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GLOBAL AEROSPACE PARTNERSHIPS IN THE POST 9/11 ECONOMY PRESENTED TO DELTA FORUM JANUARY 14, 2002 BY R.G. HEMANN.

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Presentation on theme: "GLOBAL AEROSPACE PARTNERSHIPS IN THE POST 9/11 ECONOMY PRESENTED TO DELTA FORUM JANUARY 14, 2002 BY R.G. HEMANN."— Presentation transcript:

1 GLOBAL AEROSPACE PARTNERSHIPS IN THE POST 9/11 ECONOMY PRESENTED TO DELTA FORUM JANUARY 14, 2002 BY R.G. HEMANN

2 Global Mergers & Acquisitions* Mergers & Acquisitions have dramatically altered the global aerospace/defense industry Since 1980 the number of aerospace companies in the U.S. has shrunk from 75 to 5 The value of these deals exceeds $150 billion with more to come In the future, strategic alliances will outpace M&As as second-tier companies become more involved and as the OEMs push more down to their suppliers *AW&ST, 3 Dec. 01, pp. 48-51

3 Aerospace/Defense Industry Merger Reviews by Federal Government Application of antitrust laws and regulations will play a stronger role in U.S. aerospace/defense industrys continuing consolidation 94-97; 51 reviews 98-01; 101 reviews (laissez-faire)(enforcement) Value $ 82.0B+ $115.0B+ Average~$ 1.3B~$ 1.3B Median $373.0M $230.0M Largest $ 16.3B $ 43.0B Smallest $ 7.0M $ 10.5M

4 Changing Aerospace/Defense Industry Paradigm Civilian aerospace budgets and business decreasing Defense aerospace budgets and business increasing Mergers & acquisitions increasing Global strategic alliances will increase Increasing security concerns will have chilling effect on aerospace/defense e-business Increased need for surveillance H/W and S/W

5 Changing Aerospace/Defense Industry Paradigm Increased need for better and more timely intelligence and its dissemination New, robust and secure command, control, and communications needed Increased need for IT and its security Airline security issues and the emergence of fractional ownership programs will jointly drive strong growth in business aviation at the expense of the airlines

6 Global Services Discussions to expand the global trading system for services began in 2000 General Agreement on Trade Services (GATS) of the World Trade Organization (WTO) Over 140 countries U.S. services industries exported $279B in world markets in 2001

7 Aerospace/Defense e-business e-business applies best to the back end of the systems spectrum For defense systems, e-business cannot be used in the front end of the systems spectrum Dont want the world to know what we are doing by being able to look it up on the Internet Need Internet security

8 Number of Countries Known to be Involved in the Collection of U.S. Military Technical Information 199634 199737 199847 199956 200063 50% of all foreign attempts to collect ITAR information are from countries that do not normally conduct business with the U.S. (including embargoed countries)

9 Worldwide Targeting Efforts in 2000 Asia37% Eurasia21% Europe19% Middle East/North Africa18% South America 4% Sub-Saharan Africa 1%

10 Year 2000 Targeting Military Critical Technologies List 1. Information Systems30%Military & Commercial 2. Sensors and Lasers17%E/O Targeting, Night Vision Devices, Terminal Guidance of Smart Weapons 3. Aeronautics 9%EA-6B, F-15, CH-47, F-22, UAVs, ALQ-144 IR Countermeasures Set Total 54%

11 Year 2000 Targeting Military Critical Technologies List 4. Armaments & Mtls 8% 5. Electronics 8%Down from 3rd in 99 6. Marine Systems 6% 7. Chem/Bio Systems 3% 8. Manufacturing 3% 9. Signature Control 2.5% 10. Guidance/Navigation 2.5% 11. Space Systems 2.5% 12. Materials 2% 13. Nuclear Technology 1.5% 14. Ground Systems 1.5% 15. Information Warfare 0.5% 16. Power Systems 0.5%

12 Technology Targeting by Frequency of Occurrence 1. Information Systems 2. Sensors & Lasers 3. Aeronautics 4. Weapons & Armaments 5. Materials 6. Electronics Amazingly, the most successful (41%) method of collecting these data has been simply openly soliciting it from the companies themselves or from their people

13 Technology Targeting by Frequency of Occurrence The second most successful (18%) method has been the solicitation and marketing of services Surprisingly, some contractors solicit bids for their products, services, or proposals via the Internet - this usually results in a flood of responses, many of them disguised attempts to get ITAR information

14 Use of Internet for Collection Use of the Internet by foreign entities as a tool to identify potential targets and facilitate collection of information provides worldwide access to U.S. defense technology Anonymous Simple Low cost Non-threatening Risk-free

15 Use of Internet for Collection Since 1998 the Internet has been a significant source of foreign collection of DoD technologies (27% of all contacts) Emailed RFI regarding a companies mapping software from an embargoed foreign country. The email address was listed as a point of contact on the companies website, which also highlighted the companys advances in mapping software.

16 Hacking/Probing/Scanning/Pinging Most of foreign Internet activity in 2000 was probing efforts Searching for weaknesses in systems for exploitation Hundreds of attempts over a period of one day from a foreign country Used multiple passwords trying to gain access to a cleared facilitys network Firewall monitoring software caught all attempts A few contractors now incorporate security with their website design and advertising - this trend should grow in the future


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