Tag Archives: Lockheed Martin

IP in the balance

This weekend, roughly 25 hours ago, the Washington Post released a story regarding the F-35, now there are a few stories about that crazy bird in circulation, yet this one was particularly fetching. The article (at https://www.washingtonpost.com/business/2019/11/16/power-struggle-over-f-fighter-jet-comes-head-lawmaker-threatens-hold-up-contract/) called ‘A power struggle over the F-35 fighter jet comes to a head as lawmaker threatens to hold up contract‘ starts with “the complicated IT system supporting the fleet’s maintenance infrastructure still falls far short of expectations” is an eye opener, but it is not the IT systems (no matter how defunct they are) that is the issue, it is the ownership of certain IP systems in the plane, the patents themselves that are now the issue. It is not “some lawmakers criticized the terms of Lockheed’s arrangement with the government, saying overly generous intellectual property agreements threaten to lock Lockheed into a wasteful long-term profit machine with limited accountability” even though it is certainly an issue that is the setting, no it is “Rep. John Garamendi (D-Calif.) threatened to hold up a multibillion-dollar contract if fundamental questions aren’t resolved” that is the issue, yes having multi billion dollars in sales held up is one part way to go, for some of these buyers with a few billion in their pocket, looking at alternatives will be the coarse course they could be sailing, this gives additional problems for Lockheed Martin and the US government is setting the stage as it has the inner lane in this skating race, the problem for Lockheed Martin is that the opposition they face are Russians (who are coming with the Su-35 and the Su-57), apparently NATO sees the Sukhoi Su-57 as a bit of a felon, so anything can happen. China is coming with the J-31, according to some it is a copy of the F-35 (source: Business Insider) yet it comes without IP and Patent battles, so the copy will be out without a politician stopping production on elemental questions not being answered. In addition, its unit cost is $70 million, whilst the F-35 is between $77 million and $108 million, the cost price of the more expensive version implicitly states ‘including engine‘, so there is that to consider as well.

There is however a more serious note to the F-35 and the Washington Post gets there when we see: “Carolyn Nelson, a Lockheed Martin spokeswoman, said the government is working on a new technical data package that was not a part of the initial F-35 contract, as well as a separate “performance-based” contract for logistics support“, you see the issue we see here is not merely IP and patents, it is the situation where government is yielding the floor to local business. If we accept the mess that the US has made in regards to 5G and Huawei, whilst we accept the words of Alex Younger (MI-6) “Alex is giving us the national need and the premise that another government should not have ownership of infrastructure this important“, something I mentioned in ‘Tic Toc Ruination‘ (at https://lawlordtobe.com/2018/12/06/tic-toc-ruination/) almost a year ago. That setting is crucial, as such when you have a national product called ‘Defence‘ why on earth would you let that reside with a global player like Lockheed Martin? I get the idea that the avionics are a bit of a call, yet the IT systems are a larger debate, basically America has large needs with Lockheed Martin, so what happens when the well dries when the US debt becomes a noose around the nations neck? Do you think Lockheed Martin is sitting still? I do not expect that Russia or China ever having a piece of Lockheed Martin, but the UAE, Saudi Arabia? If we take premise to the situation ‘the premise that another government should not have ownership of infrastructure this important‘ the point of view I am taking is a lot less theoretical, is it?

And when we consider: “Air Force estimates that most of a given aircraft’s long-term cost actually comes from keeping it flight worthy. Manufacturers are keenly aware of this, with companies such as Boeing launching whole business units focused on maintenance and repair” we should be wondering why the Air force is striking out, not out like in ‘too bad, let’s try again‘ but in the way that the batsman asks ‘where on earth is the playing field‘, I get it, some jobs are too specific, but is that not the Air force focal point? That in light of the procurement: “the Pentagon has been buying jets in greater quantities in order to get the average price down. They recently finalized a $34 billion agreement that defense officials described as “the largest procurement in the Department’s history.” The deal brought the F-35’s price per plane below $80 million ahead of schedule“, so when you consider that buying 2400 planes (at the very least) got the price down, what math was done on fixing and maintaining these birds? 2400 planes imply 100-250 squadrons, it implies no less than 200-500 repair and maintenance teams, it implies that these people need to be schooled and as they come up short, the move of Boeing starts making sense in a real way, so how much additional costs are involved there? Let’s not forget that the US is currently at minus $23,000 billion (-$23 trillion), we might see the victorious ‘Yohza’ on them reducing the price of a bird, but how much debt, interests and cost of maintenance was seemingly overlooked?

In all this, the Government Accountability Office was seemingly not heard clearly enough, we get this when we consider “the program is having trouble keeping the F-35’s mission-capable, an odd problem for a brand new fleet. The overall F-35 fleet was capable of performing all of its tasked missions only about a third of the time” and that is before we consider the maintenance staff, their training and the setting of spending money before the elements are all adjusted for. So as the article ends with ““if we are missing parts and can’t get our jets airborne, our ability to deliver combat effects on this aircraft is significantly diminished,” said Lt. Gen. Eric Fick, the Pentagon’s F-35 program executive“, I merely wonder what other options were overlooked, that’s fair is it not?

You see when we are considering the upgrades and the adjustment to technical flaws in the hardware, the IT systems become a very real part of it all, oh and any person telling you that the IT is OK and there are not issues, will be my reason to introduce you to a liar. For that you merely have to look at DELL and their setting of laptops, I have had two laptops, both delivered on the same day, and both needing separate upgrades before I got them delivered to their respected users, not different systems, no identical systems! So when we see “we are missing parts and can’t get our jets airborne” in light of software glitches, it becomes a very real thing, the F-35 might be the final straw of short sighted management, whilst asking for the moon. Even as in the past operators like Boeing and Saab decided not to play along in light of bias towards the F-35, we see an evolving matter where they will grasp the events that surround the F-35 as a way to show nations that they have what it takes, in addition, there are outstanding offers from France (Dassault Aviation), it was the initial offer to a much larger degree to train technicians in the fields of service, training and operations that might swing previous missed hits, and no matter how we slice it, Lockheed Martin might be looking at the US as a sole customer soon enough, what a change IP and IT systems can make, even in two-seater planes.

I believe that the over grasp in the 2004-2014 era is now coming back to bite the eager who signed certain agreements. In light of the fact that the F-35 fleet is mission capable only 30% of the time should worry Lt. Gen. Eric Fick a little.

And even as the F-35 might be the odd duck out, the words of Loren Thompson stating “The struggle over IP between the government and defense contractors is likely to go on indefinitely. If you own the information, you can largely shape the future of the system” might be valid in the commercial world, but Lockheed Martin is in the defence world, the rules are a little different there, feel free not to believe me, but in light of The Project on Government Oversight (POGO) and their push to “prevent a future situation like the one now facing the F-35 program — and by extension, American service members and taxpayers“, here we see that the letter to congress by POGO executive director Danielle Brian might become a swing and a Jack, so whilst POGO seeks the optional “It would also allow the government to seek alternative suppliers should the original contractor fail to live up to expectations“, we see more than a victory, the entire Huawei issue might push for this solution, which would make several nations queasy on the F-35 solution they heralded.

The F-35 is showing me the one solution that mattered to the wrong people, it was greed overjoyed and that is about to gain the sunlight and limelight others wanted to keep out of consideration.

 

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There is more beneath the sand

The Australian Financial Review has an interesting article that they released a little over 12 hours ago (at https://www.afr.com/world/middle-east/is-saudi-arabia-s-royal-family-ready-for-a-market-economy-20191112-p539sv), the title ‘Is Saudi Arabia’s royal family ready for a market economy?‘ is an interesting view on the issues that are coming around over the next decade. Stephen Cook gives us part of the goods, yet I wonder if he is cautiously holding back (an acceptable stance for any journalist) or is there more?

That is not an attack on the article; it is well written and shows a writer with a good grasp of grammar 😉 He also makes a few very nice observations. The issues that come from that are not always visible, but we should argue before we get there that any cautious journalist does not need to go there; a blogger like me on the other hand is (at times) all about the informed speculation. So when we see: “to pull off Vision 2030, Mohammed bin Salman needs some of the international goodwill he enjoyed until mid-2017“, that partially true, most of it can however be built with money and Saudi Arabia has plenty of that. At which point Mr Cook takes that frying pan and hits us with “There’s just one problem: the Aramco IPO is far riskier than the Saudis are letting on“. He gives it in the form of “The Saudis are offering stock in 2-5 per cent of the company. One of the sticking points has been valuation“, he is true, and we see that in the article that there is a margin of valuation (depending on the offerer) that is almost 50%, And that is not the only part, there is a view that Saudi Aramco will value at almost twice the price of Apple, that is a lot and there will be an actual benefit that Mr Cook does not offer. He does give us that the Saudi offering could end up netting between 24 billion and 115 billion. No matter how this turns, there will be plenty of Saudis all wanting a share or two, a population supporting its own national product, so there is interest, the benefit we do not see here is the corporatocracy that the EU has become, with value in the fire of shares, whatever Iran will think of next will bounce back, any attacks is no longer a mere Saudi Problem, Saudi Arabia has done something interesting. By offering 2.5% of a company its visibility will become global and that is the first nail in a coffin named Iran. And that is not the only one; there is another benefit to see when we take a harder look at Vision 2030.

You see Vision 2030 will be a clean systems sweep of 5G (and 4G lte) systems, the old 3G and other systems will be absent, the Saudi’s will get a much better view of what is needed in the 5G atmosphere without having old equipment holding it back, you might laugh, but do you have any idea on the amount of equipment out there switched on because there is some ‘twittle’ hardware connection, or the owners merely does not know that some equipment does not need to be turned on? It amounts to almost 7% of the electricity bill and the amount of technology and hardware involved shows a massive amount of additional loopholes requiring fixing. You might not think this is essential, yet when we realise that there is an amount that is between calculated and measured that is not addressed, we see a much larger issue, in at least two cases I have seen the ‘connections’ merely being ‘improperly’ addressed, I wonder what else was not done. Vision 2030 will allow us to look at hardware connected and we will see a whole range of equipment never connected. There will be an amount of niche markets that will evolve because of it and as we see that evolve, whoever is working in Neom City, will get an interesting benefit to this change.

Getting back to the IPO, there is every concern that the quote “Iran’s Islamic Revolutionary Guard Corps (IRGC) has every reason to keep the Saudis on the defensive and mess with Aramco’s IPO” has value, yet the first one who is part of the IPO will have the benefit of calling out Iran’s actions and now there will be nations with skin in the game, Iran is basically done for and it needs the nuclear benefit of playing the bully, yet it is running out of time no matter how blind the EU tends to be. When any Wall Street corporation has skin in the IPO, they will report it to any channel willing to expose Iran and that is what Iran really does not like, you see playing the bully only works when no one is looking at you and that option is about to end. They will now enter a stage where the writer claims ‘make investors nervous‘, yet when they go a little overboard and ‘make investors angry‘ their benefit is gone and that is why they need the nuclear pact to be in their favour. A bully merely knows no other way to look at matters, but now we see a much larger field and Iran is about to get exposed a lot more.

So now we get back to Neom City, the writer gives us “The plans (and promotional video) were impressive, but the effort failed miserably“, yet he gives no reason, I will, The amount of media willing to give Neom City the light of day could be counted with two hands, with the hundreds of accepted media in the Aether, they all shied away from Neom City and it was not Jamal Khashoggi. It was in part America and in part Europe that was scared. A city that is stated to be 22 times the size of New York is a building marvel, it would be no less than another world wonder and the powers that be have no intention of letting Saudi Arabia walk away with a world wonder, not in this age. Even as the bridge to Africa might never become a world wonder, the bridge itself will be a global accomplishment and it will give larger gains to Saudi Arabia. In addition it takes another premise, the city of Sharm-El-Sheikh (Sinai) would gain in several ways, whilst the bridge would open Saudi Arabia to Egypt in larger ways. It would also open up technology paths to Saudi Arabia. In addition we see: “Mohammed bin Salman has calculated that he has a greater chance of eliciting the loyalty of his subjects – and thus shoring up his power – by giving them movies, concerts, and WWE wrestling events; reining in the religious police; and granting women the right to drive“, yet it is missing a part, with the building needs growing for close to two decades, we will see a new class of people, A class to Egyptian Muslims working in Saudi Arabia growing the population and growing a larger stage of a new population drive, those needing a better life, we have seen this in America and Europe and it will drive a new need in these people finding a niche where they can settle their family in growth, that part will be new to Saudi Arabia and it will create new wealth group and a larger drive towards Saudi Arabia. I reckon that Saudi Arabia could grow to well over 20% this was and the size of Neom city would allow for a much larger growth giving new options to Saudi’s and those wanting to be Saudi.

As I see it Saudi Arabia could over time grow that IPO to be up to 9%, so basically it will get access to 3 times that maximum of 115 billion, with an offering that over time will be close to $400 billion, we see that Neom city has been paid for, at that point with the IPO in place, and Neom city ready to grow Iran will be shown to be the bully of the Middle East, and bullies can be dealt with in swift ways by any global population that is clearly aware, which now leaves us Hamas and Hezbollah, we actually need not look in those directions, Israel is looking there already, we merely have to wait what will happen next, with these two elements clearly in lace it will not take long for technology firms to seek their nesting grounds in Neom city, Huawei is actively looking, Google has set its premise, as have Apple, Microsoft and IBM (who added 197 jobs in the last month alone), so the need is being addressed, now it merely takes time for the entire stew to settle, once all the elements have been added, we only have to wait (which will be the hardest part), yet there is little to no doubt in my mind that when we see the elements of Neom City, we will see a much larger shift in the west, it will not only be to stay on par with Saudi Arabia, it will be to get all the residual hardware and all the non-effective hardware to be removed from hundreds of places, I reckon that the US will face a new technology need at that point.

You see, in the end, there is less to a decade to a ‘futuristic city’ and a technologically ‘apt city’, Saudi Arabia is about to show the world that part and all the other nations will need to show that they can keep up and with their debts sized the way they are that will be the hardest issues for them and the US knows it has a large problem keeping up, as does the EU, they never thought that they would require to meet wits with Saudi Arabia, they never thought it was ever going to happen, as such they were not ready. Iran is banking on it, in the end I wonder which of the two elements will be the strongest, I’ll let you figure out what I mean.

i believe that by 2035 the global technological will be redrawn, it will be a map that the EU and the US will not be happy about. The Wall Street Journal gave a nice presentation 4 days ago with ‘U.S. Government Is Tripping Over Itself in Race to Dominate 5G Technology‘ and ever as we see sources stating: “U.S. officials say the country is in position to reap those benefits”, we merely need to see SDXCentral giving us: “AT&T is tempering expectations for its forthcoming 5G network riding on sub-6 GHz spectrum. While AT&T says it was the first wireless operator to demonstrate 1 Gb/s and later 2 Gb/s speeds on a commercial 5G network running on millimeter wave (mmWave) spectrum, it’s not making any grand projections for a speed improvement on its forthcoming 5G network running on the lower spectrum bands” (at https://www.sdxcentral.com/articles/news/att-down-on-low-band-5g-speed/2019/11/) to see that they are all running for the advertised word and there is a large hiatus between the ‘advertised word‘ and ‘achieved technology‘, that difference was seen at the end of October as Reuters gave us: ‘Trump says U.S. will cooperate with ‘like-minded’ nations on 5G networks‘, everybody on the US sided mind is trying to fix the backlog that they have against Huawei and some of them have a huge backlog, when we see “Trump has held numerous calls with foreign leaders, including British Prime Minister Johnson in August, to urge them not to let Huawei use 5G networks“, yet at by the time have we seen ANY EVIDENCE that there is a national interest failure on Huawei hardware? America hopes that it has taken the hardware drive and fixed its own economy (and the mere fact that we will not ask questions), yet Saudi Arabia already has ties to Huawei giving Saudi Arabia the option to pull ahead and make the monthly gap larger on a daily basis. The difference is that intense. There is more and more evidence to see that the EU is not going the way of the US and that will give them an advantage on the hardware range, yet they still have all the other old hardware to deal with. They could face two issues, let’s not forget that Riyadh faces that too, but if Neom City shows the benefit to a newly constructed fast internet city, what we saw in the UK 5G image, that path will be faster seen in Neom city, merely because the change is pushed from the beginning and not after the fact (as most technologies are).

The ‘what 5G is about‘ shows what 5G could do and in many nations we see part of this appear over time, yet in case of Neom city, with a 5G focus it will come all at once, it will give Arabian software Engineers a larger playing field and a playing field on rolling out some of those solutions anywhere else in the world. It is a path that we seemingly forgot about and we have seen this path a few times from Japan and the US, just the idea that Saudi Arabia will be able to focus on it was never in the sight of any of them and it is scaring them, Neom City has become that scary to both the US and the EU (well and Japan too). They have all been in the mind for well over 5 years that they see it first in Japan and later on it will be rolled out to the rest of the world. Now that setting changes those in charge are afraid, they have no ties to Saudi Arabia and no ways to make them.

Fear will be the key that the US and the EU will employ to set issues straight, and stopping Neom City to a much larger extent will be their focus, which gets us back to the quote we saw: “the effort failed miserably“, There was as I see it a much larger need to keep it out of the media, the people just never got to see all the elements that were clearly visible in 2018 when initial view of Neom City was given. I saw the first parts in May 2nd 2018 when I gave “the attached Burton presentation ‘Opportunities in Saudi Arabia – Vision 2030 and Beyond‘ spends two slides on it and the most important part shown is “Vision 2030 calls for 50 percent of military equipment purchases from domestic suppliers instead of imports“” a presentation by Edward Burton, President and CEO, U.S.-Saudi Arabian Business Council from June 2017. (at https://lawlordtobe.com/2018/05/02/are-there-versions-of-truth/) in the article ‘Are there versions of truth‘ I had not realised all the elements at that point (why should I?) yet I saw that Vision 2030 would be a bigger issue yet the larger impact would be visible beyond “90 executives from both countries to sign new trade and investment agreements worth $350 billion” the fact that in these 90 we would see “Lockheed Martin ● Honeywell ● JPMorgan Chase ● The Dow Chemical Company ● ExxonMobil ● Jacobs Engineering ● Baker Hughes ● McDermott International” was clear, the fact that Jacobs Engineering Group Inc. (Steven J. Demetriou) was involved was a clear indicator of that. I believed that whatever think-tank Edward Burton responded to was seeing ‘roadmap for economic development‘ and Identifies general directions, policies‘ and optionally ‘CEDA established new operating models‘ and realised that this went way past the Council of Economic and Development Affairs (Saudi Arabia) there was an actual global impact. This setting has merely taken an accelerated view, especially in regards to Huawei, there is a much larger setting and we will soon see that the impact is global.

Darn! I was not the first to notice!

Even as we realise that the Council of Economic and Development Affairs was created in 2015, there is a larger stance where Saudi Arabia has found the flex point where they will become a global player, that is why Iran is scared, that is why other parties are about to play diminished roles and they are all afraid, their status quo is about to be removed.

 

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Change is coming

Well, actually change is always coming, some in the form we know, some innovative new and sometimes change is of a very different variety. We already knew that the Americans weren’t too bright when it comes to trade wars, and the one that is getting fuelled here is definitely a wrong one. Yet it is not about that trade war and it is not in the billions of impact that the war will have on consumers. There is a second war brewing. One that Europe and America were not ready for, one they did not prepare for. It is a new armistice race, they were not prepared because it is not the high technology they usually deal with, it came from the lower regions. Yet let that not underestimate the stage. Two players in that stage are Fabrique Nationale Herstal, established in 1889. Less than a 60 years later They would produce the FN FAL, a rifle used in over 90 countries, in that same year the final push was made for the FN MAG, use in over 80 countries. These weapons are even today lethal and can go up against the most modern side arms. One factory created two behemoth successes, merely two of dozens of weapons that are regarded as a top quality arms. Yet, it is not about FN Herstal. It is neither about the long term number one Heckler and Koch was founded after WW2 and soon became a success story in several fields surpassing FN Herstal, yet these two are not facing a new competitor. Both FN and HK face a rather troublesome future. You see, they are stopped by all these political Human rights laws and whilst we get the need for Human Rights, the people in there seem to have a view so altruistic that it also kills commerce.

Number three is delighted, SAMI, or in its full name the Saudi Arabian Military Industries, is about to equal and surpass in less than half the time that the previous two required to get established. All the data on patents, technology and deals with Boeing, Lockheed Martin, Raytheon and General Dynamics, as well as partnerships with Thales and CMI Defence opens new doors, doors the other two were barred from. SAMI is now in a position to surpass both and become bigger then the two earlier mentioned combined. In 2017 SAMI got Andreas Schwer (former boss of Rheinmetall AG) and the man has not been sitting still. At the same steps we see Neom growing, we see the mandate of SAMI to create 40,000 jobs by 2030 and it seems that SAMI is ahead of that curve too. With all the issues playing in Asia, Africa and Latin America SAMI has created the stage where they can outbid and surpass all expectations from the buying companies. It goes beyond the assembly of 150 Lockheed Martin Blackhawk helicopters. With the partnership with Navantia less than a year ago, we see the additional growth sectors in Latin America pop up, yes, it is all new, it is all change, but not the change you would hope for. We might see shunning of arms in America, but it remains a large export business, one that is now getting pushed to the side by the Saudi Arabian Military Industry, and it is not stopping. As the links with Navantia matures, we see the option to cater to the needs of coast guards on several national levels and these are not the small players. Some might have noticed the small mention of ‘Offshore Patrol Vessels Market 2024: New Business Opportunities for Manufactures to Upsurge in Coming Years‘, yet Navantia and therefor SAMI are in the thick of that part of the equation, growing faster than anyone took notice of. We might look towards the Dutch Damen, Australian Austal and Turkish Dearsan, yet they all have the same flaw ‘each player can deliver few numbers of OPV‘, Neom city changes that premise as it has a massive chunk of red sea at their disposal, basically SAMI has the option of building space well over 5 times the combined spaces that Damen, Spanish Navantia and Dearsan combined have. It changes the equation a fair bit. It sets a different market premise; it took slow growth of 130 years for FN Herstal to get where they are now. It takes SAMI 12-15 years to get that same stage, more important it seems that tall the contracts and memorandums out there gives SAMI a much larger option to grow and more important a lot more industry to bring home through export, another promise made by Crown Prince Mohammad Bin Salman Al Saud delivered in advance of the date he wanted it to be. CEO’s and goal driven executives all set in a stage to exceed expectations. It might be fuelled by oil, but more important it is fuelled to success whilst the EU is making more and more issues on exporting all kinds of goods and the US – China trade wars are not helping. In addition the news quotes like “Europe must develop a much stronger common approach to the new 5G technology to make itself less vulnerable to security risks“, which sounds nice, but I already saw two elements they overlooked and my IP pushed a solution, a solution they are not ready for and seemingly Google is less and less ready for making Huawei the only remaining player and Saudi Arabia has a lovely deal in place. You see, that premise of 5G with ‘to make itself less vulnerable to security risks‘ requires 5G to be firmly in place and whilst we see delay after delay Saudi Arabia keeps pushing communication and other solutions forward implying that they are setting a much larger stage creating new technologies for other regions and in that the other players forgot one interesting side effect. Any stage of armistice and war requires communications to be upgraded and Saudi Arabia can deliver that too. It is there where we see a larger change and a larger group of options for Saudi Arabia. Walid Abukhaled, CEO of global defense and aerospace corporation Northrop Grumman has created a stage that is approaching a global one all from the comfort of Riyadh, Saudi Arabia and whilst the rest is bickering over scraps of food form the European table we see an entire industry growing silently day by day to almost exponential proportions. An interesting part that can be verified on several levels and the news and the European media remain oblivious to that part.

The Arab News states that he ‘aims to export weapons‘, I believe that SAMI has progressed a lot further, as I see it they are almost ready to implement defense solutions on a global scale, and this includes defense systems to several nations that Europe refuses to talk to for whatever reason. This goes beyond what we see in the Arab News (at https://www.arabnews.com/node/1547956), it goes beyond ‘electronic warfare and cybersecurity‘; it goes beyond the mere operational stage, beyond the educational and implementation stage. Together with General Authority for Military Industries (GAMI) they have created a new wave on a much larger scale than we have seen before.

Good business is where you find it and it seems that Walid Abukhaled is currently finding it everywhere.

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As perception becomes awareness

That is the stage we often face, we perceive we acknowledge, we become aware and that awareness becomes the reality we face towards the new reality we did not comprehend before. It is usually not that great a path to be on, especially when you see that the path you are on has a distinct route taking you to exactly the place no one wanted you to be.

Yet for the CAAT (Campaign against the Arms Trade), especially Andrew Smith, and optionally both Martin Chamberlain QC and Liam Fox as well. It is important to see that these people are not evil, they are not delusional and they are not entirely wrong, yet the reality that was given by CNBC half a day after my article ‘When the joke is on us all‘ (at https://lawlordtobe.com/2019/04/07/when-the-joke-is-on-us-all/) is now entering a new dimension. As CNBC gives us ‘Russian expansion in the Middle East is a ‘clear reality on the ground,’ WEF president says‘, we are also given: “Moscow has signed technical agreements and memoranda of understanding to sell its S-400 and other weapons to Saudi Arabia, Turkey and Qatar“, there is now optional noise that this could include a nice batch of shiny new MIG’s, as well as a few other items where we see that the UK is soon to lose the option to make £5 billion for its treasury giving the BAE Systems now headaches to content with. Anything that is related or connected to the UK facilitating to the kingdom of Saudi Arabia could optionally not happen, or will be receiving the standard ‘don’t call us, we’ll call you‘ status. Isn’t ideology great?

We might all (including me) accept the quote: “There is “overwhelming evidence” of violations of human rights law by both the Saudi-led coalition and other forces in Yemen, lawyers for the Campaign Against the Arms Trade (CAAT) told the court on Tuesday.” Most will be forgetting that to all interpretation, the Houthi forces are terrorist forces. Their connection with Hezbollah and Iran is not enough, the short and sweet is that they were not an elected government, they merely moved towards a coup d’état and instigated the war we see now.

So there we are, I now have to talk to the United Aircraft Corporation, owned and founded by Vladimir Putin and the parent organisation of the makers of the MIG, so as I try to get a meeting with the ‘Pоссийская Самолетостроительная Корпорация‘, on being their new exclusive contact for sales to Saudi Arabia (yes, I know, I have no chance in hell there, but I remain an eternal optimist), we see on how the high nosed ideologists are costing the UK billions, all that whilst the opposite of what the Saudi coalition is facing has been ignored or trivialised by a lot of people. You merely have to see what you can on Al-Manar (Lebanese satellite television station affiliated with Hezbollah, broadcasting from Beirut, Lebanon) to realise that Hezbollah is still a player there, it is less visible when it comes to Iran, Iran is playing the field low key and on what some call the down low. Even as the evidence is clear that Houthi forces have Iran drones, the way they got them remains unclear, speculated, but not proven and that too must be noted.

Yet in this era, and under these settings we now see that due to the CAAT, the UK will lose more footing and will have less of a voice at the grown up table that is trying to resolve the issues in Yemen. In the end the CAAT achieved nothing but the dwindling revenue stream for the UK, yet the Russian Federation will be grateful and if I get the job, I will send a huge hamper to the three parties involved (after my first bonus payment that is), the voice makers so to say.

This is the setting that governments and large corporations created form 2004 onwards, we all might have a huge national pride, but in the end, we need to sell, we need to make the cash that is required for rent and food and those in a stage where they set high moral borders in places where the impact is actually zero, you have no value, you have no gain, you merely end up with unpaid bills.

Now if governments had done something about the FAANG group 15 years ago, it would be different, but that is not the case, that is not the reality we face. You see, the fighters are just the start, as we enabled the Russians to get a foot in the door, they now have a direct path to both Syria (they already had options there) as well as Saudi Arabia (and optionally Qatar) to start deploying (read selling and training) these nations on the Altius-M drone. Especially in places where the price of a fighter is basically the same as three drones, drones will be the path many nations go and even as the America Predator looks leaner and meaner, the acts of US Congress as well as that from UK Parliament is now opening the doors for Russia, which is not a good thing (except if I get the job, it will be awesome at that point).

It goes from Bad to worse, especially for America. You see, the MIG-35 and the Altius-M are merely the start. In the end, the gold is found (for Russia that is) with the Sukhoi Su-57, I know little about that plane, yet the stories that it can outperform the F-35 are from sources that are not to be ignored, so even when we hear that the US has plans to counter that, in light of their failed USS Zumwalt comedy caper, those plans can be sneered at until they prove to work. And in the end it is almost as simple as: “Do you want this flag to be on a British, American, or Russian product?

This all matters!

You see, the arms race is important not because they are weapons, but because the economies get huge incentives through those commercialised items. The fact that at present 6 nations are on the list for that new gadget and in light of the high winded American response in the past on who was allowed to buy a F-22 Raptor and it was vetting its allies in a crazy way. Now, in all truth there might be a case for that (I honestly cannot tell), but now that we see that Russia is willing to sell to sovereign states and they have no bar, whilst we see the unconfirmed part of: “State-run Chinese media is claiming that the People’s Liberation Army has been able to track the U.S. Air Force’s Lockheed Martin F-22 Raptor” implies that the stealth part is less stealthy than we thought it was, and any evidence will drive sales towards Russia too. All parts that had much less chance of happening as the UK systems were proven, they were great and now, or optionally soon, we get the resolution that sales to Saudi Arabia are off. Whether that is right or wrong is not for me to decide, but the fact that the £5 billion loss of revenue is triggering a $12 billion shift in other directions, optionally towards Russia is a part that most ignored to the larger extent, a sales path denied because people forgot that in any war, especially against terrorist forces, the people will always be in the middle. Oh, and if you think that it is all bad, consider that the makers of the F-22 Raptor (Lockheed Martin) also has other paths, so the F-22 profits also forges upgrades and new options in commercial flying, cyber solutions, Radar solutions, Communication platforms and a lot more, in that we see BAE Systems that has services in finance, Cyber security, Compliance solutions and a lot more. Now, the one sale towards Saudi Arabia might not impact it to the largest degree, but a change has been made and the competitors now get a larger slice to play with, and it can lead to additional repeat business, it is not a secret, it is not even an unknown, any person with a decent knowledge in Business Intelligence could have told you that and there is the problem, the one-sided ideology of CAAT is now optionally going to cost the UK a lot more than anyone bargained for.

As I said, I have nothing against ideologists and ideology is great when it can to some degree adhere to commercial reality, and selling to a sovereign nation is intelligent and common sense packaged together, yet when soft-hearted people overreact on events in Yemen, whilst the stage comes from Iranian funded terrorism, how can we go against that? The fact that 16 million Yemeni’s are in danger form several sides (disease and famine) whilst the Houthi terrorists are depriving these people of food, whilst they do everything to stop humanitarian aid via Hodeida and other places, are we not buttering the bread of terrorists?

How can you sleep knowing that this is happening?

BAE Systems, Lockheed Martin and United Aircraft Corporation are not evil, they are not a danger, they sell to governments and all three want to sell to the same governments making this a buyers’ market. The moment you forgot about that part of the equation, that did not make you an ideologist, it made you short sighted and that is my largest concern on CAAT, the fact they are needlessly depriving the UK government of treasury income, yet speaking for selfishly coated me, if it pays my bills, I am all fine with that in the end.

 

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What possessed them?

The LA Times brought us the article ‘The Navy’s newest destroyer, the Michael Monsoor, is as much an experiment as a ship-killer‘ (at https://www.latimes.com/business/la-fi-michael-monsoor-zumwalt-20190126-story.html) a few days ago. My personal view is that it is the ugliest vessel I have so far ever seen. Now, for a functioning being pretty, pleasing or even appealing is not a requirement. It needs to be the killer that scares every other killer and even there it falls a little flat.

The initial consideration for laughter is seen when we consider the line “In the end, what was once intended to be a class of 32 destroyers will now be only three — making for a per-ship cost of about $4.4 billion, according to a December 2016 estimate by the Government Accountability Office, the most recent cost estimate available. Including development costs, that number balloons to $8.2 billion, the GAO said“, so basically the US gets three dinghies for a mere twenty four billion dollars (aka $24,000,000,000), or twenty four thousand million

Three mechanical driven rowboats that amounts to one third of the entire US national budget on education, how perverse is that? Well, it is their tight to choose of course. Yet when we learn that “Despite the higher price, the two advanced gun systems have no ammunition, cancelled because of cost“, a smart bullet system that costs $1,000,000 per round. With the added “The gun’s shells were to be rocket-propelled, guided by GPS and loaded by simply pressing a button“, we are treated to a system that congress will not fuel with ammunition. That is the foundation of a failed and sunk project whilst the vessel is for now still afloat. It was even more fun to learn that optionally the system I designed to sink the Iranian fleet could also be used here, giving us an optional $135,000 solution to drown a $8,300,000,000 mishap, how is that not return on investment? On my side that is!

Do not get me wrong, the US is our ally and I have no such inclinations, my focus was sinking the Iranian ego trippers, I merely found it interesting to know that for a stealth boat, any stealth boat has a similar weakness and mine was set to kick the Iranian dinghies a little, so I take no pleasure that my solution is likely to work there too and it shows the failing of a design and project to be much larger than anyone considered, giving us all a lot more to ponder, because some elements should have been clearly seen on the drawing table and it seemingly was overlooked to such a large extent.

The second part in the mishap is seen when we consider that the design was awarded in 2008, laid down in 2011, launched in 2013, christened in 2014 and repurposed in December 2017 with ‘New Requirements for DDG-1000 Focus on Surface Strike

When USNI News gives us (at https://news.usni.org/2017/12/04/navy-refocus-ddg-1000-surface-strike) “The Navy is revamping the Zumwalt-class destroyer’s requirements and will morph it into a focused surface strike platform, the director of surface warfare (OPNAV N96) told USNI News today” Are you kidding me? After 8 billion and change, a path that spans 10 years (with all the fiasco’s on the internet), we see the calling of ”revamping’ instead of loudly calling the entire Zumwalt class a failure? Did the $1,000,000 per shot not give a clear indication that something extremely weird was afoot? Was there no quality calculation showing us that some implementations were not realistic and that a system like this having a flaw that might be swallowed by a $135,000 could spell a lot of trouble in any direction?

I feel particularly concerned with Rear Adm. Ron Boxall when we see: “I was very pleased with where we came out because some of the decisions were much more about the concept of what we’re getting instead of the actual platform we’re getting“. To him I would go (off course in an informal way) with: “Robby, pal, when the betrothed concept is too far from the begotten actual, we need to consider, ‘product fraud’ (you did not get what you ordered), we can go with ‘failure’ (they did not deliver what was promised) and we certainly need to go with ‘fiasco’ (congress will not allow you to purchase the bullets that the dinghy fires)“, so overall there are three levels of non-success to consider on a whole range of issues that these three puppies have and lets not call them ‘ship-killers’ ever, OK?

And when we see “at the same time look at some of the challenges we’ve had. It’s no surprise, we have some very expensive bills still outstanding with the LRLAP (Long-Range Land-Attack Projectile)” so is that a way to state that invoices were unpaid, or that paid invoices have not met practical delivery? The question is out in the open, because we can go in a few directions. It becomes a larger issue when we see the NY Times Magazine (at https://www.nytimes.com/2018/12/06/magazine/navy-gunfire-ammunition.html). Here we see: “All three of the failed projectile programs had similar design features and shared a fundamental conceptual problem. “When you try to make a rocket-boosted projectile that can steer itself to a target, you basically have built a guided missile,” said Tony DiGiulian, a retired engineer who has studied all these weapons“, with the added “So why not just build missiles in the first place?” he said. “That’s what you’ll end up with anyway” at the very end, yet leave it to an engineer to apply common sense to an optional working solution. What stopped you guys? Too much outstanding issues with Raytheon and Northrop Grumman? I could have told you that part and I am certain that the navy has scores of common sense people around, still the eight billion was spend and congress will not foot $600 million for a full armory of shells, is anyone surprised?

So not only are we confronted with “the Navy then spent $700 million to have BAE Systems and Lockheed Martin develop the Long Range Land Attack Projectile for the Zumwalt deck gun. It also came to nothing” with an added “rivaling the cost of the Tomahawk cruise missile, which has a 1,000-mile range“. And now we are treated to: “they are evaluating a new shell, called the “hypervelocity projectile,” that is lighter and narrower and could potentially be fired from the upgraded five-inch guns at targets 40 miles away. The program is experimental and in its early stages, and it is unlikely to produce a viable weapon soon“. So not only is the US Navy in a phase where they have nothing, they have been in an 11 year phase of denial and unsupported science fiction ideas that went nowhere with an optional total bill of $256 billion, averted to a mere twenty four billion by scrapping 29 (ugly) vessels.

The fun part is that there was an option to consider, weirdly enough it was not DARPA or the US Navy who came up with the idea; it was film director Jon Favreau who had the brainwave in 2009. Yes, it was a drone used in the movie Iron Man 2. Yet the idea is far less weird and less science fiction then you might think. The air force has its drones, yet the navy could have deployed its own drones, vessel drones are not a myth and even as they are not stealth, they are small enough to get in quick, fire and get out, with a Zumwalt cruiser as a home base. So when we see: “We just doubled the range of our artillery at Yuma Proving Ground,” Gen. John Murray, Commanding General of Army Futures Command, told reporters at the Association of the United States Army Annual Symposium“, we see that the Army has one part of the equation and that droning that solution might have saved the US treasury a few billions. The drones will not endanger manpower, the drones do not required oxygen and can approach submerged and all that at a fraction of the cost, was that so hard to figure out?

Now we get that the brief was never about drones, yet when you try to find a 2010 solution for a 1988 version of smart bullets (at https://www.youtube.com/watch?v=hfGnUzGRIuY) we need to consider that someone spending billion to not get there was a terrible idea from the moment the first invoice was paid.

Did I oversimplify the issue?

Let’s also realise that the road to triumph is paved with failures, that makes sense, as not every solution is the breakthrough we aim for, more precisely the failures tend to contribute to future success, yet in this case there seems to have been a lack of common sense on a whole spectrum of issues (or so it seems). And it is there where we see the issue in the larger field, especially with all the failures that seem to define the Zumwalt class, especially as the bulk will be shoved under the carpet through ‘revamping’.

In addition, when we revisit General Murray and consider the quote: “A 70-kilometer target range is, by any estimation, a substantial leap forward for artillery; when GPS guided precision 155mm artillery rounds, such as Excalibur, burst into land combat about ten years ago – its strike range was reported at roughly 30 kilometers. A self-propelled Howitzer able to hit 70-kilometers puts the weapon on par with some of the Army’s advanced land-based rockets – such as its precision-enabled Guided Multiple Launch Rocket System which also reaches 70-kilometers“, what would stop us from adding a drone part in there? Not in the launch, but in the shell itself. Consider the simplicity, when there is one shot, there is a lot less cyber security needed, that whilst the vision for the drone operator is merely the need to adjust the trajectory and there are accurate low expense solutions there. The initial cyber part is not too expensive and merely requires a 240-300 second fail-safe on hacking, there are plenty of solutions there. When we consider that an artillery round could be adjusted, the enemy needs to know the frequency, the codes and the option to interfere, the drone operator might not have to do anything and merely need to lock out changes at some point. An optional 12% increase on a 89% certain hit, making every shot a hit, a better result could not be asked for, so when you consider my ad-hoc idea (open to loads of scrutiny at present), we are still left with the ‘what on earth possessed them in the first place‘, we get it, the defense gravy train is very lucrative, but to revamp the brief on a 24 billion fiasco that was 10 years in the running is taking the mickey out of the entire train ride (staff, fellow travelers and equipment).

War never changes, the technology does but at some point we are confronted with the simplicity of common sense and adjusting the view towards another direction would not have been considered and preferably before the ship was launched might not have been the worst idea. If an optional solution to force a reactor meltdown is seen in a snow globe, what other ideas have not been looked at? Even when we look at it from a complete non-military way, what other options have we never investigated?

It is the same for 5G, when we consider that not the telecom operator but the consumer is at the heart of it all, we see a whole new range of solutions that brings new technologies, and new innovation and they can lead to new services and new foundations of income and profit of course.

 

 

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European Exodus Community

There is a reality that people seem to miss. There is a reality that the people at large have been ignoring for far too long. Big business had been until early this year trivialising the entire Brexit issue. Some started the catchphrase ‘Bremain’, but that went out of fashion fast. At some point, in October 2015 something expected happened. An American opened his mount (in this case Trade representative Michael Froman), which gave the Britons “If you leave EU you face barriers to trading with America“, Is that really so? In my view, if the Democratic Party does not get its A-game in place, many will not want to be in trade with a nation that cannot pay its bill anyway. You see, if Brexit becomes a reality, the Euro will take a sizeable dive, which will also hurt the US Dollar. More important, as the US has not been able to keep any kind of control on their budgeting, the US issue would take additional tumbles. Consider that the US exports $57 billion to the UK, should one direction fall away, than so does the other direction, you see pharmaceuticals can come from India, Vehicles can come from Japan and Medical Technical equipment can come from places like the Netherlands (to some extent). We are looking at an easy 12 billion going somewhere else. So that part is not a given, yes, UK export might have a few hitches, yet when other players are found for at least 20 billion in goods, new arrangements will be an option (very fast), not so much for the US of A.

Yet, I get it. The USA is afraid, very afraid because of what the Euro changes will bring and their fear is escalating. This we get from Euractiv (at https://www.euractiv.com/section/uk-europe/news/majority-of-french-back-holding-frexit-referendum/), who is now proclaiming that “53% of French surveyed would like to hold a referendum on their country’s continued EU membership“, an issue I saw coming a long time ago. i was the first one keeping my eye on this, and even as Hollande and Sarkozy are trying to make other ‘arrangements’ they now realise that non-compliance with the French voters will mean that the bulk will demand Marine Le Pen be elected, another prediction I saw coming. More important, should Brexit be averted, than Frexit still remains a real risk. It implies that American will almost be forced to send their own Al Jolson European Tour 2016-2017, yet unlike Al Jolson, this tour will not be a sell-out success, it will be seen as a painful reminder of America not cleaning ‘house’ in the 2004-2009 era. An era that brought many nations to the edge of despair. Now we see the Obama administration trying the option of Al Jolson singing ‘can I have a little more please‘, an idea many Europeans will regard as offensive. The changes will give additional worry. From one perspective, if the dollar collapses, export from America should go through the roof, but the overly mismanaged economy gives a clear clarion call that the funds to cate to this need would end up being insufficient. The latter part is my own speculation, I have no hard numbers supporting that part. From all the export, one in eight is about machinery. This seems to be a solid one, especially from the excellence in the past, yet in all this we in equal measure ignore that the US is not the only place to get this stuff, so if a part will move to an Asian provider, American wealth numbers will take a sharp dive, all that because Michael Froman seemed to have forgotten that they are not the only player in town.

Yet I digress!

There is now the realistic concern that a European Exodus could hit the community, a real danger, which also means that certain borders will come into a different play. This will impact the USA as well as Europe. Yet instead of a clear summary, the press seems to be throwing too much in the air with emotional plays from both sides of that isle which I consider to be not so productive. We see not so helpful articles by Jane McConnell on ‘why Brexit would be apocalyptic for the games industry‘ with quotes like “British gaming receives a wealth of talent and funding as a result of being in the EU“, which is a joke to say the least. When we see PC Gamer giving us info regarding Ubisoft Montreal “but it was built primarily on the strength of Quebec’s generous subsidies and tax breaks, and with a newly-elected government facing serious debt problems, those breaks are being cut back. That has CEO Yannis Mallat taking another look at the studio’s long-term future“, so that billion Euro firm in France is ‘surviving’ due to tax breaks. (at http://www.pcgamer.com/ubisoft-ceo-ponders-reductions-to-quebec-tax-breaks/). Now, remember that this article is 2 years old. So basically in the time that Ubisoft created mere mediocrity in gaming. In all that time only the recently released ‘the Division‘ seems to be up to critical scrap. So how about not catering to tax breaks? The final argument “and thanks to the EU working time directive, we are guaranteed 20 days a year of paid annual leave, offering us all us all at least one day we can happily set aside for binge playing. That’s worth remembering“, how interesting that she relies on that part, not on the part of government accountability which is actually driving people away. In addition, remember Markus Persson, simple small software firm in Sweden? It made over 2 billion in the end (from Minecraft). So, let’s not cater to mediocrity! The same issue can be stated for Hello Games. It is about the reset the bar for gaming quality, both small firms, just the two visible in a group of dozens. These tax breaks are there for the small players, but they have been overwhelmingly used by large players to not dig into the ‘quality setting’ frontiers they should have been in.

I feel personally decently certain that Brexit is becoming a reality. If the press would focus on truth and fact, not on emotion to sway the people, there would be a certainty that Brexit will be. It will drive Frexit too. The EEC will become a near death-trap for the last one in, which means that Italy will not be in a happy place between 2017 and 2018. I expect it will drive the membership numbers of Lega Nord with Matteo Salvini, I cannot tell how strong, because I know too little of the other Italian players. Yet in all this, certain other players are rearing its ugly head. You see, when we go back to November 2015 we see a paper by Natixis (at http://cib.natixis.com/flushdoc.aspx?id=88106), there we see “In the worst case scenario, the United Kingdom leaves the EU and does not join the European Free Trade Association; there would then be custom tariffs between the United Kingdom and the EU, but given the size of the trade flows, the impact on the economies would be limited. The United Kingdom has a very small industry and its exports of services, which are very specialised, would probably not be too severely affected“, this is the view I also ‘synched’ to. Basically, the bad sides of the EU towards the UK are massively larger than the good sides. The Natixis paper by Patrick Artus might not be complete, but it gives the goods that matter, from that point of view.

You see, the short-sighted users of a spreadsheet forgot the drive that Brexit could have, the view I predicted already in 2014. In addition, the growth and danger that right parties all over Europe became, fuelling one another is a side I did not see coming either. In addition to that view, we saw in November that Wolf Richter, Wolf Street in Business insider had “A Brexit would be ‘a non-event’“. I wonder where that came from. Oh no, I need not wonder because they mention Natixis and quote the relevant parts.

So what changed?

Well, the part I foresaw and everyone ignored is that Frexit is slowly becoming a reality. Now we have ourselves a lot more than a mere horserace, because this is what Natixis can’t use. It is in massive parts a French conglomerate, not a global one. In that regard Frexit will impact on Natixis as a whole. In this I mean that Natixis will see its profit margins decrease by a fair bit (we are talking a game of billions here), whilst in equal part limit certain economic movements and options. That makes it a different event. And the less we say about the impact on the US the better. Ah, here I am wrong!

You see, Lieutenant general Frederick Benjamin Hodges gives us the following last Tuesday (at http://www.reuters.com/article/us-britain-eu-usa-idUSKCN0WH0QJ), we get ‘Brexit would weaken NATO versus Russia‘, which is not entirely correct, is it Freddie? It is not a lie either! The mess seems complicated but it is not. We can agree that the General is under orders here. I reckon massively from his Commander in Chief who dropped the ball several times and is sending the General out into an economic field that is not ‘his’ theatre of war. Here is the part that is unwritten (not by me), whilst everyone was looking at Lehman Brothers and other Wall Street players, they all forgot about Natixis, who has a wealth portfolio that delivers an annual return that outranks more than just a few EU nations. When that limits and dwindles many players will panic, because the survival of some is now depending on continuity. Something that behind the screens of Brexit and Frexit comes to terms. With Brexit there was enough time to make adjustments, with Frexit that time will not be there, apart from the fact that it will force Germany to take a different course (one that is expected, but cannot be predicted). In all this that is only one element. The General is right that NATO will weaken, what is not given is that it will change the expenditure that some nations are making, which will directly hit Raytheon, Northrop Grumman, Boeing and Lockheed Martin, which will now be a sizeable dent in the American economy too. Apart from a collapsing Euro, America will get hit by a double whammy, that part is not given (it is ignored by too many), not shown and not elaborated on. It is how expenditure changes. NATO existed since long before the Euro was a reality, but as those evolutions were taken, by lowering defence spending on a national level in Europe, we see that this ignored cluster will have serious consequences, very much so for the American military hardware industry.

Can I be wrong?

That is what matter, for me as much as for you the reader. We will be depending on two elements, Is Brexit a reality in the first and will it force Frexit in the second. The first is less up in the air, but not a given, in the second, when Brexit happens, Frexit will be a certainty. Even if Brexit does not happen now, the French are worried and they do not want to be the last in the row of decision makers as Italy currently is, the fact that 53% want this referendum is worrying to many players (except for Marine Le Pen). Both Francois Hollande and Nicolas Sarkozy cannot ignore the cries of the French, if they do, they will feel the discomfort that Marie Antoinette had on October 16th 1793 (well, one can fantasize, can one not?), because France is for the French (as they see it), not for the Americans. They will come down hard on their government, which is playing perfectly into the hands of Marine Le Pen. No matter what happens, with or without Brexit. Germany cannot sustain the environment without the other three players, which places the UK now in a tactical predicament. Relying on France to keep cool, this is what drives Brexit to additional momentum.

So all this will drive the European Exodus Community, to some extent people, because national business needs the motivated people to get businesses working and moving forward, but for the most it will be about small businesses in a national setting. Those who adapt fast will grow. Larger corporations will feel the disastrous drag of not changing gears, of not adapting to the new environment, mainly because those head offices (many in America and Asia) will not comprehend the old systems that drove them and the changes required to make them. Those depending on decision makers will find that delays will cost increasingly until (often enough) the decision has been made too late. Rowing against the current will be a new slogan that larger players will have to deal with, driving their talents to smaller places where speed is available. This exodus environment will hit in many places, in many layers on several fronts. A front where only the adjusted will make headway. I wonder whether 2018 will be the year of culling the corporate herd. It is too soon to tell, but it will for the most depend on the brethren Brexit and Frexit both leaving this rocky boat called EEC!

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The military Pound

We do not need to look far to see that cut backs are more than just the talk of the town. They have been the talk of nations for a long time, and we have seen more than one system discussed when it comes to the need for overspending.

So, when many read about the fact that the military overspend again we might not have looked to be too overly surprised. It is however the proverbial straw that is breaking the camel’s back. This is what was said on Sky News on Feb 28th “Britain’s Ministry of Defence has been slammed after a report showed between 2009 and 2011 it bought STG 1.5 billion ($A2.24 billion) worth of equipment more than it used.

The article was short, to the point and ended with “The ministry is to introduce controls that it hopes will reduce spending on inventory by STG 500 million a year by 2015.

So, the British consumer will be confronted with taxation on overspending by almost 2 billion until that time? How is that fair. This is not the end of it. There is a lot more. This is the clear part where we are confronted with overspendings; however, there are a few more issues at play.

The New York Times published a story in July 2006 named “Pentagon Struggles With Cost Overruns and Delays“. In this example they went over the costs of the F-22a Raptor. It was a track from 1991 until 2010 that showed a massive amount of overspending. The response as stated in the New York Times was “We must transform the way the department works and what it works on, he said. It could be said that it’s a matter of life and death — ultimately, every American’s.

So was that an answer? It seems not. Because that same story repeats itself when we look at headlines involving the F-35. “$24 billion British budget blow-out in black hole F-35 project“.

It seems that the boys in uniform seem oblivious to words like ‘common sense’, ‘budgets’, ‘overspending’ and you know, words of that general direction. Now I am all for a good defence, yet the parties involved seem to be either completely academically ineffective (incompetent seems too hard a word), or those paying are really lacking a certain level of backbone. Especially when budgets are overstretched the way they are. Am I having a go at the Australian and UK admin soldiers? I am not sure. Who made these decisions? Who allowed for these levels of overspending? These are serious questions that need answers and it needs more then investigation, it requires ACTUAL actions being taken. I am not talking about some political inquest wasting even more time and money. No! Defence needs to take a look at their laundry and fix this. It seems clear and shown that this needs fixing on several levels.

In the meantime solutions must be found, especially when it is clear that almost all parties in the commonwealth have to tighten the belt on budgets all over the place. It seems very unfair that even though the military are to most the visible part to defend a nation, the people placing their lives in harm’s way on a daily basis are having their budgets cut severely.

You know, I have a nice idea, right out of the extreme right field. Lockheed Martin donates 1% of paid costs by the DOD to the Metropolitan police as a show of good faith. Not all will be happy with this idea, but several will be less unhappy and the way the costs are cut especially to the police departments. It seems only fair. Who knows, Sir Bernard Hogan-Howe might arrive in the office on a Monday morning holding on to a cheque and wearing a large smile (be not afraid if that happens). The same could be done for the RAAF. I reckon Commissioner Scipione might be happy to know that in the end, overspending almost 30% per F-35 unit (an unacceptable amount of overspending per unit) the police force will get a small shiny future. The other option is for the RAF to order 14 less F-35’s and the RAAF orders 2-3 less and these police departments get those funds directly.

There is however a deeper part to those rumours. Is the F-35 too overpriced and are we moving to a previous model (the F-22)? Even though several sources implied certain noises, there is no real knowledge at present (or better stated, known to me) that this is actually happening. It would be interesting as the NY Times reported that the F-22 had its last delivery in 2010. If so, should we pay full price for a model taken out of production? Would you pay sticker price for a 2010 Toyota? This seems more than a little unfair. Not to mention that we seem to reward/ignore a blatant budget overrun for two planes by the same company. A ‘ploy’ they seem to have handled since 1991. That means they did not seem to have cleaned up their act for two decades.

So we have two issues.

1. Commonwealth armies seem to be overspending by a lot and on needless things.
2. Commonwealth armies are confronted and left with much higher bills by their suppliers.

I am not claiming that the military are doing this on an intentional basis to waste money, but it stands to reason that we should ask questions when the size of the British forces is set around 225,000 and there seems to be an annual overdraft of 800 million dollars. The Australian Defence forces are not without fault either. This was mentioned in an article by the SMH, however I personally thought that this article asked more questions on the numbers they reported, then on the actual issue.

There is another side to this, and this was voiced by President Obama on Feb 19th as mentioned in the Guardian. “Obama warns Congress over spending cuts: ‘People will lose their jobs‘”. This is not an unfair statement. Yet the issue that is not mentioned is that overall, the profit margin for those companies is often a lot larger than most commercial companies seem to be left with, and THAT part seems to have never been curbed. That was illustrated in an article in Aviation week by Joe Anselmo on May 18, 2012. There it was quoted that “A Wall Street research firm says defense contractors should be able to maintain their profit margins even as Pentagon spending declines“. That seems to prove the thoughts that others have as well as myself. So, these are not unique thoughts. These are thoughts that have been in play for a long time, so when we are looking at recessions and budget issues, it seems to me that there is at least one player in town who gets to play with a stacked deck.

I hope the message is getting through. There is a massive amount of needless overspending and there currently seems to be no planned solution to properly curb this enthusiastic method of an open wallet policy.

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