In a shocking display of newfound fiscal restraint, President Obama this week threatened to veto his own defense bill. Obama made the threat after a last-minute addition to the bill that added funding for seven more F-22 Raptor fighter attack aircraft. The Raptors cost about $350 million per aircraft, adding $1.75 billion to the $680 billion defense bill. The Raptor is a fifth- generation aircraft that features advanced integrated avionics and electronic warfare systems, stealth technology, thrust vectoring, higher mach cruising speeds and superior weapons.
Lockheed Martin ( LMT) and Boeing ( BA) are building the Raptor, along with numerous subcontractors such as Northrop Grumman ( NOC) and Texas Instruments ( TXN). The media have characterized this funding battle as a political one, but that's only part of the debate. The Raptor program employs close to 100,000 people from New Hampshire to California. In a recession where saving jobs is an administration precept, we're seeing some interesting battle lines being drawn, with Sen. John McCain (R., Ariz.) and Sen. Carl Levin (D., Mich.) on one side urging additional funding, and senators from states that will be impacted by a reduction of aircraft on the other side. In my opinion, the political debate is secondary to future needs of our nation. Secretary of Defense Robert Gates believes aircraft like the Raptor are not needed because future wars will be similar to the ones in Iraq and Afghanistan, not "peer engagements," with countries like the former Soviet Union. He also believes the F-35 Lightning II, the Joint Strike Fighter, will be able to fulfill the nation's future air superiority needs.
The problem with this thinking is that it is based on today's situation, not tomorrow's. Leaders must identify the potential threats of tomorrow, and prepare their organization and infrastructure accordingly. Many business leaders I work with are hesitant to make strategic investments today for potential downrange threats, preferring to fight today's tactical battle. But a good leader must do both. Arriving at some point in the future while you're in a fight for survival and saying "I wish we had built this technology" is wasted breath. There are obvious financial implications. Do you commit the capital spend today to prepare for tomorrow, or do you hope that potential threats don't materialize? It's a tough call, but one that a leader has to make. You can be sure that while you fight today's battle, many of your competitors are designing products, services, and technologies to knock you out of business tomorrow. I would be. I'd keep a close eye on what my competitors are putting into R&D and make sure I'm one step ahead. This debate needs to be resolved quickly. The venerable F-15 Eagle, the current mainstay of our air superiority fleet, is more than 30 years old. Many models are older than the pilots flying them, and several have even come apart airborne. In a recent exercise, four Raptors took on scores of Eagles and destroyed every one without a loss. This was startling because the F-15 Eagle, flown by several other countries, has never suffered an air-to-air loss in actual combat.
I can assure you countries such as China, India, and Russia are putting significant effort into their fifth-generation aircraft. These aircraft are a match if not superior to what the United States plans down the road. And these countries will have no problems selling these advanced aircraft to rogue nations such as Iran and North Korea, or emerging countries like Indonesia. I appreciate the administration's new zeal to save money, but I believe it's misplaced and a little late. Congress, which acknowledges not knowing exactly what's in the stimulus packages and cap-and-trade bill that were rammed through, now are putting the brakes on at $1.75 billion in additional funds. I suspect it's because of some unneeded programs and initiatives, which should take a back seat to our future national security requirements. Firing line: Businesses need a similar mindset when looking at new technologies or making decisions on future strategy. Focusing solely on today's battles can prevent you from recognizing emerging threats and technologies that may put you out of business tomorrow. In order to win you need to be prepared to fight tomorrow's battles today.