pacing threat’ and system rival and are expecting Europe to pull their weight by contributing to their own defence.
The Russian invasion of Ukraine has revealed these and other unpleasant truths for Europe. As political leaders across Europe acknowledged, we are indeed facing a ‘Zeitenwende’ (turn of the times). Europe is at a critical juncture that calls for a change of policy and processes.
Germany, France and Spain, economic strongholds and important NATO allies, have announced their plan to finally live up to the 2% NATO defence expenditure target. NATO has welcomed this as it sees these members paying their defence dues and improving the operational readiness of their armed forces.
But it’s a long way from rhetoric to reality: Unfortunately, even a full year after it was introduced with much fanfare, the ‘Zeitenwende’ is largely still awaiting its actual execution. The budgeted funds substantiating this policy change are excruciatingly slow to reach the European defence industry: Apart from purchasing F35 fighters and planned CH-47 helicopters, Germany, for example, has yet to spend the bulk of the funds. Even the restocking of ammunition and replacement of defence goods provided to Ukraine has not yet occurred.
But it is not just the allocation of funds the ‘Zeitenwende’ execution has failed on so far. The necessary overhaul of the procurement regulations, while, of course, remaining compliant with laws and regulations, has not happened in Germany. These rules, defined in peacetime and seemingly designed to ensure zero legal or contractual risk without improving throughput and implementation results, need to be revised and adapted to the realities of a defence landscape that has to brace for a decade of rising geopolitical risk including an ongoing hot war in Europe.
And finally, the industrial base has to be secured and overhauled as well: from a capacity to deliver to a technological and a mindset point of view.
We can only accomplish the three improvement needs mentioned in concert.
Devising a Collaborative, Resilient and Sustainable Defence Infrastructure for Europe
The key questions for European defence in the 21st century are simple: How can we achieve a collaborative, resilient, and sustainable defence infrastructure for Europe? What should it look like? And how can the European defence industry play its part?
The answers are just as simple in principle, but their implementation is a mile-high, tall order for our generation: We need a different mindset. We need to let go of short-sighted comfort and business as usual. We need to look ahead and move swiftly. Europe needs sufficient strategic autonomy. We need a transparent, coordinated, integrated European industrial and technology strategy. This mindset is the basis for building and maintaining credible, sustainable, and well-equipped armed forces in Europe and for NATO.
From a defence industry perspective, we, our customers (governments and armed forces), and key partners (non-European suppliers, NATO) need to address the following action items:
- secure, utilize and leverage existing defence capabilities;
- facilitate the defragmentation and cohesion of the European defence landscape;
- promote and establish ‘new and agile’ ways of working;
- modernise procurement and optimise its processes;
- mature and standardise interoperability and modular open systems architecture for platforms;
- promote a European Space Strategy.
All this needs to be done and achieved together. It requires full collaborative transparency and the willingness of all stakeholders to rally behind a common purpose: Build a robust and sustainable European defence landscape that strengthens Europe’s security and its reliability for NATO.
How to Leverage and Utilize Existing Defence Capabilities
Many significant challenges have been exposed in the light of the war against Ukraine. If we accept these ‘lessons learned’, we might have a great launch pad for moving by leveraging existing defence capabilities.
One example is the significance of localised defence maintenance hubs. The ability to maintain, repair, upgrade, and further develop combat systems on-site is strategically and economically prudent and a precondition for resilience. It is also time-efficient and guarantees the continuous mission-capable status of critical weapons systems. Airbus Defence and Space has long seen the advantages of such hubs.
Two proof point examples are:
- Getafe (Spain), which is home to the A400M, C295 and Eurofighter, also maintains the F/A18 Hornets. Airbus works closely with the Spanish Air Force to keep them mission ready until they age out in 2024.
- With Manching (Bavaria, Germany), we have built one of Europe’s leading facilities for military aviation. This site is unique in more ways than one: In Manching, Airbus and our customers (German armed forces) work together closely and as equals. Its beginnings were primarily in repairing and maintaining American aircraft like the F-104 Starfighter and F4-Phantom, and to this day, we maintain externally produced aircraft such as the NATO AWACS aircraft. This site covers the entire value chain from R&D and design to production, maintenance and customer service of military aviation platforms. It also houses the Future Combat Air System’s (FCAS) ‘Remote Carrier’ and ‘Loyal Wingman’ development and simulation. Accordingly, Manching would be a logical decision to maintain and keep operational the German Luftwaffe’s recently purchased F35 fleet.
The various site capabilities Airbus successfully operates in its home nations ensure cost- and time-efficient military readiness and necessary working equipment to respond to threats effectively and offer a blueprint for industrial cooperation and end-to-end capabilities.
Co-working hubs such as these are critical in securing a reliable and sustainable European defence infrastructure, which today has become necessary in the face of war in Europe.
A robust and inclusive European defence industry is crucial for both NATO and its largest member, the US, as it promotes genuine burden sharing. It fosters joint innovation, inspiration, and interoperability, essential elements even for the US, which contributes to multiplying its military capabilities. Therefore, a strong European defence industry is necessary to address global security challenges and fulfil its responsibility, a precondition for making sovereign decisions in Europe. This becomes particularly significant since the US considers China as a ‘pacing threat’ and will shift its focus to the Indo-Pacific and China, reducing attention on European defence and security.
Facilitating Defragmentation: How to Create a More Cohesive European Defence Landscape
The European defence industry landscape is highly fragmented and cohesion is imperative. Consisting of many countries with diverse military and industrial capabilities, individual defence priorities and budget constraints make it challenging to align and coordinate: The European defence industry is significantly smaller in scale compared to the US, with a dilution factor of approximately 10. While the US focuses their budget on fewer platforms or weapon systems such as tanks, ships, and combat aircraft, Europe operates with roughly half the budget. Consequently, this leads to duplicated efforts and inefficient utilisation of constrained resources in Europe.
There are two theoretical propositions on how to curb fragmentation:
The first option is that the European defence industry gets consolidated, and only the strongest players remain. However, this is hardly a feasible or likely scenario. Naturally, politicians are too invested in protecting their national interests and constituents’ votes; and national defence players are trying to secure their profitable defence contracts and are not interested in close co-operation. Germany is a case in point: Its notorious 25 million Euro release process exacerbates structural fragmentation and underscores the political influence and manoeuvring in constituencies.
The second option is multinational and industrial collaboration on large defence programmes. While this is not a new approach, it is most certainly the only viable option. Yes, some joint European programmes of the past have faced justified criticism: too expensive, too late, and not fit for purpose. However, let’s look at and understand the root causes: The defence industry often has to deal with either last-minute changes in customer requirements or national specifications. These so-called ‘gold-plated solutions’, not aligned with other nations, prevent scaling, lead to an explosion of complexity throughout the life cycle of a product and strain already tight budgets further.
That said: The industry too is to blame and has frequently made mistakes. By over-promising, over-extending, and under-delivering on contracts the industry failed to meet expectations.
Despite these challenges, and based on our experience, we strongly believe that multinational programmes are the only key to Europe’s success and defragmentation of the defence landscape – if they are sourced jointly, specified realistically and developed collaboratively, transparently and iteratively between customer and supplier. In recent programmes like Eurodrone, FCAS close discussions on requirements and expectations with project partners and customers have proven beneficial and were a lesson learned from the past. And for future endeavours, Airbus is taking the adoption of agile and Minimal Viable Product1-oriented (MVP) ways of working into consideration.
Promote and Establish ‘New and Agile’ Ways of Working
Industries are experiencing constant and unpredictable changes. While this permanent disruption known as VUCA2 (Volatility, Uncertainty, Complexity and Ambiguity) presents challenges, it also provides opportunities to reform traditional leadership, management, and daily operations approaches.
Embracing new concepts like MVP and digital design can be game-changers for the defence industry. MVPs are the simplest product versions built to test their viability and value to customers. It validates assumptions and tests the product’s value proposition, target audience, and business model. Digital design allows designers to create and test digital product prototypes before making them in real life. Companies can save resources and improve customer satisfaction by applying these approaches in a scaled, agile setup. This method is a framework for managing complex projects, breaking them down into smaller tasks and completing them in short sprints. Team collaboration, openness, and transparency are integral to the project’s success. This all must be matched by a procurement process that allows for incremental and evolving steps.
To stay competitive, we need to change our operational thinking and practices. This is especially true for our space business. Small, well-funded start-ups are disrupting the costly space industry, driving innovation and democratising space.
Investor-funded companies like SpaceX, Blue Origin, Maxar, and Starlink have transformed the market with their agile and lean business practices, copied from Silicon Valley. Their approach to the space business is very customer-centric and has less of the red tape that comes with traditional, government-sponsored projects. As more companies like SpaceX enter the market and the battle for investment, talent and contracts becomes even tougher, the transformation of the defence industry is inevitable.
To achieve this, we must treat all procurement, contracting, R&D, and production stakeholders as part of a ‘Sprint team’. This includes our customers (procurement representatives of and users from the armed forces and government officials) and (inter)national industry partners, who, ideally, fully commit to the process.
Transforming the defence industry’s classical approach and adopting new ways of working is both imperative and challenging for our customers, our industrial partners and ourselves at Airbus. Letting go of the waterfall processes we hold dear requires persuasion in order to evolve. In the first pilots across several nations, we see promising results; however, we will inevitably experience setbacks that we need to consider as a source of improvement rather than defeat. We are convinced that this transformation will lead to reduced lead times to usage, and make the products more resilient and interoperable.
Modernize Procurement and Optimize its Process
The defence procurement process in Europe is, in many ways, outdated. Over decades an approach has become established that favoured special and national requirements – so-called ‘gold-plate requirements’ – over actual user needs (e.g. a turboprop aircraft flying at Mach 0.75 leads to costly and complex propulsion systems or a 100% reliability expectation for electronics equipment: it is beyond what even the automotive industry, with millions of products, would ask for).
This is not the result of European collaboration – aimed at overcoming national fragmentation in costly and complex systems – but of excessive nationally-driven requirements. A case in point is the Airbus NH90 helicopter. With over 22 distinctly different variants spread over approximately 600 aircraft, this leads to exploding costs of complexity. In order to produce time- and cost-efficiently, the defence industry – like most industries – depends on scale and serial production. That is not feasible with rampant, spread-out, and highly specialised individual variations. The result is a defence industry that, dependent on government contracts, is more or less knee-capped and forced to over-promise, fearing that they won’t be able to deliver on time, cost, and quality.
We need to do away with the deliberate decoupling driven by the procurement office in the procurement process between the description of the requirements and the military-technical expertise the industry offers. This whole process flies in the face of industrial logic, with pages upon pages of detailed and high-flying gold-edge requirements produced by procurement offices. The industry is not allowed to negotiate or discuss these requirements but is expected to either take it or leave it. The effects are many times: The development journey is ten years with a fixed set of requirements that may – or may not – match what is actually needed once the product is available.
Reforming the procurement process and aligning it across all European Union member states is a necessary step forward. It needs to happen with all stakeholders involved from the very beginning, especially on large, multinational defence contracts. The main objective is to understand the different requirements of the diverse national armed forces and find common ground that delivers on their needs when on mission and in theatre. Gold-edge requirements must be kept at an absolute minimum and always be weighed regarding actual user benefit, necessity, and cost-effectiveness. A streamlined, cost- and time-effective European procurement process will eventually lead to better interoperability and cooperation. The Ukraine war demonstrated the importance of the limitations of individual nations acting in isolation and the need for fast and joint development and acquisition of defence capabilities.
A New Paradigm: Mature and Standardize Interoperability and Modular Open Systems Architecture (MOSA) for Combat Platforms
To address interoperability, our industry needs to incorporate modularity and open architecture from the beginning of any development process. Simply saying, we must stop hyper-diversification and the ‘one product for one application’ mentality that inherently complicates compatibility. Modern armed forces need systems that adapt to diverse needs, products with low operational complexity, are fit for combat and always mission ready. Interoperability and layered open architecture will be even more critical in the future: NATO has also stated that it is vital for allies to act efficiently together to achieve tactical, operational, and strategic objectives.
The extensive introduction of the F35 across European Air Forces is a case in point. The aircraft itself is just one part of the procurement. Its closed ecosystem comes with an additional hidden price tag: making the F35 interoperable with the rest of the fleet systems is a costly and herculean task, as a workaround needs to be found.
Furthermore, we must consider that in the coming decades, European and US forces will be operating mixed fleets of crewed and uncrewed 6th-, 5th– and 4th-generation aircraft, demanding new technological solutions to solve recurring interoperability issues. Therefore, we cannot afford to accept closed proprietary systems, as they lead to duplication and higher costs, reducing the combat value of a fleet with mixed assets and systems.
The future of warfare will be digital, and the global defence industry will only be able to meet the demands of a constantly evolving geopolitical and defence landscape through the industry-wide adoption of interoperability and MOSA.
A Loyal Wingman-type drone can be a good example of why modularity and interoperability are so important. This uncrewed aircraft, equipped with Artificial Intelligence (AI), teams with crewed aircraft to support and enhance the latter’s capabilities. The Wingman is a cost-efficient force multiplier that performs surveillance, reconnaissance, and even combat. To keep pace with the fast-changing nature of warfare, our armed forces need Loyal Wingmen with modular capabilities that are interoperable with as many aircraft types as possible – regardless of their generation or manufacturer.
The modular and interoperable approach must define the future of our industry. The industry must accelerate its adoption to stay competitive and be considered an attractive partner to third-party suppliers and customers. Across the Atlantic, the US military first generation of Collaborative Combat Aircraft (CCA) has announced the delivery timeline by the end of this decade.
On the other hand, the delivery date for the European comparison project, FCAS, is currently planned for 2040 – a very late timeline for teaming manned and unmanned aircraft. We must speed up our lead time and bring FCAS pillars like ‘Remote Carriers’3 – ideally developed via an MVP-type approach to continuously add capabilities.
Our industry and customers must prioritise the benefits of MOSA and interoperability over proprietary interests and concerns.
Promote a European Space Defence Strategy: The Space Domain Paradox
Tomorrow’s geopolitical challenges will take place across a fluid continuum of land, sea, air and space, cyber. Space will be the next combat theatre, which is still widely underestimated but needs to be addressed with a holistic and determined 21st century defence strategy.
While space has become increasingly important for military operations, such as satellite communications, intelligence gathering, and missile defence, the European approach to space has traditionally focused on civilian, commercial and environmental endeavours. As a result, the space domain has been kept separate from geo-strategic considerations. That mindset is changing now, but as more European countries develop national space capabilities, the fragmentation of the space industry subsequently increases. So does the risk of potential turf wars in space. Europe created its next paradox of multinational necessities and national interests.
To address this issue, the European Union must establish a strategic framework that promotes collaboration in countering space threats and identifying the main risks to space systems and the associated ground infrastructure. Developing shared strategies, policies, and regulations for space can serve as the framework for jointly addressing space challenges, and must include all players: The defence industry, armed services, and NATO. What is required are diverse critical functions with much greater resilience and shorter latency than Geostationary Orbit (GEO) can offer: earth observation, communication and intelligence gathering. Secure satellite constellations such as Infrastructure for Resilience, Interconnectivity and Security by Satellite (IRIS)2 and building up an active defence capability – will become strategically indispensable means of deterrence for both Europe and NATO.
Conclusion
Taken together, these are the key suggestions for the road ahead:
An honest and realistic definition of requirements. Instead of dream walking, we must keep it real. That means mandating products based on modularity, scalability, and MOSA, and co-designing the products and features with customers and industry partners.
Agile development and procurement: Our processes must be thoroughly revised and integrate MVP concepts to create and test products more quickly based on a tandem customer-operator feedback loop for continuous improvement.
Interoperability and connectivity by design: It should be mandated by NATO and must become second nature to us instead of continuing with individual, national solo efforts.
Defence budgets: The defence industry has to get real and finally deliver. That means NATO nations must spend at least 2% of their GDP on national defence.
Think transatlantically: Let us pursue a tech-driven, European industrial strategy that doesn’t position itself against the US but aims at serving as a strong pillar within NATO. This will create a force multiplier for Europe, building a resilient industrial base with higher visibility that will attract investment and much-needed talent.
European defence industry: A strong industrial base is also a prerequisite for burden sharing while giving the US more flexibility in addressing global security challenges, such as China.
European programmes: The defence industry has to initiate and implement complex systems because of the above mentioned points and for all the above reasons.
As a big player in the European defence sector, Airbus Defence and Space will strive to help reshape European defence security with its nation partners and allies.
We live in extraordinary times and need to take extraordinary measures: Airbus Defence and Space has recently overhauled its strategy and is undergoing a profound transformation. At our core, we always put our customers first and constantly iterate our decision-making and operational execution process. We offer an interconnected product and service portfolio for capabilities in the strategic air, space and cyber domains, covering all key areas of 21st century defence.
With broad competencies in the aerospace sector, we can assist Europe in taking on a greater role in guaranteeing its security, increasing its strategic autonomy and strengthening NATO’s collective power. All of this is fundamental to Airbus’, Europe’s, and global security. It is essential that Europe – policymakers, governments and the defence industry – take on the future of defence in the 21st century.
Airbus Defence and Space is in a great position to move ahead with our NATO partners, customers and allies. We offer our technological expertise, unique innovation spirit, valuable industry insights and experience.
We are ready to do our part.
