Chairman, Chief Executive Officer and President,
Northrop Grumman Corporation
On Monday, September 16, 2013, Northrop Grumman Chairman, Chief Executive Officer and President Wes Bush Addressed the 2013 Air Force Association Conference and Trade Show in National Harbor, Maryland. Below are his remarks.
The Air Force-Industrial Partnership: A Bridge to the Future
I sincerely appreciate being invited to speak today. The Air Force Association has been such a valuable and integral force on behalf of the United States Air Force and, by extension, the nation whose interests the Air Force serves, and has served, for so many decades.
Those of us in the defense and aerospace industry feel a special kinship with the Air Force. Your service and our industry have been inseparable partners since your inception. In many ways, we have grown up together, collaborating on challenges of enormous complexity along the way.
Today, our partnership represents an integrated team – a total Air Force – that includes civilian technicians working around the world with uniformed service people. It includes those of the guard and reserve and even, by extension, the employers who support their service obligations.
The results of this long partnership have kept our nation free, our economy vibrant, and our way of life intact and validated.
Today, I would like to talk about that partnership. I would like to touch on the foundations of its success. But more importantly, I would like to examine its future during this age of rapid global change and economic challenge.
We all know the story of the Air Force’s birth as an independent service in 1947. And we all know how, at virtually the same time, the dawning Cold War required our nation to remain on an indefinite wartime footing.
Those circumstances made a demand on our economy that had never been made before – a need to keep a technology-dependent service supplied with all the capabilities it might need to wage another world war on short notice, without wrecking our economy in the process.
Of course, our nation found the answer in a partnership between that service – the Air Force – and a permanent industry that recognized and shared its partner’s commitment to innovation and technological dominance; an industry vitalized by competition and free market capitalism, and committed to alignment with its partner’s needs and vision.
Those collaborative innovations produced such game-changers as satellites, missiles, precision munitions, extraordinary persistence, highly capable sensors, unmanned systems, materials technology, stealth, computational superiority; the list goes on and on. These are innovations that have contributed to those Air Force hallmarks of speed, range, and flexibility. Since the Korean War, our nation’s Air Force has never operated without complete air dominance.
As stories go of innovation in a nation’s interests, America’s Air Force-industry partnership is a hard one to top.
It has been a partnership that has prevailed over periods of war and periods of peace. It has prevailed over periods of economic expansion, and economic contraction. It has prevailed over periods of frantic, immediate need and relative international calm when some were saying that military history had reached its end.
Today, we find ourselves at another turning point – in fact more than one – one, geo-strategic and one economic – that have compounded to place unprecedented demands on our venerable partnership.
Warfare that began twelve years ago is winding down in many places around the globe. Our nation’s leadership has determined the need for a strategic shift toward Asia and the Western Pacific, bringing with it the need to focus more on some technologies and capabilities, and less on others. And all of this is occurring at a time of economic challenge, resulting in shrinking defense budgets.
The innovations our partnership will need to develop in this current environment will likely revolve around such things as global reach; strategic defense; and, as always, the ability to understand in detail all that is happening around the globe.
Our partnership will need to ensure the Air Force’s ability to prevail over peer as well as non-state actors. It will require compatibility and collaboration with new allies as well as old ones. And it will need to do all of this with a greater emphasis than ever before on affordability.
In short, we find ourselves at a bridging moment – a moment in our nation’s history when the successes of our previous partnership will have to be projected into the future under a rapidly changing set of circumstances.
So, what exactly has made our partnership so successful? And is that success sustainable? Let me spend a few minutes on those questions.
I have used the word, “innovation” several times. You have heard me assert that innovation was critical to our nation’s survival during the Cold War, and our ultimate victory therein.
But innovation doesn’t happen of itself. This is important to talk about because we often throw that word around – innovation this and innovation that.
Innovation is the fruit of the human mind. You might call it intellectual capital, or human ingenuity, or just plain talent. Whatever you call it, the common denominator is people.
And that applies to the Air Force as well as to us, your industry partner. The successful completions of your missions depend on the amazing people of the Air Force – well educated, incredibly committed, superbly equipped, and meticulously trained.
As so it is with industry. Our ability to innovate the solutions you need depends on people – well educated, committed to our customers’ mission, superbly equipped with all the technologies and laboratory tools needed by the scientist and engineer; and meticulously trained in their areas of expertise, and in the value of free inquiry and expansive thinking.
As people have always been at the heart of our successful partnership since its inception nearly seven decades ago, so will we depend on people to see us through the challenges of this current age.
In that sense, what are our prospects for prevailing over our current challenges? Clearly, those who know, know that the Air Force comprises some of the most talented, creative and innovative people our nation has to offer.
And I will tell you, on a personal level, I had the good fortune, as a young engineer fresh out of college to go to work at the Aerospace Corporation, and to learn about our collective military-industry enterprise directly from numerous Air Force majors and colonels who took me under their wings and not only taught me about bringing technology to the warfighter – they taught me about long term vision, personal commitment to mission, and what ethics and integrity really mean to our collective undertaking.
So I have a special place in my heart for Air Force leadership, and I know this group will keep a keen eye on the future. But the people part of this equation is a very challenging one as we look ahead. Let me give you my perspectives on the industry end of the people equation. To start, I will tell you that from industry’s perspective, I see real cause for concern.
First, because of the pace of technology itself.
I don’t need to tell you that the progression of technology around the world is moving at a pace that is far faster than most of our fellow citizens realize. And you know better than anyone that your success and the standing of our nation rely on technological superiority, not technical parity.
I am confident that today, we are still the world’s foremost nation technologically. But it is critically important that we do not allow ourselves to feel comfortable with where we are in this race. In fact, as a nation, we are working hard to educate the world around us on technology. You can find most all of the course work from our premier technical universities, online for open use around the globe today – and often for free.
So we are helping to accelerate this pace around the globe, and in the broadest sense this is a good thing. But it does add to our security challenges.
And this pace of technological progress highlights another cause for concern, which is demographic.
Within our industry, among many of our core disciplines, more than half of our current technical professionals are retirement eligible – today. What that means for companies like the one I lead, as well as virtually every company that comprises our industry, is that even in an economic downturn and shrinking defense budgets, we are out aggressively recruiting new engineers, scientists and mathematicians – across the board. This is proving to be a challenge, as the best and brightest have many opportunities – in the U.S. and abroad.
Which brings us to another cause for concern: Education.
I won’t dwell on this issue because we are all so familiar with it. Our education system, for myriad reasons, is not producing enough STEM graduates – that is, graduates of science, technology, engineering and math specialties – to satisfy the needs of our industry and all the other industries competing for their skills.
It’s clear, when we show up on college campuses; there aren’t enough to satisfy the needs of our industry and all the other industries that are competing for their skills.
And that competition is a key part of this equation. We regularly find ourselves on college campuses working hard to recruit new STEM professionals for our company. But so is every other company in our industry. And so is every other technology-dependent industry as well – from biomedical, to entertainment, to information technology and telecommunications, to you-name-it.
And because American STEM professionals graduate from the best programs in the world, they are being recruited by industries the world over. If you are a young engineer coming out of school today, you have an amazing array of choices.
So what advantage does our industry have over all those others – here and around the globe – against whom we compete for talent?
Quite simply, we do cooler stuff than they do!
Cyber; stealth technology; sophisticated sensors; satellites and other space systems; directed energy; aircraft, both manned and unmanned.
I’ve spent thirty years in this industry and I am still in awe of the things we work on and the challenges we overcome. I believe that the technological challenges our industry and the Air Force collaborate on are simply more interesting, more important and more exciting than anything a new STEM professional might get to do anywhere else. It represents one heck of a selling point as we try to recruit the talent we need. This is the place to come to work on the most amazing things.
But even that advantage is not assured, especially in these times. And this points to another cause of concern as it relates to the people part of our equation: investment in defense R&D.
Defense R&D, as a fraction of our nation’s gross domestic product, has been on a downward slope for some time now – even before the advent of our current economic difficulties.
I think we all know that intuitively, but let me tell you what the numbers say. If you turn back the clock to the 1960s, we were spending about one percent of GDP on defense R&D.
In the eighties, that investment declined to about three-quarters of a percent. And over the last decade, it was down to about a half of a percent. If you look at the projections indicated by the budgets going forward – and these numbers were before the sequester – that defense R&D figure will decline further to about one quarter of one percent of GDP.
These ever thinner R&D budgets are insidious for many reasons. Apart from the opportunity costs to our nation of fewer technological breakthroughs, they also induce a very dangerous risk aversion.
We often lose sight of the fact that failures are inherent in pushing the technology to its maximum. If you’re going to have technological superiority, you’ve got to push technology. When we’re risk averse that sends a very dangerous message to young engineers as they decide their career paths. They need to know that our collective enterprise – the Air Force and your industry partners – is the place for true research, unlimited development, and pioneering innovation that inevitably requires some risk. But it also requires R&D budgets.
Whatever R&D budget results in the current environment, whatever the outcome, we must recognize that that outcome is a decision about our future. And it is a decision that affects not only our technological superiority, but also the basic health and readiness of our enterprise. Of course, industry needs to invest in its own R&D as well, and I know I speak for most of the companies in our industry: Our intention is to try as hard as we can to maintain that R&D as we go through this more difficult environment. We must recognize that R&D investment is the engine for our enterprise.
That engine drives not just of our current and future products; R&D is what powers our ability to attract and retain the talent we need to innovate those future solutions and capabilities. R&D is the engine we depend on in our daily battle for talent. It is the engine powering our technological superiority today and, more meaningfully, tomorrow.
I am convinced that our enterprise, including industry – your integral partner – takes very seriously the issue of people: finding them, recruiting them, retaining them, helping them feel fulfilled in their career ambitions within our enterprise.
We are working hard on the issue of STEM education. We are pursuing imaginative and innovative solutions with our nation’s educators from “K” through twelve, and into the college levels – both undergraduate and graduate levels.
And let me take this opportunity to give a plug for Cyber Patriot. AFA has, I think, introduced an absolutely pioneering program working with high schools and now middle schools to help young people see the benefit of pursuing a cyber education. For our part, the Northrop Grumman Foundation is pleased to partner with AFA in doing that.
But this is hard work. It takes a lot of effort to make this work. We are working with communities, state offices and colleges and universities to bring students into STEM curricula, to keep them there through the completion of their studies, and to bring them into our collective enterprise when the graduate.
As part of that solution, we are working within our respective companies to keep our R&D efforts vibrant and to maintain their momentum. We are also working at an industry level through AIA and other industry associations, and with Congress and with you, our partner, on this same issue.
Yesterday saw the start of National Aerospace Week – the perfect time to recognize our industry for the national asset that it is. It is a precious commodity. And it needs to be recognized and treated as such. During this week our industry’s trade group, the Aerospace Industries Association, will be working hard to elevate the nation’s consciousness toward just this end.
Aerospace is more than just a $270 Billion-a-year enterprise. We exist to serve you so you can serve the nation’s policy-makers and the people to whom they answer. Like many of the solutions our partnership has found over the decades, prevailing in our current environment must be a collaborative undertaking.
And like the nation it serves, the partnership between the Air Force and industry is not ideologically focused. It is not even technologically focused. Our partnership is people-focused because it is people that drive the outcome. The quality, talent, and character of the people we retain to find solutions to the collective challenges we undertake, are the heart and soul of that partnership. That goes as much for those who make their contributions in blue jeans and business suits as it does those in Air Force blue, camouflage fatigues or tactical flight suits.
Our partnership has always been symbiotic. It has always sought to build a future founded on the attraction and retention of the very best people in the military and in industry. And to ensure that the best trained and innovative force has the advanced tools necessary to assure technological superiority over any adversary.
In the give and take between capacity and capability – and we’re all hearing those terms a lot these days – our partnership must always ensure capability. That capability requires innovation, and innovation means people.
Our people, be they Air Force or industry, are the bridge between our partnership’s successes of the past and our successes yet to come.
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