The military aircraft industrial base should remain in “good shape” despite ongoing market pressures, but could be harmed by reduced defense spending for future procurement and research and development, according to a new Pentagon report.
The Pentagon’s Annual Industrial Capabilities Report provided to Congress last month said projections through 2015 show a steady increase for aircraft procurement as the trend continues to accelerate programs into production to speed overall recapitalization.
The report, however, warned that decreases in research, development, testing and evaluation (RDT&E) could endanger industry innovation and design capabilities. The report cited budget reductions in F-35 RDT&E funding as the program heads into full-rate production.
“The impact of top line budget constraints on future procurement and Research, Development, Test and Evaluation (RDT&E) funding levels means that industry design and development capabilities may be at risk,” the report said.
The Senate Appropriations Committee in September called for cutting $37.9 million from the Navy’s fiscal 2012 research request of $1.3 billion for the F-35.
On the shipbuilding front, the Pentagon said U.S shipyards are facing contraction and inefficiencies associated with lower build-rates.
“This sector has seen a contraction in the defense industrial base, reducing competition and inhibiting affordability,” the report said.
The report highlighted Northrop Grumman’s [NOC] decision earlier this year to spin off its shipbuilding business, forming Huntington Ingalls Industries [HII], which now controls Newport News, Avondale and Ingalls and makes up three of the six major U.S. yards. The others are NASSCO, Electric Boat and Bath Iron Works–all under General Dynamics [GD].
Northrop Grumman had planned on closing the Avondale shipyard in New Orleans, a decision which now lies with HII. If HII follows through on closing Avondale, it would reduce the United States to five major shipyards and would affect more than 11,000 direct and indirect jobs, the report said.
The report noted that the shipbuilding industry relies too heavily on Navy contracts, while foreign yards are more balanced between military and commercial shipbuilding. NASSCO is the only one of the six major U.S. yards who has competed successfully in the commercial market, the report said.
In all, U.S. commercial shipbuilding accounts for 1 percent of global shipbuilding output, the report said.