Paris Air Show preview; A startling 'top threat'; UTC-Raytheon merger reax; and more.

Just when we thought the grounded 737 MAX would dominate the headlines at this year’s Paris Air Show, United Technologies and Raytheon announced that they intend to merge and the Pentagon handed Turkey a deadline to choose between the S-400 and the F-35. And speaking of the 5th-gen fighter jet: a new report says it has many serious problems that haven’t been in the public eye.

Here we go — or et c'est parti, as Google Translate has it. This year’s flagship European air show comes as the aerospace and defense sector seems to find itself in the national and international headlines on a daily basis.

Plenty of U.S. officials will be joining the bevy of industry leaders in Paris, including Commerce Secretary Wilbur Ross, NASA Administrator Jim Bridenstine, Ellen Lord, the undersecretary for acquisition and sustainment, and acting Air Force Secretary Matt Donovan.

Before the American delegation departed for the Paris Air Show, Lord called it “an efficient and effective venue to meet with our NATO allies, international partners and industry leaders.”

Government officials and industry executives say events like the Paris Air Show (and Farnborough Air Show in England on alternating years), are incredibly valuable for networking purposes alone since they can hold dozens and sometimes hundreds of meetings over the course of the week.

State of Play

The usual caveat: Paris, like the air shows in Farnborough and Dubai, is largely commercially focused. Most headlines concern, say, airline makers Airbus and Boeing attempting to outsell one another. It’ll be interesting to see how the 737 Max grounding following two deadly crashes of the new airliner, will affect commercial sales totals. New reports say the Max will not return to service until December. The Max will be the topic de jour around the Boeing chalet.

But there are plenty of defense themes this year. We’ll be listening for thoughts on the planned UTC-Raytheon merger, particularly from companies and suppliers that already do business with each firm.

Now that the U.S. is threatening to kick Turkey out of the F-35 program, we’ll be looking for any presence the Turkish military and industry has in Paris. We’ll also be asking about Lockheed’s plans to find new suppliers for the more than 400 parts that Turkish companies make for the jet.

Speaking of the F-35, the Pentagon and Lockheed have a handshake agreement for the next batch of F-35s, which includes 157 jets. This is the 12th lot of low-rate production lot purchased by the Pentagon and U.S. allies; it includes options for two more batches of planes worth about $34 billion. Will the Pentagon and Lockheed continue their recent practice of reaching a handshake agreement as the aviation world gathers in Paris?

But European nations are also developing new combat fighters. At last year’s Farnborough show, BAE unveiled plans to create the Tempest, a new-generation warplane. France and Germany are developing a new jet of their own and Sweden is considering a new jet of its own or joining the U.K. or Franco-German projects, Capital Alpha Partners analyst Byron Callan writes. Also, Eastern European nations are on a shopping spree for new weapons to replace their old Soviet equipment, to include fighter jets.

We’ll probably hear a lot about the technology — like electronic warfare or artificial intelligence — those future planes will use and also how the next-generation tech could be used on existing equipment.

Based on the interviews, briefings and meetings on my schedule, I’m expecting discussion of future weapons, missile defense, space, hypersonics, counter-hypersonics and counter-drone tech and also advanced manufacturing.

Much more about Paris, after the jump.

Welcome

You’ve reached the Defense One Global Business Brief by Marcus Weisgerber. Going to the Paris Air Show? Drop me a line, and as always, send your tips and feedback to mweisgerber@defenseone.com or @MarcusReports. Check out the Global Business Brief archive here, and tell your friends to subscribe!

From Defense One

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After an analyst said Obama-era opposition to consolidation had dissipated, Trump appeared to signal the opposite.

Pentagon Gives Turkey a Deadline to Cancel S-400 Deal or Lose F-35 // Marcus Weisgerber

By July 31, says the ASecDef, Ankara must choose between the Russian S-400 or the U.S.-led JSF.

'Space Force' Shrinks in House Proposal // Katie Bo Williams

A bipartisan amendment would trim several generals from the new space-focused component.

Jobs & Planes

The Aerospace Industries Association, the trade group that advocates for aerospace and defense firms, said the sector generated $929 billion in economic output and a positive trade balance of $90 billion. Both of those figures are up over 2017, AIA CEO Eric Fanning said last week at the Paris Air Show preview event in Washington.

Fanning added that the aerospace and defense workforce rose by 100,000 people from 2017 to 2018. The current total of 2.5 million employees accounts for 20 percent of U.S. manufacturing jobs.

More than 350 U.S. companies from 35 states are expected to exhibit in Le Bourget. This year there are 20 state pavilions, something that appears to be increasing lately.

On the Flight Line

Among the U.S. military aircraft expected at Paris: F-35 Joint Strike Fighter (static display only; no flight demo is planned), KC-46 Pegasus tanker, C-130J Super Hercules, and F-15E Strike Eagle; AH-64 Apache, CH-47 Chinook, and P-8 Poseidon.

Seeing the KC-46 on that list might have raised your eyebrows, particularly since those tankers have been mired with problems — including persistent issues with its refueling system and Boeing leaving tools and parts inside of the planes. But the Air Force is showing off the aircraft anyway, on Airbus’ turf, to allies who might be interested in buying a few of their own.

The P-8 is there for the same reason — to woo European allies who might be increasingly interested in anti-submarine warfare.

What’s not on the list: The F/A-18 Super Hornet — a plane Boeing is shopping in Finland, Germany and Switzerland — and an American F-16 (Belgium is slated to bring one), which is all the rage in Eastern Europe these days.

As for the flying demonstrations, nothing to write home about. Of course the Dassault Rafale will fly, but I personally enjoy the attack helicopters. Nothing gets your heart pumping like a rotary-wing aircraft in gravity-defying angles. The flight times for the EC665 Tigre and Turkish Aerospace Industries T129 ATAK will be circled on my calendar.

GD CEO: US Division Is a Top Threat

General Dynamics CEO Phebe Novakovic’s rare public speeches tend to be interesting. Speaking in Boston this week, she was asked to name the top two threats to the United States.

Her first response, “I think we have exogenous threats to our country. I think we now have peer a near-peer competitors who are not necessarily aligned with our value system or our interests. I see that as a real threat.”

Threat No. 2 is something you would not expect from a defense CEO: “As an American, I worry profoundly about our divisiveness as a nation. Democracy requires shared values. We’re not having” a discussion “about our shared values. There’s too much anger and hatred…I worry a lot about the corrosive and cancerous effects of that...anger and hatred. Typically, great empires fall from the inside out.”

Throwing some shade at Silicon Valley:

Novakovic was also asked about Silicon Valley companies that don’t want Pentagon contracts. No one said “Google” — whose employees have vocally objected to the company’s helping the Defense Department install algorithms that identify objects in videos gathered above the battlefield — but it’s clear that’s who the questioner was referencing.

“I’m frankly alarmed when I see some companies to whom much is given not want to work with the U.S. government,” Novakovic said. “Who do they think provides them this freedom? Where do they think the platform for their technology [and] innovation comes from the security and stability of this nation. So, I find as an American, that troubling.”

Novakovic also pointed out that there are tech companies that cooperate with the defense industry. General Dynamics “has established some strategic alliances with many of what the Defense Department calls ‘non-traditional suppliers.’ We’re also looking for people with smart, better ways to do things.”

General Dynamics (and Lockheed Martin) has a footprint in the Valley.

Activist Investor Objects to Raytheon-UTC

Bill Ackman of Pershing Square Capital Management, is against the merger of the defense and aerospace giants, according to emails obtained by Bloomberg. Ackman pushed UTC to divest Carrier and Otis last year. More here.

Two Reports to Read

First, the Congressional Research Service has a good summary of the U.S. Navy’s plans t develop three new unmanned underwater vehicles: the Large Unmanned Surface Vehicles (LUSVs), Medium Unmanned Surface Vehicles (MUSVs), and Extra-Large Unmanned Undersea Vehicles (XLUUVs).

And the Government Accountability Office has a new report that says the U.S. Missile Defense Agency has not met its testing goals.

Making Moves

The Amphibious Warship Industrial Base Coalition has appointed Sam Perez, a retired U.S. Navy rear admiral and current vice president of military customer affairs at Rolls-Royce North America, the advocacy group’s chairman.