A better business model for transnational armaments cooperation
The Royal United Services Institution has just published in RUSI Journal (vol. 161, no. 5, October–November 2016) the latest long essay of the Defense Industrialist project of the Atlantic Council. The abstract encapsulates our argument:
The traditional business model of transnational cooperation in armaments development and production is not working. Although the model is designed for economies of scale through long production runs, the political allocation of work share hampers supply-chain management. This leads to worse results than would have been attained in purely national projects. In its place, Steven Grundman and James Hasik propose a new model with fewer customers, a focus on innovation and an emphasis on developing multiple purchasing options with more competitively determined multinational content.
In place of future grand multinational projects, like today’s A400M and the F-35 programs, we recommend more attention to bilateral arrangements with fewer corporate partners. As we note in conclusion, in that way industrialists and their customers can
get “closer to the businesses,” speeding communication and improving day-to-day governance. The fluidity of an alliance structure, without a twentieth-century obsession with scale, will produce a more flexible and less costly twenty-first century approach which can provide the solution to modern security problems.
Courtesy of publishers Taylor & Francis, a limited number of reprints are available directly from the authors.
Steven Grundman is the Lund Fellow and James Hasik is a senior fellow at the Scowcroft Center for Strategy and Security.