Army’s Future Vertical Lift Competition Could Have A Devastating Impact On The Industrial Base

Sometime later this year, probably in September, the U.S. Army will select the winner of its biggest rotorcraft program since the Vietnam War era.

As part of its Future Vertical Lift modernization program, the service will select the successor to its ubiquitous UH-60 Black Hawk helicopter.

The Army refers to the successor as a “future long-range assault aircraft,” and there is little doubt that it will far exceed the performance of the venerable Black Hawk. The Army expects to buy 60 per year for decades to come.

Two teams are competing for the award, one led by Bell/Textron and the other a joint BoeingBA
-Sikorsky team. All of the companies contribute to my think tank.

This commentary is not about who has the better offering, or how the new rotorcraft will transform the conduct of land warfare. It is about how the contract award will impact the rotorcraft industrial base.

Industrial base considerations are not part of the selection criteria that will determine who should win the program. The Army says it is mindful of potential industrial fallout, but the reality is that whichever team wins will be set up for decades of high-volume work, and whichever team loses will be severely, perhaps fatally, damaged.

The Black Hawk successor won’t just replace 2,000 UH-60s in the Army fleet; its advanced technology and economies of scale will make it the preferred candidate to replace aging utility helicopters in the other military services and the fleets of allies.

In other words, it will likely eclipse the sales prospects of rivals in the global military market. Just providing spare parts and support to the selected aircraft will confer on the winning team a long-term franchise worth tens of billions of dollars.

Against that backdrop, it is not hard to see which team has the most to lose. That would be the Boeing-Sikorsky team, which has built 90% of the helicopters in the current Army fleet.

The three dominant aircraft in the current fleet are Boeing’s ApacheAPA
tank killer, built at Mesa, Arizona; its Chinook heavy lifter, built near Philadelphia; and Sikorsky’s Black Hawk, built at Stratford, Connecticut.

These three rotorcraft all have something in common: if the Army has its way, they will cease production before the end of the decade.

The service is currently buying 812 upgrades of Apache under a multiyear contract, but at nearly a hundred deliveries per year, that program will not be funded beyond 2025. The Chinook was supposed to be upgraded to a “Block II” configuration that would have kept the Boeing plant near Philly working for 20 more years, but the service reversed itself and now seems uncertain about the upgrades.

As for Black Hawk, that has to cease production later in the decade to make room in the budget for a ramp-up of its successor.

There are a few other rotorcraft programs under way at the plants, but production of V-22 tiltrotor fuselages for the sea services at the Philly plant is coming to an end, and production of a heavy-lift helicopter for the Marine Corps at Stratford will barely exceed 200 aircraft.

So, the “future long-range assault aircraft” will largely define the future of the domestic rotorcraft industry. The Army plans to award a smaller scout helicopter later in the decade, but that is small potatoes compared with the Black Hawk replacement.

It is no exaggeration to say that the three plants in question represent most of the U.S. rotorcraft production capacity. A defeat in September thus could doom much of that capacity.

For Sikorsky, a unit of Lockheed MartinLMT
, the impact on 8,000 workers in Connecticut—nearly two-thirds of its workforce—would be devastating, as would be the impact on 242 suppliers in the state.

Sikorsky has been operating at the Stratford plant since 1929, and currently spends about $450 million annually in the state on parts and support; Lockheed has invested a billion dollars modernizing the plant since acquiring Sikorsky in 2015.

Boeing’s Apache plant in Mesa plays a similar role in the regional economy, employing nearly 4,000 workers at a site it acquired from McDonnell Douglas in 1997.

As for Boeing’s Philadelphia site, where it plans to locate the headquarters of its program to build a Black Hawk successor, the consequences of not winning the award would be profound; it is the largest industrial site left in the lower Delaware Valley, a place that has managed to survive even as other industries like electronics and petrochemicals have gradually deserted the region.

Two generations ago, the industrial corridor on both sides of the river south of the city was famous for its shipbuilders, its refineries and its railcar production; the Chinook today is produced in a building that originally manufactured Baldwin locomotives—once the biggest such enterprise in the world.

That’s all gone now, except for the Boeing plant and a Kimberly-ClarkKMB
site in nearby Chester. Boeing employs over 4,000 workers at its helicopter plant, and relies on 473 suppliers in the Keystone State.

Of course, there would be ripple effects in other states if the Boeing-Sikorsky team lost, and those to some extent would be balanced by new investment in Texas if Bell/Textron won (I will write about that possibility later).

But the Biden administration and Congress should harbor no illusions about what it will mean for workers in Arizona, Connecticut and Pennsylvania if the Boeing-Sikorsky team fails to prevail in the competition.

Many thousands of jobs will be wiped out, not just at Boeing and Sikorsky, but also at hundreds of suppliers and, indirectly, at other local businesses.

The first people to go will be the engineers, who without a win will have little to do with their skills, and they will be followed out the door by production workers who no longer will have a product to assemble by the closing years of the decade.

The Biden White House talks a lot about industrial revitalization. This is an opportunity to think through the connection between military spending and economic outcomes.