Sunday, August 1, 2004
Helicopter manufacturers are scrambling to tap into the growing market for UAVs; However, they face formidable challenges. Here's what you need to know to prosper in the 21st century.
Unmanned aerial vehicles, or UAVs, are one of the hottest topics in defense circles--and for good reason. They promise to perform vital military missions without exposing soldiers, pilots or other personnel to danger. UAVs also may perform missions that would be too intrinsically dangerous irrespective of external threats.
Today, moreover, UAVs are not simply a hope; they are reality--a well-known, high profile reality, the demand for which is growing steadily. Indeed, the well publicized success of UAV systems in Iraq and Afghanistan has caused military leaders there to demand more such assets.
"One of the overriding issues that we hear from our military leaders--from Gen. Odierno in the 4th Infantry Division to the troops on the ground [in Iraq]--is the need for additional UAV capability," said Rep. Curt Weldon, Chairman of the House Tactical Air and Land Forces Subcommittee. "These recent conflicts have demonstrated their utility." UAVs, he added, "are an integral part of our intelligence and military operations."
Iraq and Afghanistan "catapulted UAVs into the media spotlight, boosting interest in these systems to new heights," explained Larry Dickerson, an analyst for Forecast International in Newtown, Connecticut. "Suddenly, UAV requirements that had long existed but received scant attention were being re-examined."
However, for the helicopter industry, there's one glaring problem: None of the UAVs now employed by the U.S. military has a vertical takeoff and landing (VTOL) capability. All of the operational success so widely touted by the military and in the press instead centers on fixed-wing UAVs like Northrop Grumman's RQ-4 Global Hawk and General Atomics' MQ-1Predator. Rotary-wing UAVs, meanwhile, remain on the sidelines, untested and unready.
This is a problem for the industry because the market for UAVs is about to explode. In fact, it's already exploding, and companies that fail to tap and cultivate this market now stand to lose billions of dollars in potential business.
That dramatic growth may sound premature. The UAV market, after all, is still "in its infancy, with a truly massive expansion in procurement not expected until after 2010," according to a Forecast International study. However, the UAV market is developing more rapidly than many observers had predicted, as events overtake planning.
For example, in March 2003, immediately prior to the Iraq war, the Pentagon unveiled its UAV Roadmap for the next quarter century. The Roadmap noted that the U.S. military then had more than 90 UAVs operationally deployed, and that that number was expected to quadruple to 360 by 2010.
In fact, the number of UAVs operationally deployed has doubled since last year and is expected to double again within the next nine to twelve months, said Dyke Weatherington, deputy to the Pentagon's UAV Planning Task Force.
Combat commanders want UAVs for intelligence, surveillance and reconnaissance missions. These missions are especially important in Iraq and Afghanistan, where the U.S. military must counter elusive but dangerous guerilla insurgencies. In such an environment, there can be no such thing as too much intelligence, surveillance and reconnaissance.
"UAVs are high-demand, low-density assets," Weatherington explained. Their potential value "ranges across virtually every mission area and capability of interest to the Department of Defense."
To meet this burgeoning requirement, the Pentagon expects to invest $10 billion minimum in UAVs through 2010. That's more than 3.3 times as much money as the U.S. military invested in UAVs during the 1990s; and it's in addition to the $1 billion that the Pentagon spent on these systems from 2000 to 2003.
Vast appropriations are required because the Pentagon is determined to push the technological envelope well beyond where it now lies. Intelligence, surveillance and reconnaissance operations are important, but the military would like also to arm its UAVs and employ them for high-risk strike and reconnaissance missions.
This helps to explain why the Army canceled Comanche. Even with a flawless test and production schedule, the aircraft would not have entered into effective operational service until the next decade. As it was, Comanche was a troubled program and thus subject to repeated delays and restructurings. Army officials reasonably expected that these delays might continue.
UAV technology, though, continues to advance and likely would have eclipsed Comanche. That at least is the expectation within the Pentagon. "Beyond 2015, 2020, many of the combat missions--including the high-threat, armed reconnaissance mission--may transfer primarily to unmanned systems," Weathering said.
"The market for unmanned air vehicles is worth an estimated $10.6 billion over the next 10 years," reported Forecast International. "This figure includes all air vehicles, ground control equipment and payloads expected to be produced through 2012."
The U.S. military is the biggest procurer of UAVs and will dominate this market. However, Great Britain, Germany, Spain, the Netherlands, Italy, and Greece are all expected to place new UAV production orders over the next 10 years.
Less advanced militaries also are interested in acquiring UAVs. The Taiwanese want them to guard against Communist Chinese aggression. Thailand, Malaysia and Colombia view them as a tool to help battle radical domestic insurgencies. For South Korea, they promise to compensate for the loss of American troops along the demilitarized zone.
"More and more nations are realizing that UAVs can save lives and make a military force more efficient by performing certain dull, dirty and dangerous missions," Dickerson said.
The market may be international in scope; but for the foreseeable future, American companies stand to benefit most financially, with at least $5.4 billion worth of contracts over the next 10 years, according to Forecast International.
"Yet," the company noted, "this market contains a substantial number of UAV contracts that still need to be awarded. Some $1.3 billion worth of contracts is up for grabs, and companies from around the globe are vying to get a piece of this action."
These include, belatedly, helicopter airframe manufacturers. Bell Helicopter Textron, for instance, is marketing its Eagle Eye tiltrotor UAV. Schweizer is teaming with Northrop Grumman on the RQ-8 Fire Scout, which employs a 333 turbine airframe. Boeing last May acquired Frontier Systems of Irvine, California, for the express purpose of developing and marketing Frontier's A160 Hummingbird.
Boeing also is investing its own money to develop an unmanned OH-6 Little Bird. The Little Bird has been flown by the 160th Special Operations Aviation Regiment for more than two decades, and the Special Operations Command always seeks to stay on the technological cutting edge.
"If this pans out like we think it will--and this is a very low-risk effort--then there will be significant military applications," said Eric Stuverude, Boeing's business development director for Army unmanned systems. A flight demonstration of the Little Bird UAV is expected in November, he added.
MD Helicopters acquired the OH-6 production line from Boeing in 1999; however, Boeing still supports the Special Operations Little Birds.
MD Helicopters nonetheless hopes to play in the UAV market with its 500-series rotorcraft. The company is targeting specifically the Navy, which, after much deliberation and backtracking, finally has opted to procure the Fire Scout.
That deal, though, is not as secure as some observers think, according to Alan Neugenbauer, MD's director of government relations. The Navy requires greater performance capabilities than initially were achievable with the Fire Scout. Neugenbauer said the MD 500-series "meets all of the Navy's objective requirements now. We can start anytime they want."
But it may already be too late for MD Helicopters. Northrop Grumman and Schweizer have added a new four-bladed main rotor with improved airfoils to the Fire Scout for increased payload and endurance. The two companies said they will meet all of the Navy's objective requirements. Neugenbauer said these improvements help, but do not quite measure up to what the Navy requires.
This competitive jockeying underscores the importance that helicopter airframe manufacturers see in having UAV systems readily available for the U.S. military. That's because Iraq, Afghanistan, Congress, and the Secretary of Defense all are pushing the services to accelerate their procurement of UAVs. Yet, companies can't sell what they don't have and can't show to potential customers.
For example, precisely when it canceled Comanche, the Army announced that it intended to procure the RQ-8B Fire Scout UAV, which employs the new four-bladed main rotor. The Army also announced that it was earmarking $390 million in displaced Comanche funds to UAV systems like Fire Scout.
The success of Global Hawk and Predator is illustrative. Most analysts didn't expect that Northrop Grumman and General Atomics would sell many of these aircraft. There was, after all, no war in Iraq and Afghanistan when the Predator was being developed in the mid-1990s.
Critics dismissed the aircraft "because it did not fit the old ways," President Bush said in December 2001, shortly after the defeat of the Taliban regime in Afghanistan. "Now it clear that the military does not have enough unmanned vehicles," he observed.
Initial market projections for the Global Hawk, likewise, were modest--maybe a few dozen systems, Dickerson said. But now that Global Hawk has proven itself operationally, Northrop Grumman is projecting that it will sell between 245 and 300 Global Hawk systems by 2020.
Northrop Grumman and General Atomics have tapped into the growing UAV market because they were there when no one else really was. For helicopter airframe manufacturers, this is a lesson worth remembering; it certainly helps to explain the success of Fire Scout and Eagle Eye.
Bell's Eagle Eye was selected last year by the Coast Guard for long-range maritime intelligence, surveillance and reconnaissance missions. Bell first test flew the aircraft in 1992 and thus had a well-advanced system available for near-term deployment.
The Coast Guard's Deepwater modernization has been in development for more than a decade, but has taken on a renewed sense of importance now that homeland security is a national priority. Indeed, a recent Rand Corporation study recommended that the Coast Guard buy "significantly more" cutters, UAVs and helicopters than it originally planned to acquire.
Current plans call for the Coast Guard to acquire 69 Eagle Eyes while replacing 93 Eurocopter HH-65A Dolphins and 42 Sikorsky HH-60J Jayhawks. Moreover, by having a UAV system available, Bell has sparked the interest of the Marine Corps, which now also is looking to acquire the Eagle Eye.
Of course, it took Bell some time and much money to develop the Eagle Eye; and similar investments will be required of the industry for the development of more advanced UAVs. However, it is unclear whether helicopter airframe manufacturers such as Bell, Sikorsky, AgustaWestland and Eurocopter can compete with larger systems integrators like Northrop Grumman and Lockheed Martin.
This is significant because the Pentagon clearly sees UAVs as "more of a system of systems challenge than an airframe challenge," admitted Rhett Flater, president of the American Helicopter Society.
This is perhaps best illustrated by the competition for the Unmanned Combat Armed Rotorcraft (UCAR), which is being sponsored by the Defense Advanced Research Projects Agency (DARPA). Bell and Sikorsky both competed, but lost out in Phase I to Northrop Grumman and Lockheed Martin.
In Phase II, Sikorsky (and Kaman) teamed with Northrop Grumman, while Bell signed on with Lockheed Martin. DARPA expects to award a final contract to one of these two teams in October. Phase III then will commence with the development of two demonstrator UAV systems. DARPA expects to have UCAR operational in 2012.
Lockheed Martin and Northrop Grumman are quick to praise their airframe partners for making important contributions. In particular, Sikorsky and Kaman have developed an intermeshing rotor; Bell a compound helicopter. Both of these technologies are notable because they enable these aircraft to fly much faster than any comparably sized helicopter--in excess of 160 kt. for vehicles that weight about 6,000 lbs.
Nonetheless, the fact remains: It is the systems integrators and not the airframe manufacturers who are driving this train. This bodes well for Boeing, which has sophisticated indigenous systems integration capabilities, broad-based military expertise, and deep pockets.
That's why the company has taken a lead role in developing UAV systems and is working with DARPA on the Canard Rotor/Wing. Boeing's X-50A Dragonfly achieved its first flight in December and can be scaled for both manned and unmanned applications. The aim is to combine the speed and range of a fixed-wing aircraft with the flexibility of rotary-wing flight.
The Systems Challenge
However, the requirement for extensive systems development work poses a formidable challenge to other helicopter airframe manufacturers with less financial and technical wherewithal. This is not a new problem; it has existed for some time. It has, however, been exacerbated steadily by ongoing advances in technology.
"What we've witnessed since Vietnam is an increasing percentage of systems involved in most new [helicopter] platforms," Flater said. Avionics and communications systems, he explained, "now are defining roles and missions for existing platforms."
Flater said that when he was a helicopter pilot in Vietnam 35 years ago, systems accounted for just five percent of the value of his CH-46 Sea Knight. The helicopter's remaining 95 percent value was centered in the airframe. Today, by contrast, "more than 50 percent of the value of most helicopters these days are systems."
But developing and fielding systems requires a different skill than building and developing airframes. That's why airframe manufacturers increasingly have been partnering with systems integrators.
Helicopter airframe manufacturers also have been tapping CEOs and senior managers with a systems background in order to develop their own indigenous systems integration capabilities. Sikorsky President Stephen Finger, Bell CEO Michael Redenbaugh and Boeing rotorcraft vice president Pat Shanahan, for example, all have a systems background.
"We're dealing with a new generation of leadership within the airframe industry," Flater said. This new generation is "highly skilled and has not only platform know-how, but systems and lean-management know-how."
This focus on systems integration work is making helicopter airframe manufacturers more competitive; but don't expect the industry to make a mass migration into UAVs. No one, after all, is talking about replacing manned rotorcraft.
UAVs "are not just that smart," Dickerson said. "They still haven't reached the level where they could possibly compete with a human pilot. They're not nearly as intelligent as people think; and they're certainly not capable enough for air-to-air engagements."
Analysts like Dickerson instead expect that UAVs increasingly will complement helicopters and accentuate the growing overall importance of military aviation.
UAV Helo Teaming
In the near term, UAVs "primarily will augment manned systems and make them work better," Weatherington said. "It's a matter of having the machine do what the machines do best and having a human doing what humans do best."
That essentially means designing UAVs to better detect and process data and information. Manned aviators then can be empowered to make the most effective use of this information on the battlefield.
For example, UAVs are ideal for high-altitude, long-range surveillance missions that a pilot might find boring and tedious. However, they are incapable of making sound tactical judgments in a chaotic and uncertain war environment. That requires genuine thought and, usually, careful and instantaneous consideration of several competing courses of action amid the fog of war. Yet, genuine thought is beyond the capability of even the most advanced machine.
"No unmanned system can match the analytical skills of a human warrior," said Loren Thompson, a military analyst at the Lexington Institute. "So whatever UAVs we build will have to be closely tethered to a real person."
That's why most UAV work thus far has focused on UAV-helicopter teaming and digital connectivity. For example, two recent Pentagon initiatives--the Hunter Standoff Killer Team and Airborne Manned/ Unmanned System Technology demonstrator--aim to integrate UAVs with manned Army helicopters and Air Force FA/18s for extended-range reconnaissance, surveillance and target acquisition.
"About 75 percent of the helicopter market is immune from UAV competition, because it involves lift and transport missions," added Richard Aboulafia, an analyst with the Teal Group. "The remaining 25 percent, which is scout and attack, faces various levels of danger from UAV competition."