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Missile Markets: Uneven Recovery

Missile development and production is starting to recover from the doldrums of the mid-1990s. The recovery is uneven with some areas such as air-to-surface and cruise missiles seeing a major upsurge, while other areas, such as anti-ship missiles, remain stagnant.

Britain's decision this past year to opt for the multinational Meteor to arm the Eurofighter was not an entirely unexpected decision given the push toward European integration. While widely viewed as a setback for its competitor, the Amraam, in fact the picture is far less clear. Meteor so far is a paper design and is unlikely to be ready for deployment for a decade. In the meantime, the major Eurofighter customers -- the U.K., Germany and Italy -- plan to buy some number of Amraams to arm their fighters until the Meteor becomes available. Meteor is unlikely to become a serious competitor to the Amraam in the export market in the near future, if ever. Amraam export orders alone now exceed 7,000 missiles, and are likely to climb beyond the 10,000 mark by the end of the decade. The Amraam enjoys the advantage of economies of scale in production, driving down its unit cost, and the advantage of already having been integrated on a wide variety of fighter aircraft. Given the fate of recent multinational European missile programs, Meteor now faces the usual challenge of being developed on time and within a reasonable budget.

The growing recognition of the dominance of beyond-visual-range (BVR) missiles in modern air combat has been very evident in the long-standing debate about opening up Amraam sales in the Asia-Pacific region. The U.S. State Dept. has been reluctant to allow the sale of weapons with markedly greater capability until some other country does so first. As a result, Amraam sales have been cautiously approved on a case-by-case basis while awaiting proof that the Russian R-77 has finally been delivered to customers such as India, China and Malaysia. The dominance of BVR missiles has also dampened the sales of the new generation of short-range dog-fighting missiles. Although much ink has been spilled regarding the advantages of new highly maneuverable missiles such as the Russian R-73, Israeli Python 4 and British Asraam, export sales have been remarkably thin. They will be joined in the market in the next few years by additional competitors such as the German IRIS-T and the U.S. AIM-9X.

One lesson from recent air campaigns that has not received extensive attention is the durability of aircraft missiles. The French senate has been critical of the high cost of missiles to replace missiles after a relatively short number of flight hours. Modern missiles take terrible abuse when flown on pylons for mission after mission -- their electronics get shaken and their solid fuel delaminates. The Kosovo experience may lead to greater attention to durability in the future.

The important role of air power in policing the ''New World Disorder'' has led to greater interest in precision strike. The Kosovo air campaign of 1999 reinforced this trend, but it has been well underway since the 1991 Persian Gulf war. This political development has coincided with an important technological development in the form of cheap and practical hybrid GPS/INS guidance packages. Such guidance approaches were serendipitous. While the use of GPS for guidance might have been anticipated by the military role in the development of navigation satellites, the rapid and massive proliferation of the technology has been due largely to the attractiveness of the technology in the civil sector. Widespread manufacture of GPS receivers for civil applications has driven down the cost of the devices for military applications. Inertial navigation systems (INS), long a staple of missile guidance, have seen a similar cost revolution due to the development of cheap miniaturized devices for civil applications such as automobile air-bag systems. This has created a synergistic effect, making a combined GPS/INS guidance package cheap enough to guide bombs in the $ 20,000-range instead of being limited to missiles in the $ 2,000,000-range.

The next step in this direction may be on the horizon with recent U.S. experiments to exploit inexpensive commercial thermal imaging devices. Air-to-surface missiles already use a range of imaging infrared (IIR) seekers, but their applications have been limited by the high cost of such seekers. Automobile manufacturers such as Cadillac have been sponsoring the development of low-cost, uncooled, thermal imaging sensors as a night driving aid. These systems may prove practical as an adjunct to GPS/INS guidance. The GPS/INS system would provide the mid-course guidance for the bomb or missile and get it within a few meters of the intended target. The low-cost IIR seeker would provide the precision terminal guidance.

At the moment, air forces are obliged to acquire two categories of precision attack munitions, cheap GPS/INS weapons to attack soft area targets, and high-cost precision munitions for hardened targets which require direct impact. The advent of an inexpensive imaging infrared seeker could lead to yet another revolution in air attack by creating a universal guidance package that could perform either mission at low cost.

A further incentive for the development of such systems is their suitability in contemporary low-intensity conflicts. Current precision attack munitions, notably laser-guided bombs, require that the launch aircraft loiter in the vicinity of the target between launch and impact while illuminating the target. This has proven to be acceptable in situations where the targets are either not defended, or weakly defended by old air defense missile systems susceptible to existing electronic warfare countermeasures. But as new generations of SAMs (surface-to-air missiles) begin to proliferate, campaigns such as the Kosovo operation may become increasingly costly. The new generation of GPS/INS, mated with other low-cost options such as wing kits and IIR guidance adjuncts, will skirt around this problem by extending the release range of the munitions to stand-off distances beyond the range of the new SAMs. The U.S. is currently looking at such options with extended-range versions of JDAM (joint direct attack munition) as well as spin-offs such as the SSBXR (Small Smart Bomb Extended Range).

What has been quite surprising in the past five years has been the remarkably slow pace of European defense firms to make any effort at all in responding to this revolution in airpower. The French air force has had an outstanding requirement for a JDAM-type munition called AASM, but has been paralyzed by budget cuts and debate over whether a future weapon should be based on U.S.-controlled navigation satellites or some future European GPS alternative. Britain has a requirement for a JDAM-type munition, and recently selected an enhanced version of the Paveway guided bomb with a dual-mode laser/GPS targeting capability.

Stand-off is the name of the game in more expensive, long-range air-to-surface missiles, with nearly all major air forces now looking at a wide variety of weapons. These encompass a variety of configurations and guidance approaches from powered submunition dispensers like the AGM-154 JSOW (joint stand-off weapon), to longer-range options like the AGM-158 Jassm (joint air-to-surface standoff missile). These are, in essence, short-range cruise missiles. Europe is very active in this field with the Anglo-French Storm Shadow/Scalp and the Swedish-German Taurus, both of which have entered flight trials in recent years.

Another unpublicized lesson from Kosovo has been the need for more attention to safeing and arming systems on missiles. A number of NATO air forces were shocked to discover how many missiles and expensive munitions they had to dump into the Adriatic when strike missions were aborted due to weather. This was due to the fact that the aircraft types had not been cleared to land with certain types of munitions. As air forces begin to use more precision munitions and fewer dumb bombs in highly politicized operations, weapons wastage could become a significant political and funding issue.

Air defense missiles, more popularly called SAMs, have long been the single largest area of the missile development field in terms of cost. In the past decade, SAM sales have plummeted, particularly in the export market. Hardest hit have been the intermediate-range missiles, typically vehicle mounted and used for the defense of mobile formations. Sales of systems like Crotale, Roland, Rapier, ADATS and their Russian equivalents have dried up. The only steady market in SAMs has been at the low end with man-portable systems such as Mistral and Stinger. What has been a very noticeable trend has been the use of these man-portable systems in somewhat more elaborate complexes with forward-alerting radars and other sensors. The resulting systems have been attractive as a low-cost alternative to traditional radar-guided systems. The Kosovo air campaign also suggests that they provide good ''bang for the buck.'' The Serbian possession of Igla (SA-16/SA-18) manportable missiles, while not shooting down a single NATO aircraft, did force NATO air forces to operate at altitudes of more than 15,000 ft., diminishing their accuracy and forcing many aborted missions due to clouds below the missile ceiling.

There have been some interesting attempts to develop missiles with performance envelopes similar to conventional medium-range SAMs, but with lower costs. Sweden's RBS.23 BAMSE is a good example of this configuration, using a two-stage missile with command guidance to offer the range and altitude capabilities of a larger and more expensive semi-active radar guided system. Russia has been in the forefront of this development, and recently signed a major deal for its similar Pantsir system with the United Arab Emirates. The Pantsir sale has another interesting dimension in that it is the first time that Russia has embarked on full-scale engineering development of a weapon system based almost entirely on an export order.

The U.S. continues to fund a wide range of anti-ballistic efforts including Patriot PAC-3, Thaad (Theater High-Altitude Area Defense), Navy Area Wide and Theater Wide Defense, and the strategic National Missile Defense. The widespread proliferation of tactical ballistic missiles provides a more certain political footing for tactical missile defense than for strategic missile defense, which remains a political hot potato.

Nevertheless, recent political developments may undermine the sense of urgency behind the tactical missile defense initiatives. The political rapprochement between North and South Korea, if it lasts, should reduce North Korea's incentive to export ballistic missiles. North Korea has been the major source of missile technology of concern to the U.S., with extensive sales and technical support to Iran, Syria and Pakistan. Without this technical support, a number of ballistic missile programs in the developing world will collapse or be significantly delayed. Iran's missile programs have not proceeded as quickly as some had anticipated, with yet another launch failure this past year. The wild card in all of this is Russia. Leakage of Russian technology to Iran has been a source of concern to the U.S. government. Russia is beginning an export drive on a new Scud follow-on, the Iskander, which if successful, could dramatically change the nature of the threat. Iskander is a modern solid-fuel missile using a highly automated and survivable launcher.

Anti-ship missile development has been stagnating in recent years. The collapse of the Franco-German ANNF effort and its French follow-on, the ANS, has left the European aerospace consortium with relatively old designs such as the venerable Exocet. The situation is much the same in the U.S., with the Navy still relying on the Harpoon.

The reason for the stagnation in anti-ship missile development has been the shift in emphasis in navy operations from Cold War blue-water missions, to the current concentration on littoral operations in support of peacekeeping missions ashore. As a result, navies have begun to show more interest in power-projection ashore than naval combat on the high seas. Nevertheless, there remains a need for short-range anti-ship missiles able to operate under the demanding conditions near shorelines. The most active program in this regard is Norway's NSM effort, intended to replace Penguin. NSM may end up becoming the pan-European next-generation light anti-ship missile, as Norway is already cooperating with a number of other countries in its development.

While European and American anti-ship missile development is in the doldrums, Russia continues to export new anti-ship missiles with substantially better performance. China has acquired the Moskit (SS-N-22) with its purchase of two destroyers. The Moskit is a very large, supersonic missile designed for the anti-carrier role. In the past year, Russia has also signed a deal to provide India with the 3M54E Club anti-ship missile. This is a novel design based on the 3M14 Granat (SS-N-21) strategic cruise missile. The Club uses a fuel-efficient turbojet engine for its approach to the target, but in the terminal phase, the warhead section separates from the fuselage more than 30 km. (16.2 naut. mi.) from the target, and is propelled at speeds of Mach 3 by a second-stage rocket engine. This type of missile poses some unique problems for ship defense. The missile's small size enables it to be fired from submarine torpedo tubes or warship vertical launch cells, making it a far more versatile weapon than the enormous Moskit.

Anti-tank missile production has been heavily affected by the shift in interest away from the former tank threat in central Europe to the needs of light expeditionary forces in low-intensity conflicts. The programs hardest hit by the trend have been the two European efforts, the TriGAT Medium-Range and TriGAT Long-Range which appear to be on the brink of collapse. Britain's withdrawal from TriGAT-MR in 2000 may sound the death knell of the program. European firms are now scrambling to find off-the-shelf substitutes. Some firms are beginning to form consortiums to offer the U.S. Javelin or the Israeli NT-Spike. France would like to retrieve some of its investment in TriGAT by offering a low-cost derivative that can be fired from existing Milan launchers. The U.S. Army is in an enviable position, with the light-weight Javelin already in service. The need for a replacement for the TOW missile has taken a back seat, and may finally be met by the new Common Modular Missile program started in the past year.

Tactical ballistic missiles are starting to return to favor in the U.S. armed forces, notably the Navy. As its mission shifts from blue water operations to littoral operations, the Navy is becoming far more interested in projecting power ashore. Plans are already underway to convert older Standard missiles into Land-Attack Standard Missiles (LASM). However, this is only an expedient, and in 2000 the Navy started one of its first new missile programs in years, the Advanced Land Attack Missile (Alam). Alam could be a hypersonic cruise missile or a tactical ballistic missile. It is intended to arm the new DD-21 destroyers, but it will have applications on new submarines as well as existing warships. The Army is somewhat more constrained in ballistic missile development due to the 1987 Intermediate Nuclear Forces (INF) Treaty. Its existing ATACMS (Army tactical missile system) missile is treaty compliant, and fulfills the Army's requirements for deep strike. Development is focusing on enhancements to ATACMS such as the new guided BAT (brilliant anti-tank) submunition.

In the U.S., strategic ballistic missile development has been in hibernation since the end of the Cold War. The Air Force is completing its extensive Minuteman 3 life-extension program which will keep this classic in service until 2020. The Navy is continuing to acquire the Trident 2 D-5 missile. Both services are beginning the very early stages of defining future missiles. It is possible that a common missile might be selected to fulfill both roles. Russia has continued to deploy its new Topol-M land-based missile at a very slow pace due to budget problems and its submarine missile program has been paralyzed by the decision two years ago to cancel the troubled Bark missile. Neither the U.S. nor Russia has been anxious to proceed with any new programs until the shape of future forces is determined in forthcoming START 3 treaty negotiations.

France has eliminated its land-based strategic missiles and is now concentrating on its sea-based deterrent. Its future M51 design has been beset by budget problems and is unlikely to be ready until the end of the decade. China continues to develop a new generation of intercontinental and regional ballistic missiles, but its strategic force remains small and antiquated.

The most dynamic area in ballistic missile deployment has been in the developing world. Pakistan has two parallel programs, the Ghauri with North Korean assistance and the Shaheen with Chinese aid. India has reactivated its intermediate range Agni program, and is planning to deploy both land- and sea-based versions of its Prithvi tactical ballistic missile. North Korea's missile program has been relatively quiet this past year as it ponders its future relations with South Korea. Iran has undertaken steps to actually begin deploying its Shahab 3 missile, but the long-anticipated test of its longer-ranged Shahab-4 has not yet taken place.

Cruise missiles have continued to attract attention in view of the extensive use of Tomahawks in recent conflicts and peacekeeping operations. The high-expenditure rate of the Tomahawks has led the Navy to opt for a low-cost version, Tactical Tomahawk, for its immediate needs. In the long run, the Navy is examining more futuristic concepts including hypersonic cruise missiles such as Fasthawk. The Air Force has begun to take a look at its future cruise missile needs, as conversion of the AGM-86 ALCM (air-launched cruise missile) into conventional strike versions has its limitations. The Conventional ALCM (CALCM) is too large for tactical strike aircraft. As a result, the Air Force is examining an Extended Range Cruise Missile (ERCM) and also may develop a smaller tactical cruise weapon suitable for tactical strike aircraft.

Europe's interest in cruise missiles has been whetted by U.S. use of the Tomahawk in the Balkans and during other recent conflicts. France and Britain are developing the cruise missile version of the Apache, known respectively as Scalp and Storm Shadow. Britain has acquired the Tomahawk for its attack submarines for longer-range missions. France has a requirement for a long-range, nuclear-armed cruise missile for its deterrent force and is currently developing the ASMP-A for this requirement.

Russia has seen the need for conventional cruise missiles for its bomber force and is taking a two-track approach with a conventional version of its Kh-55 (AS-15) and a new-generation weapon in both conventional (Kh-101) and nuclear (Kh-102) forms. Russia also has continued experiments with hypersonic cruise missiles, but funding has remained the single most significant obstruction to modernization. China has begun to show interest in cruise missile development with a host of programs, but to date has not been notably successful.

One of the big issues in missile defense is when cruise missile technology will begin to leak to the rogue states. There are signs that cruise missile proliferation has already begun to less threatening operators, with sales of the Black Shaheen derivative of Storm Shadow/Scalp to the United Arab Emirates, and the Russian offer of cruise missiles to India. But to date, land attack cruise missile proliferation has been remarkably slow compared to ballistic missile proliferation.

                                        VALUE OF UNITS 
                    UNITS TO BE         TO BE PRODUCED* 
YEAR                PRODUCED            (billions of 2001 U.S. dollars) 
2001                25,609              6.88 
2002                28,639              8.79 
2003                29,834              8.77 
2004                26,550              9.39 
2005                27,916             10.78 
*Pertains to missiles only and does not include associated launch hardware, radars, etc. 
Source: Teal Group Corp.