Richard Aboulafia: December 2018 Letter

Dear Fellow Aero TrendWatchers,

Big theme for 2018? How to put this gently…The world got worse. It’s tough to quantify the world getting worse. But it did. In Germany, Angela Merkel announced that she would quit her job as the world’s Adult In The Room. France looked good, until, suddenly, a mob of people in fluorescent vests started throwing rocks. Yellow vests. What is it about France? It’s always with the haute couture. Even Britain got much worse, and looks set to get more so. As a card carrying Anglophile that hurts. We booked a flight to Heathrow in February, because we want our kids to see London before March’s Brexitocalypse (my wife pointed out the pound would be cheaper in April, but we then realized that restaurants would only have local mutton and turnips).

Unfortunately,… [More]

Richard Aboulafia: November 2018 Letter

Dear Fellow New Org Chart Watchers,

For years, the world has watched for the next emerging jet producer. Will it be in Bandung, Sao Jose dos Campos, Beijing, or Nagoya? Perhaps we should look in Connecticut and Iowa. The new United Technologies, created this month, incorporates Pratt & Whitney, Rockwell Collins, and UTC Aerospace Systems (plus legacy names like Goodrich, B/E, Rohr, etc.). Somehow, this giant collection of businesses has no real overlap and builds everything a plane needs to fly except aerostructures. All they need to make a jet is someone who connects the dots and covers it all with metal or CFRP. And, of course, someone who creates a product the market wants. Bank of America/Merrill Lynch analyst Ron Epstein termed New UTC a Tier 0.5 supplier, or a virtual prime. If it isn’t now, it could be in the future…. [More]

Richard Aboulafia: August 2018 Letter

Dear Fellow Global Crisis Junkies,

There’s this country. It’s an emerging market with fast economic growth and outsized aerospace industry aspirations. Unfortunately, the government is deeply incompetent, and uses a thin veneer of nationalism, religion, and conspiratorial thinking to disguise its stupidity. Inevitably, there’s a debt crisis and a currency plunge, both of which threaten regional shock waves, with possible global impact. As a tangential consequence, the country’s massive aerospace ambitions are imperiled.

Turkey today? Sure, but also Indonesia 21 years ago. The similarities (above) are striking. There’s much to learn from a comparison. First, two differences:… [More]

Richard Aboulafia: June 2018 Letter

Dear Fellow Critical Mass Critics,

Regards from Nova Scotia, a green, eco-friendly paradise offering tasty lobsters, quirky wine, and lovely hiking. Incongruously, it once thrived as an industrial center. Nova Scotia factories built cars, machine tools, and ships. The province was even served by an extensive railroad network, moving raw materials and bringing industrial products to market.

It’s all gone now, of course, leaving behind scallop fisheries and artisanal cheesemakers. The railways are now delightful multi-use trails. Countless similar industrial hubs and rail networks were victims of… [More]

Richard Aboulafia: May 2018 Letter

Dear Fellow Horizontal Flight Admirers,

Death Spirals have threatened defense programs for decades. Death Spirals happen when a program’s unit cost rises, resulting in lawmakers punishing the program by cutting procurement numbers. Reduced numbers further raise unit costs, resulting in further procurement cuts, resulting in…programs like the B-2, with production of 21 very expensive planes.

The Unsustainable Life Spiral (ULS) is a less well-known but equally malicious beast. Here’s how it works. Someone offers a … [More]