Defense Cuts Put Squeeze on Mil/Aero Design Chain
Cutbacks in U.S. defense spending is putting the squeeze on designers and builders of military, aircraft, aerospace, communications and intelligence equipment. The U.S. spends more on defense than any other government, so budget reductions disproportionately affect OEMs and subcontractors in the military/aerospace market.
In order to maintain profitability, OEMs in the defense industry are seeking ways to cut costs and expand beyond the U.S. market. Efficiency gains have been made by designing products with commercial electronics components that are less costly than military-grade devices. Market expansion has also been achieved by selling equipment to other nations that are in the market for high-end defense and aerospace technologies.
Both strategies have their challenges, however. Commercial-grade electronics may not always stand up to the rigors of military use. Export laws prohibit the sale of sensitive components to various countries around the globe. To avoid problems down the supply chain, designers should be familiar with military specifications, be willing to test commercial components, and be cognizant of trade policies developed by the U.S. and many other nations.
Global defense spending in general is declining due to the reduced armed conflict in Iraq and Afghanistan. Deloitte’s 2014 Global Aerospace and Defense Industry Outlook forecast that global revenue for defense companies would decline by 2.5 percent in 2013. The U.S. alone has committed to reducing $63 billion in defense spending across the board by 2015. OEMs and subcontractors have taken the usual cost-cutting steps of downsizing, reducing overhead and investing in production automation. Efficiencies are also filtering down the design chain: digital product development and CAD, for example, save time and paperwork. The next step is designing in the most cost-effective components for next-generation systems.
Manufacturers Expand Rugged Product Lines Suited for Mil/Aero
Military components have long been pricier than commercial parts because of stringent performance requirements and strict quality control. As commercial quality has improved and as component makers have phased out military specification devices (volume demand has been declining for decades), designers have turned to commercial off-the-shelf (COTS) components for their systems.
While COTS parts often qualify for mil/aero applications, they may not be specified for operation over the wide temperature ranges or higher tolerances associated with military applications. Suppliers have started to develop more ruggedized versions of their commercial parts, referred to as COTS+. For example, TE Connectivity now offers a full complement of high performance commercial circular connectors, including DEUTSCH connectors, designed for rugged durability and space and weight savings (SWaP) within the military and aerospace markets. Capacitor manufacturers AVX and KEMET have also developed high-reliability components suitable for defense applications.
Engineers can also turn to a number of standards that are available for the testing of commercial components, including:
Fig. 1: TE Connectivity ADJS series
- MIL-STD-883, which defines uniform methods, controls and procedures for testing microelectronic components for use in military and aerospace systems.
- MIL-STD-202 is comprised of three classes of tests covering environmental, physical and electrical characteristics. These methods are often quoted in respect to stress testing of devices.
- ISO 9000 standards, which address various aspects of quality management.
- The Automotive Electronics Council (AEC)-Q200 provides for the qualification of passive electronic components to meet the reliability requirements of the automotive industry, including high-temperature operation, resistance to high humidity and shock, and related durability criteria.
- MIL-DTL-38999 is one of a series of MIL-DTL (formerly MIL-C) standards related to electrical connectors and details the specific configuration of a connector in terms of its construction, dimensions, connecting method and contact type.
- MIL-PRF-55365 is a specification for tantalum dielectric chip capacitors that defines their performance in terms of voltage, capacitance, capacitance tolerance and quality level. It also includes criteria for termination finish and optional surge current testing.
- MIL-PRF-55681 defines performance requirements for ceramic dielectric chip capacitors.
- MIL-DTL-3786 and its subsidiaries cover rotary switches. They ensure that switches of a particular style meet the envelope size as well as the dimensional, environmental and electrical requirements for that style.
Where Defense Spending is on the Rise:
In spite of the overall global decline, defense spending is increasing in the Middle East, India, China, South Korea, Brazil and Japan, according to Deloitte. As mil/aero companies seek to penetrate non-U.S. markets, they also must consider the export controls governing high technology. In the U.S., these are regulated by the State and Commerce departments. In 2009 the Obama Administration launched the Export Control Reform (ECR) effort, which seeks to “build higher walls around fewer items.” The ECR shifts certain parts and components from the United States Munitions List to the Commerce Control List.
The reforms are expected to ease the licensing burden for less sensitive U.S. origin parts and facilitate global trade. In order to benefit from ECR, OEMs, subcontractors and suppliers will have to operationalize the changes from the reforms, including performing reclassification exercises on items affected by ECR, training employees for the interpretation of the new regulations, and adapting internal control programs to comply with the regulations.
Still, there may be resistance to reclassification. The IPC, a trade association for the printed circuit board and electronics assembly industries, only recently secured International Traffic in Arms Regulations clarification for PCBs specially designed for defense purposes. The IPC advocated that PCB designs should remain under the jurisdiction of ITAR when the end product for which the board is designed is a USML item. IPC asserted that PCBs and their designs hold valuable and specific information about the workings of the underlying defense articles themselves. The U.S. Department of State ruled that PCBs will be controlled under USML Category XI.
Overall, defense OEMs and their subcontractors are unlikely to see any easing of cost pressure in the foreseeable future. However, the design chain can continue to pursue better efficiencies through COTS components and other means. Companies that are willing to do so, and to adapt to new trade regulations, will be better poised to take advantage of new international business opportunities.