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:: October 2004 Letter ::

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Dear Fellow Aerophiles,

Avoiding culture in Venice is tough. Masterpieces of art and architecture are everywhere. It’s a living museum. As a dedicated ignoramus, however, I was determined to succeed. There was no aerospace work to do, so I paid a visit to the Arsenale, the shipyards of the Venetian Empire, founded about a millennium ago. Most of this vast and ancient site is a secure Italian Navy facility (which should not necessarily be regarded as a comment on the Italian Navy’s sluggish modernization plans). But they do have a great museum (Drat! Culture!).

The Venetians had a love/hate (more like emulate/kill) relationship with the Arabs. The name Arsenale (from which we get our own arsenal, of course) is actually a corruption of the Arabic Dar Sin’a, or House of Industry. It’s the world’s first defense industrial site.

The past is a foreign country. They do things differently there. The final platform mattered most, and they built every wooden widget. Subcontracting? They’d laugh at the idea of giving work (and secrets) to anyone else. Vertical integration was total and all encompassing. Just In Time? They didn’t need no stinkin’ Just In Time. Why Think Lean when you can think fat? They kept huge piles of rope, wood, sails, and other components, in case the Empire needed more ships fast. There was a wartime reserve fleet of 25 ships, and at peak production they could build a ship in one hour. The 16,000 employees had one objective: smiting Turks, not returning value to shareholders. If anyone said “We need to improve our Return On Invested Capital” they’d cut off his head.

The Arsenale was clearly different from a modern day defense industry. Yet it’s more intriguing to focus on its haunting similarities with today’s aerospace companies. The Arsenale built ships in an incredibly efficient way. Unlike other contemporary shipyards that built the hull first, the Arsenale built the keel and ribs, and then added the hull, in purely linear fashion. The ship then passed a series of workstations where everything was added in succession: masts, sails, cannon, supplies, etc. It was just like a modern aircraft production line. In fact, it was a modern moving (well, floating) production line.

The Arsenale built commercial ships too, the Airbuses and Boeings of the Mediterranean Sea trade. And like Dassault, Boeing, and other defense companies, the Arsenale dabbled in luxury transport markets, building the doge’s gold-plated ceremonial galley—the Bucintoro—the 737BBJ or Falcon 900EX of its day. They also had a modern integrated research and development establishment. Venice’s lagoon, with its protected waterways and predictable currents, provided a great basin for ship design and testing. It was like having an aircraft factory surrounded by natural wind tunnels.

What if the Venetian Empire survived? What would its Arsenale look like today? Its importance as a platform maker would be eclipsed by the growing capabilities of the ships’ advanced weapons, such as the Joint Direct Arrow Munition. The ship’s electronics value would also increase, with much of the value going to the systems integrator. Black boxes like the Longbow (and Crossbow) Guidance System, or the Galley Slave Health and Usage Monitoring System (GSHUMS), which allowed instant replacement of galley slaves, would come to be more important than the ships themselves.

These weapons and electronics would likely be built by other suppliers, making the Arsenale relatively less important. Keeping subsystems suppliers at arms length would be the best way to guarantee best value. If the Arsenale built any subcomponents, there would be firewalls around that business unit, ensuring that it could compete for other platform business as well. Innovation would increasingly take place at the subcontractor level, obviating concerns about inadequate competition at the prime level.

Gradually, the Arsenale’s beloved ships would become mere cogs in a larger and more important electronic network, with such net-centric programs as the Trireme 21 Catapult Defense Vessel, or the Shallowwater Adriatic Protection System. And of course, new forms of warfare, such as Ballista Missile Defense (BMD), would compete for cash.

To survive in this tough environment, the Arsenale would think globally. Today’s Arsenale would use international sourcing to pre-empt indigenous shipbuilding programs in newly industrialized powers, such as Greater Bulgaria and New Carthage. Would-be new shipbuilders would realize that building parts of a successful Venetian ship was better than building tiny numbers of indigenous, mediocre ships. Internationalization would also lower the Arsenale’s costs and increase quality through a global network of competing vendors. The harebrained Buy Venetian Act of 2003 would threaten this process.

At the end of the day, there are big (and rhetorical) questions: did our defense industrial base evolve along inevitable lines? Is today’s privatized, mostly horizontal company the logical evolutionary conclusion? Would Venice’s Arsenale inevitably need to adapt itself to the realities of capitalism, like most defense companies in the world today? Could the Arsenale have survived as an example of the vertically integrated, publicly owned, government-run “arsenal system” that was once the norm? Has our own system gone too far in focusing on money, or in crunching the supplier base? Will we decide that a brutally adversarial relationship between primes and subcontractors is as bad as the vertical industrial structure we’ve left behind? Will we evolve towards more supply chain partnerships, similar to the Japanese car manufacturing system?

Also at the end of the day, I rejoined my wife for a pre-dinner bottle of Prosecco. She had chosen to spend the afternoon looking at Renaissance architecture while I looked at a primitive defense site. The things people think are important I’ll never understand.

Speaking of importance, you won’t find much in this month’s reports. They cover the 717, 757, Caravan, OH-1, C-5, Premier One, Rafale, and Bell’s 430. The Citation report is absent, as we’re waiting for NBAA news. Have a good month.

Yours, Self-Indulgently,

Richard Aboulafia

 

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