Lockheed Sees Potential MEADS Buyers All Across Europe
NATO countries that for decades never thought they would have to defend their borders are now weighing investments in new weapons to deter and thwart attacks.Amid a growing sense of insecurity, countries are looking to beef up their antiaircraft and antimissile systems, which could be a boon for Lockheed Martin as it seeks new buyers for MEADS.
The medium extended air defense system is a multinational program with Germany and Italy. MEADS International, part of Lockheed Martin Corp., is the U.S. prime contractor.
For Lockheed, the pressure is on to sign up customers as its 10-year $3.4 billion contract ended in December and the company is absorbing all program costs until a new deal is signed with Germany. The German government announced this month it would buy the system and a contract will be negotiated in the coming months.
The deal with Germany, Lockheed believes, is just the beginning of a broader effort to recruit more European nations into the MEADS program. Potential buyers include countries that either have no regional air and missile shields or those that currently own Raytheon-made Patriot missile defense batteries and might consider switching to MEADS.
“Germany’s was an incredibly significant decision for us,” said Marty Coyne, MEADS business development manager at Lockheed Martin. “What is significant is that they extended an open invitation to the rest of Europe to come join them.”
When the Pentagon decided in 2011 it would stop funding MEADS past 2014, the program was seen as being in real peril. The U.S. Army paid for 58 percent of the development costs but concluded it could not afford to continue funding MEADS while maintaining an arsenal of 60 Patriot batteries. The timing of Germany’s announcement this month not only saves the program from financial collapse but also coincides with a rising tide of fear across Europe.
“Now we are seeing real investment by NATO countries in their own organic missile defense capability,” Coyne said in an interview.
Lockheed’s best hope lies in Germany’s Defense Minister Ursula von der Leyen, who has taken a hawkish stance on foreign affairs and is viewed as a possible successor to Chancellor Angela Merkel.
“Von der Leyen is shifting Germany into a leadership role in defense,” Coyne said. “A lot of nations in Europe have been waiting for this.” With Germany in a leading role, it would not be a stretch to predict more countries might want to join the MEADS network, he said. “The open architecture will allow all countries, not just countries with large budgets, to help grow a NATO wide missile defense umbrella,” Coyne added. “That is the vision Germany sees as a framework nation. For us, the industrial team, this is extremely exciting.”
Countries will be able to plug surveillance radars and missile launchers into a common network, Coyne said. “Romania already expressed interest and has approached Germany.” Sensors overlooking the Black Sea, for instance, could be integrated with Germany’s MEADS launchers. Similarly, other nations could contribute different components.
A tougher challenge will be to persuade current users of the Patriot system to change sides. MEADS suffered a crushing defeat this year when Poland decided to go with Patriot for its national missile defense. Coyne said the loss in Poland was not an indictment of MEADS because the government ultimately decided it wanted a system that was already fielded. “That eliminated us,” he said. But
Poland is not completely lost, he added. The deal it signed is for two Patriot batteries, but the long-term goal is to deploy eight, which would open the door for MEADS in the future when Poland considers bids for its remaining six batteries. “They want to build a networked capability, very similar to what Germany is buying,” said Coyne.
Missile defense competitions in Poland and Germany were the opening salvoes of the Patriot-versus-MEADS battle that could intensify in the coming years if other nations follow Germany’s lead.
Raytheon executives have said they intend to win Germany back with a proposal to modernize the nation’s 12 Patriot batteries.
Germany is one of four European countries that use the Patriot. The question is whether the other three — Greece, Spain and the Netherlands — can be persuaded to switch, Coyne said. “It’s one of the significant aspects of the German decision.” Those three nations collectively own 10 Patriot systems. “They would be candidates for MEADS,” he added. “There’s tremendous potential for all the allies to take advantage of this open invitation by Germany to come in either at the system level, or at the component sensor level. The network lets everyone participate.”
Lockheed also intends to offer industrial incentives to countries that buy into MEADS. After it wraps up development — Coyne said it is 85-90 percent complete — the next step is to work out a production arrangement with top customer Germany. Lockheed’s German partner MBDA Deutschland could end up as the lead contractor. “The Germans are comfortable with Lockheed Martin playing a significant role as well as MBDA. We would not be surprised if the German government elects MBDA to be their prime, and we would be a significant partner. But there will be production on both sides of the Atlantic.”
The same model can be extended to other countries, said Coyne. “There will be production opportunities for a country that wants to join MEADS. If they want to bring in their own launcher or sensor, there is development work available to them as well.”
The demand for deployable missile defense systems like Patriot or MEADS was not foreseen just a few years ago when the United States agreed to build a European-wide missile shield — with fixed-site radars and interceptors in Poland and Romania — to protect the continent from Iran’s long-range ballistic missiles.
“Air and missile defense systems like MEADS provide 360-degree protection against not just ballistic missiles but also air breathing threats like cruise missiles. You need a layered approach,” said Coyne. The continent-wide defense shield does nothing “if something came in from the right, left side or from behind.”
With the United States bearing the bulk of the expense of building the European shield, a surge of interest by NATO countries in deploying defensive weapons should be welcome by Washington as it shows allies are more willing to invest in their own defense. But it’s been mostly Russia’s aggression that has made countries reconsider their defense priorities, said John R. Deni, professor and
NATO expert at the Strategic Studies Institute, U.S. Army War College.
The United States is making a huge investment in a theater-wide missile shield on behalf of NATO, but this is not helping Europeans feel more secure as they don’t see their biggest threats coming from Iran, Deni told National Defense “I think there’s limited appetite in Europe for theater wide missile defense. I’m not convinced that Europeans are too concerned about the Iranian missile threat. I don’t think it’s something that is on their radar.”
Vladimir Putin, on the other hand, has altered the thinking about NATO security. “Countries are more interested in tactical point defense. That is reflective of where they see the threats and the deterrence they want to be able to display,” said Deni. “This tells America that they are not too gun shy in defending Western interests.” Germany said it will increase its defense budget by 6.2 percent over the next five years. Other nations have indicated they will make modest increases, too. “We are beginning to see allies responding because of what Putin has done in Ukraine.”
Antimissile systems like Patriot or MEADS can cost hundreds of millions of dollars, and few countries have the wherewithal to purchase and maintain these systems, Deni said. But the environment has changed. “In the U.S. we were very skeptical about Poland’s interest in Patriot. Most of us thought there’s no way they are going to be able to afford this. They have proven us wrong.”
From the perspective of weapon makers, “I would say things do look pretty good for companies that supply point defense systems,” Deni said. “I do not think things look good for theater wide defense. The evidence clearly shows that there is a military necessity for tactical point defense systems.”