Commission to Assess the Ballistic Missile Threat to the United States
Appendix III: Unclassified Working Papers
Robbin Laird 1 : "Rethinking the Role of Western States as Supplier
The analysis of the proliferation of ballistic - and cruise missiles and of
relevant aerospace technology - has largely focused upon the sale of end
products. The control of largely government sponsored and supported
military technologies has been seen as the core challenge. Among Western
states, notably during the end of the Cold War, and in the early post-Gulf
War period, there was a broad consensus upon the need for control of end
Nonetheless, under the impact of the globalization of the economy and of
building a global information economy, the role of Western states is
changing in relationship to the proliferation problem. Rather than being a
problem of controlling transfers of military systems per se, the challenge
is now the role of Western entities - corporate and private - in building a
global high technology network. Diffusions of technology are generated by
the competition among Western entities positioning themselves to play key
roles in the new global economy.
As Western states rely more heavily upon commercially generated technology,
modern military systems become specialized sub-sets of the redesign of a
global manufacturing system. As such, the proliferation problem is turned
on its head. The West seeks to build a global network and is generating key
change in how high technology industries operate worldwide. This is seen as
critical to economic health of Western economies. At the same time, the
building of such worldwide networks create the preconditions for the
diffusion of technologies critical to the building of missiles and
air-breathing systems within states which would not have the indigenous
capacity to build such systems.
The Networking Dynamic
A key change associated with the current phase of the globalization of the
economy is the role of networks. Governments are losing control over a
considerable part of their economic and security agendas. Non-governmental
entities are building relations with one another, nationally and globally,
which leads to unprecedented diffusion of power in the modern economy. As
such, the networking dynamic creates an entirely different context within
which proliferation will occur. National export controls will be less and
less efficacious as commercial networks diffuse information and knowledge
within the global economy.
Economically, the shift of the United States from primary reliance on
large-scale organizations to the confluence among networks of
organizational entities has led to one of the greatest periods of
innovation in American history. This shift would have been impossible
without the emergence of the new information society.
The economic challenge to Asia and Europe is to shift to an economic
networking environment and away from the dominance of industrial mega-firms
and bureaucracies. American economic groups have sought partners abroad and
have outsourced parts of "American" production.
Collaboration is "global" in terms of engaging Western and selected Asian
economic entities within the U.S. and "Western" production cycle. But the
reciprocal impact is growing as well --high technological jobs get exported
and production occurs through partnering abroad and at home within the same
A key question as we enter the 21st Century will be to identify the
challenges of "foreign" influences upon "domestic" U.S. capabilities and
agendas. Indeed, the international factors of development shaping U.S.
policy have become internal forces reshaping the environment within which
the government acts. The old distinction between foreign and domestic
policy has been significantly eroded. The key delineator is increasingly
the level of participation or interaction of key states, cultures or
regions within the "American" communication and economic system.
As this new global system of "American" culture emerges it is becoming
increasingly melded into a global system of values and institutions as
well. Indeed, global reactions against the classic American patterns of
influence are reshaping an increasingly "global" American model which
encompasses cultures both at home and abroad - for they are both.
The New Global Manufacturing Model in High Technology Industries
A new manufacturing paradigm is being built around the concept of the agile
enterprise. 2 According to the Agile Manufacturing Enterprise Forum,
"agility is an enterprise's ability to thrive in a competitive environment
of continuous and unanticipated change. To respond quickly to rapidly
changing markets driven by customer valuing of products and services." 3 Or
as Eric Ross puts it: "As the twenty-first century approaches, pressure on
manufacturing in certain industries will most likely be accommodated by
those companies willing and able to adopt the agile manufacturing
paradigm.... [This paradigm] is the natural revolutionary confluence of
three concepts which are follows; flexible manufacturing, integrated
product development, and strategic partnering." 4
Three years ago, the U.S. government helped organize and fund the
Next-Generation Manufacturing (NGM) Project, an elaborate effort to
forecast manufacturing business conditions for the next 10 to 15 years. A
blue-ribbon team of nearly 500 experts from industry, government, academia,
and trade and professional associations and consortia was assembled to put
forth a vision of the manufacturing environment of the future.
In January 1997, the NGM Project published the results of its 15-month
effort, stating, "Unprecedented, interrelated changes in the global
business environment are creating entirely new success factors for
The key drivers of change according to the NGM study team were the
* Ubiquitous availability and distribution of information using greatly
improved computer and communications systems.
* Accelerating pace of change in technology. For example, rapid
engineering and production technology changes will place ever-greater
demands on the manufacturing workforce, with some companies currently
predicting skills obsolescence of up to 20 percent per year. Due to
continued automation, manufacturing labor is projected to decrease by
about 1 million jobs over the next decade.
* Rapidly expanding technology access. As technological and scientific
education spreads worldwide, competitive advantage no longer depends
solely on superior technology and expertise. The current large
differentials in technical skills among nations are shrinking. One
example is the rapid growth of software engineering capabilities in
* Globalization of markets and business competition.
* Global wage and job skills shifts. Many job skills will become
"commodities" bringing wage scales for traditional skills in the
United States down to the world-market level.
* Environmental responsibility and resource limitations.
* Increasing customer expectations. 5
In their 1996 book, Cooperate to Compete, Kenneth Preiss, Steven L.
Goldman, and Roger N. Nagel, research analysts at the Agility Forum,
combine these NGM "drivers" into a single package for innovative change.
According to the authors, the worldwide spread of education and technology
will lead to intense and increasingly global competition as well as to
accelerating rates of marketplace change. Mass markets will continue to
fragment into niche markets. Customers will become more demanding because
of higher expectations. Production will become a more collaborative
endeavor, closely involving the suppliers and customers who comprise the
value-adding chain. Societal values, such as increased concern regarding
environmental considerations or job creation, will have a growing impact on
corporate decision making. 6
According to the NGM study, teaming is the key response to the dilemma
posed by increasing expectations in a world of limited resources, and it is
at the heart of the NGM enterprise. In the new business world, the report
said, no single company can own all the skills and experience necessary to
meet all the needs of the "stakeholders"--employees, stockholders, the
local community, and so forth.
Engineers will be concerned "not only with your customer but your
customer's customers, and not only your supplier but your supplier's
suppliers," according to Preiss, director of agile enterprise projects at
the Agility Forum. "The reason for the emphasis on teaming is the quality,
speed, and cost requirements of modern competition. You can't afford to be
working in a decoupled way. "This is essentially an extended version of
concurrent engineering," Preiss added. "Let's look at the origins of
concurrent engineering. It turned out that the interactions of designers
and engineers are so complicated that there's no way of writing them down
explicitly" So the basic idea behind concurrent engineering "was to throw
the designers and engineers together in a team and let them hash things
What is being predicted regarding the growth of teaming is an enlargement
of this concept. "In the future, engineering work is going to extend beyond
design, manufacturing, and the R&D function to all functions of the company
or enterprise, and to many functions in other enterprises as well," he
Part of the need to establish these extended enterprises arises from the
fact that a company "won't be able to afford to maintain some needed skill
sets," McGinnis said. Some enterprise functions that are too costly or
difficult to duplicate will be linked to the disparate factories and
duplication centers, providing round-the-clock service regardless of
The new NGM company will be part of a global extended enterprise, which the
study defined as "a group of institutions that develop linkages, share
knowledge and resources, and collaborate to create a product or service."
These organizations, the report said, will function in an environment in
which concepts of company and national loyalty have been revised, and in
which teaming and knowledge-sharing--while competing--are the natural facts
of doing business.
This kind of collaboration maximizes combined capabilities and enables each
institution to realize its strategic goals by providing integrated
solutions to customers' needs, the NGM Project stated.
In the face of stiff competition worldwide, the report said, companies will
have to be distributed globally, with a network of factories, suppliers,
distributors, and service centers across the globe. Small and medium-size
companies will become integral parts of a global network, even if their own
physical facilities never expand beyond the continental United States.
The Impact Upon Defense Industries: The Case of the Space Business
In short, globalization of the world economy carries with it a new
manufacturing model. The emergence of global enterprises is reshaping the
way industry works. In a number of high technology industries, strategic
partnering on a global basis has reshaped how industry competes.
Globalization has radically reshaped the meaning of commercial practices.
The emergence in many high technology industries of a global development
and production cycle coupled with greater reliance by the Department of
Defense upon commercial practices opens up DoD to greater influence from
the globalization process.
In two areas - the space launcher and satellite businesses--this is already
the case. As has been noted in the about to be enacted Commercial Space
Today's high technology enterprises and venture capital markets
are globalized, meaning American companies cannot remain at the
cutting edge of technology if they do not have networks of
contacts with overseas entities and access to foreign-developed
expertise. The U.S. government is still working through all of
the issues involved in how it regulates technology-center
businesses in the new age of globalized technology.
Proprietary defense industries increasingly may find themselves on the
ropes. Unless decision-makers are willing to sustain large industrial bases
through the indefinite future, defense will, of necessity, become a
contextual industry--an applied application of high technology, commercial
A dramatic illustration of the change in the defense business against the
backdrop of the globalization of the economy is the space business. The
space business is being remade under the pressure of the new information
society and the globalization of the economy. Indeed, the landscape of this
business will change significantly over the next decade as the
reconfiguration of the key players in the space "system" unfolds.
The dramatic growth in the satellite market and its dramatic restructuring
in response to new technologies, manufacturing approaches and global
partnerships is creating a near term surge in demand for reliable and
cost-effective space launch.
In its 1997 analysis of the expendable launch market, Forecast
International made the following judgment about the intersection of the
satellite and space launch markets:
* The end of this century and the beginning of the next will see
unprecedented growth in the expendable launch vehicle market. The
current boom in commercial satellite production, brought on by the
emergence of many new fixed and mobile satellite communications
systems, is creating strong demand for boosters, both the
well-established veterans and new entrants....
* These are extraordinary times for the commercial satellite industry
and no matter whose predictions you are willing to believe, the fact
remains that many new satellite systems will soon be in operation. To
get these constellations in place the industry's rocket manufacturers,
both the well-established and entrepreneurial start-ups, will need to
supply hundreds of launch vehicles.
* Forecast International expects about 860 expendable launch vehicles
worth nearly $50 billion will roll off the world's production lines
during the next 10 years to help satisfy this nearly insatiable
demand. Launch vehicle production during the next 20 years will
involve nearly 1,480 units valued at $87.1 billion. 7
In short, the space policy "system" is being redesigned by the dynamic
interaction among government, the aerospace industry, the international
environment and the enhanced role of the networked economy and associated
The Launcher Business in Transition
Increasingly launcher policy is a contextual issue - a means to an end. A
shift from being an end in itself - for national security above all - to a
means to an end - facilitating economic development and globalization - is
a significant force pressuring redesign of U.S. launcher policy.
The older launch policy focused upon the requirements for a national policy
about launchers to meet government needs dictated by the government as the
sole-source client of the U.S. launch industry. As the emergence of a
broader commercial market for new satellites began to emerge in the early
1990s, there was a clear effort to revive the U.S. launcher business as a
player in the new commercial market. The limitation on the use of foreign
launch vehicles was perceived to be necessary to permit the revival of U.S.
The use of Russian and Ukrainian engines to assist in the revival of the
U.S. industry was seen as the major exception to a quasi-protectionist
Underlying the classic launch policy was a central role for government. The
government was the key client for the U.S. space business, but also was
deeply engaged in the production and systems integration process. National
security requirements were paramount in leading the U.S. to enter the space
business in the first place. The global competition with the Soviet Union
was a key driver for U.S. space policy. Unable to have direct access to
Soviet territory and unable to fly at will using high altitude aircraft,
space reconnaissance was a key element for monitoring Soviet activity. The
inability to operate effectively within a closed society to monitor the
activity of the Soviet state was a key driver for traditional U.S.
government space requirements. The private sector simply followed the
governmental lead. Industry followed military specifications and government
requirements in shaping its approach to the space business. In effect, the
private sector was a quasi-public sector, heavily regulated and oriented
toward meeting U.S. government-only specs. The priority on national
security policy meant that there was a sharp distinction drawn between the
U.S. and the outside world. U.S. space assets were a key part of the
national security system and as such needed to be protected against foreign
intrusion and competition. The industrial practices, around which the
business was built, emphasized a key role for the government as the systems
integrator and relied upon piecework in building handcrafted sats.
The Clinton Administration recognized the need to change U.S. policy in
response to the new commercial opportunities and conditions. But the public
policy redesign effort, which culminated in the 1994 PPD, was simply a
A new policy is emerging de facto, which takes into account the new
dynamics of change. Although there is no new comprehensive policy document
on the way, over the next few years a new policy will emerge in response to
the pressures for change. Above all, space launch policy is contextual in
character. The emergence of a global marketplace can provide a much wider
range of choice for the government. Indeed, if price is a key consideration
across a wide spectrum of activities, the government can be more agnostic
about the source of launchers - foreign or domestic.
The government will enter the marketplace with special requirements on a
case-by-case basis, but will rely on the marketplace for off-the-shelf
options in most circumstances. Such an approach will require a radical
shift in how the government works. The government still acts like it is
calling the shots, but unless it is willing to invest significantly more
money than it seems willing to do, it will be difficult to control the
marketplace. The government will increasingly leverage, not dominate the
Indeed, a significant change will come from the impact of the globalization
of high technology firms. Over the next decade, core US firm will seek and
make strategic partnerships on a worldwide basis. A new production cycle -
including in the R and D area - will operate globally. The global car is
being followed by the coming of the global ship, the global satellite and
by the global launcher. In such a circumstance, the boundaries between
domestic and foreign become blurred and the reconsideration of government
policy toward choices of launcher will be generated as well.
Restating the Problem
The challenge for a third world proliferant state shifts from the need to
get a military end unit largely controlled through military channels to one
of leveraging globally available technology to build specialized military
systems. By buying systems integrators - Western, Russian, or others - a
Third World state would then be able to assemble an air-breathing strike
platform capable of hitting adversaries at great distance. Notably,
combining cruise missile systems with naval and air platforms will prove
attractive in the years ahead as a weapon program of choice for a Third
World state bent on confrontation or deterrence.
The space launch business is especially revealing of the dynamics of change
affecting the proliferation problem. The dramatic upsurge in the space
launcher business generates a variety of global competitors and a
distributed infrastructure for the satellites, which will build the new
global information society. Competition will drive the networking of
enterprises and the diffusion of manufacturing technologies and systems
integration know-how. Globalization of the economy and the building a
global infrastructure for the new information society will reinvent the
proliferation problem - with the United States and its core allies at the
core of the system.
1. Robbin Laird is President, International Communications and Strategic
Assessments, specializing in trans-Atlantic economic, information and
security issues. Has extensive experience in the assessment of East-West
relations and has published widely in English, French and German on
Russian, former Soviet Union and European issues.
2. Joseph C. Montgomery and and Lawrence Levine, eds. The Transition to
Agile Manufacturing. 1996, ASQC Quality Press: Milwaukee, Wisconsin.
3. J. Ho, Improving Enterprise Agility. 1997, AT Kearney: Chicago,
4. E.M. Ross, Twenty-First Century Enterprise, Agile Manufacturing and
Something Called CALS. World Class Design to Manufacture, 1994. 1(No. 3):
5. Next-Generation Manufacturing Project Report: A Framework for Action
(Bethlehem, Pennsylvania, 1997), p.2.
6. Kenneth Preiss, Steven Goldman and Roger Nagel, Cooperate to Compete:
Building Agile Business Relationship. 1996, New York, New York: Van
7. From the executive summary of The World Market for Expendable Launch
Vehicles - 1997-2016 (Forecast International, July 1997).