What to expect at Farnborough; New data on aerospace and defense; That $10,000 toilet seat, and more.
A perfect storm of crowds is brewing in and around London. There’s the Royal International Air Tattoo beginning Friday and the weeklong Farnborough Air Show kicking off Monday. Combine that with President Trump’s UK visit, the Wimbledon finals, and a trio of weekend concerts in Hyde Park headlined by Bruno Mars, Paul Simon, and Michael Bublé. (Just imagine if England had made the World Cup final.)
Farnborough is the big draw for the aerospace and defense industry crowd while the air tattoo is more of a schmoozefest (more on that below the fold). So let’s talk about Farnborough.
Don’t expect any big defense deals; commercial sales dominate discussion these types of events. But a ton of U.S. government and NATO allies will attend, as will CEOs and other industry executives, so we’ll get a sense of how they’re viewing the market. The biennial airshow in the southwest London suburbs runs all week, but the top dogs tend to thin out after the first two days.
This year’s show arrives amid U.S. tension with NATO; Trump’s planned Monday meeting in Helsinki, with Russian President Vladimir Putin and drama within the U.K. government as it works to withdraw from the European Union. Plenty of American and European firms have outposts in the U.K., soexpect these items to dominate the discussion.
Who is going: There’s a high-powered U.S. delegation led by Peter Navarro, one of President Trump’s top trade advisors. Andrea Thompson undersecretary of state for arms control and international security, and Tina Kaidinow, principal deputy assistant secretary of state for political-military affairs, will lead the State Department delegation. From the Pentagon: Kevin Fahey, assistant secretary of defense for acquisition, Eric Chewning, deputy assistant secretary for manufacturing and industrial base policy, and Lt. Gen. Charles Hooper, director of the Defense Security Cooperation Agency. From the Air Force: Undersecretary Matthew Donovan and Will Roper, the service’s top acquisition official. From the Navy: James “Hondo” Guerts, the service’s top acquisition official. NASA administrator James Bridenstine and acting FAA administrator Dan Elwell are scheduled to attend.
Who else: There’s always a sizable presence of U.S. state delegations looking to bring in jobs. (At last year’s Paris Air Show, for example, how Oklahoma was trying to draw maintenance and logistics firms to the state.) Among the lawmakers expected: Sens. Richard Shelby, R-Ala.; James Inhofe, R-Okla.; and Lindsey Graham, R-S.C. There will also be governors.
All told, there will be nearly 300 U.S. exhibitors expected and 30 states represented, according to Kallman Worldwide, the marketing firm that touts the American presence.
Farnborough 101
Take the train if you’re staying in London: Unless you enjoy sitting in traffic. I learned this at my first time at Farnborough. I happily accepted a ride back to London from a source. Three hours later, we arrived. Now I take the train from Waterloo station, which takes about 35 minutes (express train) or 50 minutes (local). Debark at Farnborough station, and then there’s a free shuttle bus to the air show.
The Weather: Two years ago, torrential rain knocked out power to the show, ending its first day hours earlier than planned. That led to gridlock in nearby roads and lengthy queues for shuttle buses. I ended up walking the two miles to the train station. The moral of the story: be prepared for the worst. Wear comfortable shoes, bring an umbrella, and don’t wear clothes that you couldn’t live without. Right now, the forecast looks pretty good, but that could always change.
Welcome
You’ve reached the Defense One Global Business Brief by Marcus Weisgerber. This week’s edition comes from high over the Atlantic en route the Farnborough Air Show and Royal International Air Tattoo. Will you be there too? Reach out and say hello to: mweisgerber@defenseone.com or @MarcusReports. Check out the Global Business Brief archive here, and tell your friends to subscribe!
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More on Farnborough
On the eve of the airshow, the Aerospace Industries Association advocacy group, released 2017 numbers on the sector’s impact on the U.S. economy.
- “The industry generated $865 billion in economic output and accounted for nearly two percent of U.S. nominal gross domestic product.
- “The industry shipped $143 billion in exports, which accounted for nine percent of total U.S. exports in 2017.
- “Aerospace and defense generated a positive trade balance of $86 billion in 2017 — the largest of any U.S. industry — effectively reducing the U.S. trade deficit by 10 percent.
- “The U.S. aerospace and defense industry supports 2.4 million American jobs, paying an average wage of $91,500 – 81% above the national average.
- In total, aerospace and defense paid out $220 billion in wages and benefits in 2017, which accounted for 2.3 percent of the nation’s total labor income.
“The U.S. A&D industry depends on global relationships, access to global markets, and global supply chains,” Remy Nathan, AIA vice president of international affairs, said in an email. “Robust U.S. government and industry presence are a signal that the U.S. is serious about strengthening our international relationships and increasing aerospace and defense exports.”
Conversation Items
- Tariffs. (The Trump administration has placed tariffs on steel and aluminum imports). “We agree with President Trump that trade should be fair. And we fully support efforts to protect the intellectual property rights of American companies,” AIA's Nathan said. “The aerospace and defense industry is essential to America’s national and economic security, and having access to global markets and supply chains through trade allows U.S. manufacturers to stay competitive.” We’ll also be listening for more on how the Trump administration plans to change export control policy for weapons?
- Textron’s ATAC — its division that flies fighter jets to emulate adversary aircraft for the U.S. military — has started taking delivery of used Mirage F1 aircraft. As of this week, 13 aircraft, which were flown by the French air force, have arrived in the United States. ATAC is competing against Draken and Top Aces as the U.S. Air Force expands its use of outsourced bad guys to fly against its pilots in training.
- Also, L3 Technologies has “entered into a definitive agreement to acquire Azimuth Security and Linchpin Labs, two information security businesses.” Remember, Chris Kubasik, L3’s bullish new CEO, wants the firm to be viewed alongside the “Big 5” defense firms. “Based in Australia, Canada, the United Kingdom and the United States, Azimuth and Linchpin operate in the strategic fields of computer network operations and vulnerability research for intelligence partners and other government, defense and security agencies around the world,” the L3 said in a July 11 statement.
- Qatar has reportedly raised $4 billion in financing toward a $6.6 billion buy of Typhoon fighter jets, Reuters reports.
Planes, Planes, Planes
Get ready for #AvGeek Twitter to explode this weekend as the Royal International Air Tattoo, the self-proclaimed “world's greatest airshow,” starts on Friday. This year’s edition coincides with the Royal Air Force centennial, so expect a bit of extra pomp and circumstance. Military leaders from around the globe show up with their fighter jets and cargo planes. The British royals even tend to show up (Prince William and the Duchess of Cambridge brought son Prince George in 2016). More than 150 aircraft are confirmed for this year’s event. What I’m looking forward to seeing: Ukraine is slated to bring two Russian-made Su-27 fighter jets. We don’t get to see those kinds of jets often on this side of the pond.
The $10,000 Toilet Seat
A few months ago, we told you about the $10,000 toilet seat that the Air Force could 3D print for a much slimmer $300. Turns out that toilet seat is in a C-5 cargo plane (Will Roper the head of Air Force acquisition originally told us it was in a C-17. Both big cargo planes, so we’ll give him a pass). Regardless, Sen. Chuck Grassley, R-Iowa, wants answers as to why the Air Force was paying so much. Here’s a letter he sent to Defense Department Inspector General Glenn Fine. The Air Force tells Military.com that it is no longer paying $10,000 for the toilet seats. Last week, it emerged that the Air Force was paying $1,200 for coffee cups for its tanker crews.
Flashback to Farnborough 2016
Just for fun: Last time the show convened, here were the main headlines (remember, Farnborough takes place every other year, alternating with the Paris Air Show):