Space and Communications
"National and International Space Program Partnerships for the Next 25 Years"
AIAA Global Air & Space 2001
May 07, 2001
Thank you, and thanks to AIAA for organizing a the Global Air & Space Conference, which the entire team at Boeing always looks forward to. We've got a great panel today, we've heard some interesting thoughts, and I hope to add some of my own
I do have a few things to say about the issue of international cooperation in aerospace. Our industry generated more than $400 billion in revenue last year. If you look at our customers and suppliers, they're in 220 countries on six continents.
And perhaps I can provide a unique perspective as someone who works for the nation's largest exporter... for a company that has more than 50 percent of its commercial customer base overseas... and that is based in 145 countries around the world.
All I have to do is look around The Boeing Company... to see firsthand the trend toward globalization. . . and how it's changing the way we conduct business.
An example that jumps to mind is Exostar... a business-to-business venture for buying and selling aerospace hardware over the Internet, which involves Boeing, Lockheed Martin, Raytheon, BAE and Rolls Royce, and maybe a few other folks soon. Exostar provides an open, neutral digital marketplace where companies can transact business in a virtual environment without boundaries.
In my own business, Space and Communications, I also see many examples of international partnering already underway.
The most obvious, of course, is the International Space Station, where we have 16 countries working together on what's been called the most significant engineering project since the Pyramids. Modern design tools and the Internet are making it possible for engineers to work 24-hours a day, and to build space modules 1,000s miles apart and have them fit together perfectly on orbit.
Or how about Sea Launch, which turned out to be a "win-win" for all involved? The Ukranians had a launch vehicle they wanted to market. The Russians had an upper-stage and the Norwegians offered a unique platform. Boeing, which hadn't yet acquired McDonnell Douglas and the Delta family, wanted to get into the launch services market, and wanted to do it quickly and in a cost-effective way.
Looking beyond Sea Launch, at expendable launch vehicles in general, the very complexion of rockets is growing more and more diverse. Consider for a moment: Lockheed Martin's Atlas 5 has a Russian engine; Boeing's Delta IV has parts from Japan, Italy, Sweden, and England; seven Japanese companies recently announced forming a new space launch venture, Galaxy Express, which is expected to include a U.S. partner in the future; and the Russians are talking about adding two more launch vehicles, teaming with Australia and Korea, among others.
While it remains to be seen how many vehicles the market can support, it does underscore the trend toward globalization.
We're seeing the same trend toward globalization on the satellite side. Boeing has a deal with MELCO where we're building the bus and the Japanese are building the payload. And on XM Radio, where Alcatel is building the bus and we're providing the payload. I think we'll see more and more of this kind of teaming in the future.
In a very competitive marketplace, sales of rockets and satellites are becoming increasingly borderless, too. For example, Boeing has three Delta 4 long-term-agreements in Europe and one in Asia. Just this year we sold the first American-built satellites to Eutelsat and New Skies. In fact, 50 percent of our commercial satellite sales are outside this country.
We're seeing every indication that trend will continue. Future market projections over the next 10 years show the demand for transponders overseas will grow dramatically: from 1100 to 1850 in Asia/Pacific; from 900 to 2200 in Western Europe; and from 600 to 1350 in Latin America.
So clearly, much cross-border cooperation is already underway.
Before we look at opportunities for future cooperation, though, I think it's important to look at what motivates international alliances in the first place.
So, what are the strategic objectives that drive international partnerships? As you can see on this slide, they are:
- Enhancing market access (including foreign governments)...
- Influencing customer awards & decisions...
- Blocking or impeding relationships with competitors...
- Supporting efficient management of resources
- Leveraging sunk product development costs...
- Sharing technical and financial risk... and
- Achieving offset commitments
With those drivers in mind, I see several important opportunities for international cooperation on future aerospace programs.
First, Air Traffic Management. I think we all agree it has to be overhauled. At Boeing, we think it has to be a space-based system, but in any case it has to be a global system. Implementing it will require international cooperation on landing rights, overflight issues, etc.
An enabler for such a system will be GPS III and Galileo [the European system], which have to be interoperable. We need European partners on GPS III, and the Europeans may need a U.S. partner on Galileo if we want to ensure interoperability.
Beyond navigation... Global Connectivity in general presumes international participation. Hybrid networks, for example, require 'landing rights' in-country to provide telecommunications services in a global context.
And the next-generation Reusable Launch Vehicle, if there's ever going to be a commercial one, it will be built by an international consortium in order to spread the risk and the investment.
Another example is human space flight endeavors beyond low-Earth orbit, such as going back to the Moon or sending humans to Mars. While I don't see it happening any time soon, such an effort will require an international consortium of companies sponsored by multiple governments. Even if a single nation were willing to fund a manned mission to Mars [$60 billion is a conservative estimate], interplanetary exploration by its nature demands international representation.
Two other examples, on the military side, are Joint Strike Fighter and missile defense. On JSF, the United Kingdom and Italy are both planning to invest in either Boeing or Lockheed Martin's version. And, at the risk of getting ahead of my customer, the president announced last week he envisions a "missile defense system that includes our allies," so that may be another area [for future cooperation]. . . .
I've given several examples where international cooperation on future space programs is needed, but, clearly there are times when cross-border partnering does not make good business sense. It would be disingenuous not to admit there are cases in which a company like Boeing or Lockheed Martin or Arianespace simply doesn't need or want to cooperate on a project.
First of all, if we think we have a killer idea that's going to change the marketplace, why would we?
In some cases we wouldn't.
While in theory, cross-border partnering can provide access to unique capabilities, reduce the required investment, and open new markets that wouldn't be open to you otherwise... Too often, in practice, it seems that the playing field isn't level.
Too many times folks want to work with us just to get access to workshare, access to our markets, and access to our investment... without giving up access to their markets.
Now, I know there's been a lot written about the issue of subsidies, and it may always be an area where we agree to disagree... . But I'd like to tell you how Boeing sees it.
In short, we want a market-driven economy... free trade... and no tariffs. Pretty simple, really.
To be more specific, Boeing sees the continued growth of international trade as vital to our long-term business interests, and we support efforts to reduce barriers to trade.
We believe rules-based trade is a key to the health and continued expansion of the global economy... and abiding by international trade agreements and the rules of the World Trade Organization is essential to making the global trading system work.
Unfair trade practices distort markets and are bad for everyone in the long run. And while we have no objection to governments lending money to aerospace companies... the terms and conditions of such loans must be comparable to what commercial lenders require.
Finally, I've talked before about my frustration about export control and our inability to fix this situation, so I'm not going to talk about it today, but I think we all agree it gets in the way of doing business and it has to be addressed.
Those are some of my quick thoughts about international cooperation on space projects and where it is headed in the future. I look forward to getting into more detail [or your questions] during the discussion.