Recent Trends and Future Challenges of Civil

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Recent Trends and Future Challenges of Civil
1. Introduction
Faced with the persistence of global recession, leading countries have
gradually cut their defense budgets and reduced demands for defense
acquisition. The prolonged EU financial crisis and the US fiscal cliff slowed the
rise in global economic growth; Western nations have continued to cut their
military spending1) Against the backdrop of an economic slump, the major
arms manufacturers such as Lockheed Martin, Boeing, and BAE are seeking
ways to extend their market through the Civil Military Integration (CMI), cost
Recent Trends and Future Challenges of
Civil-Military Technology Cooperation in
Korea*
cutting, and mergers.
This trend is full of suggestions for the defense industry in South Korea. As
the economic growth rate slows and the government investment reaches their
Figure 1.
The Framework of Civil-Military Technology Cooperation
Source : KIET, “Fundamental Civil-military Technical Cooperation Plan (draft)”,
2012.4 (re-written by KIET based on the “CMTC Master Plan (draft)”).
* This article draws heavily on the CMI international conference presentation material in Korea
on December 14th 2012.
1) IMF, 2012.9; SIPRI, 2012.
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limits, the CMI has attracted public attention to change the way of investment
from conventional “government investment” into “private investment”.
Therefore, the CMI can be a pragmatic choice in order to find a new growth
engine and boost industrial competitiveness. It is expected to utilize the
defense budget efficiently, vitalize an aggressive spin on/off, boost
employment and improve the spread effect to enhance the quality of life.
2. Global Trends and Outlook of the CMTC
Reviewing the global trends and outlook of the Civil-Military Technology
Cooperation (CMTC), it is summarized as “4C”, which represents Cut,
Consolidation, Catch-up, and Convergence, as follows. First, defense
expenditure cuts are made by advanced countries due to global recession and
the easing of tensions. After the lifting of the Cold War, the advanced countries
have been gradually cutting their defense budgets. This trend of reducing
defense expenditure has accelerated further following the recent fiscal crisis in
Europe and the US. The Obama administration recently reached an agreement
cutting its defense budget by nearly $500 billion over the next 10 years. Also,
European countries, such as the UK, Germany, and Italy, have decided to cut
their defense expenditures. On the other hand, China and Russia, which still
Table 1.
Defense Expenditure Forecast Results (2011~2015)
Unit : billion dollor, %
2011
2012
2013
2014
2015
Average
Growth rate
US
689.6 (42.4)
669.7 (40.6)
650.4
631.7
613.5 (35.4)
-2.9
China
129.3 (8.0)
153.7 (9.3)
182.8
217.4
258.5 (14.9)
18.9
Russia
64.1 (3.9)
74.3 (4.5)
86
99.6
115.4 (6.7)
15.8
Europe*
216.5 (13.3)
210.2 (12.7)
204.2
198.3
192.6 (11.1)
-2.9
Others
525.0 (32.3)
532.4 (32.2)
539.8
547.3
554.9 (32.0)
1.4
1,624.5 (100)
1,651.4 (100)
1,678.8
1,706.7
1,735.0 (100)
1.7
Total
Source : KIET’s forecasting based on SIPRI, SIPRI Military Expenditure Database, 2012; IHS,
“Aerospace and Defense Industry Trends”, 2012.
Note : 1) * Sum of France, Germany, UK, Germany, Italia, Spain, Netherland’s (SIPRI 2012) defense
expenditure.
2) ( ) stands for a ratio.
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Figure 2.
M&As in the Global Defense Industry (1990~2012)
Source : KIET, 2012.11.
Note : The M&A between BAE (2nd largest) and EADS (7th largest) was revoked in
October 2012; however, there is still a possibility for the merger.
remain major military powers, will continue increasing their defense
expenditures and carrying out a “defense export promotion” policy.
Second, global defense companies implemented their consolidation
through a diversification strategy in the civil industry by enforcing market
power over the past two decades. In 1990, M&A mainly occurred in the US,
and the EU increased M&A against that trend in 2000. For example,
mega-sized defense companies such as Lockheed Martin, Boeing, and
Raytheon were established. In response, major EU defense companies like
EADS, BAE Systems were also established.
After 2008, developing countries, including Israel, actively promoted M&A
for strengthening marketing capabilities, enhancing brand value, and
developing new markets. For instance, Italian Finmeccanica acquired DRS
Technologies for $5.2 billion, and Israel’s Elbit Systems acquired Innovative
Concepts for $15 million. Recent common trends are M&A for CMI. US UTC
acquired Goodrich for $18.4 billion to enforce global market power. Also,
major defense companies recently acquired cyber security companies to
secure new growth engines.2)
Third, it is quite obvious for developing countries to catch up through
2) SIPRI, 2011.
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Figure 3. Trade Balances of the Defense Industry in Israel and China (2006~2011)
(million TIV)
Source : Written by KIET based on the “SIPRI, SIPRI Arms Transfer DB”, 2012.
Note : Based on finished goods.
CMTC. China is one of the countries growing rapidly in defense industries
through Dual Use strategies. In the 1990s, 80~90% of commercial products,
such as taxis, cameras, and bikes, were produced in defense factories.
Recently, the Chinese defense industry gradually promoted developing dual
use technology through the Restart 2008 plan led by COSTIND. Over the last 6
years (2006~2011), China’s defense industry exports have grown annually at
17.8% on average, becoming the 4th largest arms-exporting country in the
world. China used to record trade deficits in the defense industry, but started
to make profits in 2010. Based on the current growth trend, China is expected
to become the 3rd largest arms-exporting country in the world by 2015.
Also, Israel, through world-class civil military technical cooperation, has
implemented the “Best Practice” in CMI. For example, several military bases
have initiated diverse national defense projects. Global companies such as
“Audio Code” have benefited from such projects. Over the past 6 years, Israel
has shown sustained growth in its arms-exporting reaching an export level of
production equal to 80%. Since 2009, Israel has recorded a trade surplus in the
defense industry for 3 consecutive years.
Lastly, it is common to see a convergence between the civilian and military
industries worldwide. The U.S has united civilian and military standards and
promoted Commercial-Off-The-Shelf (COTS) procurement. Since 1994, the
United States has implemented the “Milspec Reforms” (Defense Standard
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Reform) for the unification of civil-military standards: updating or eliminating
military specs & standards, and converting those to civilian standards;
introduction of the ASSIST system to support management of defense
standards, allowing public access, and implementation of the DSP (Defense
Standardization Program) for standardization in overall national defense
procurements.
The U.S. has also reduced costs by avoiding additional military standards
and by promoting COTS procurement. For example, the United States’
CECOM (Communications-Electronics Command) has expanded the adoption
of COTS through the “Adopt-Adapt-Develop” strategy, and COTS products are
tested for military use. If some supplies do not satisfy certain military
requirements, such supplies are reformed or new products are developed.
Recently, the United States has been emphasizing COTS and the
procurement of NDI (Non-developed Item) at the parts and sub-systems level
rather than at the complete systems level.
With the mil-spec reform and COTS policy, the US has reaped the benefits.
For the Cobra Helicopters program, 70 military standards were consolidated
into 2 standards, and commercial standards were substituted for military ones.
In addition, the AMRAAM project did apply commercial standards instead of
military standards. In the JDAM (Joint Direct Attack Munitions) project, total
acquisition cost was reduced by 50%, thanks to such standardization and
simplification. Broader application of COTS products were used when
building British fleets.
3. Recent Trends for CMTC in Korea
(1) Status of the Civil-Military Industry in South Korea
1) Manufacturing Industry
The decline in global demand resulted in worse production, domestic market
and export performance compared to the previous year, despite robust
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growth in the automotive and machinery industry. In 2012, the overall real
economy in South Korea weakened due to the global economic recession,
which resulted in the nation’s poor export performance. Specifically, both
ship-building and steel which had led the nation’s exports were seriously
impacted, each down by 25.5% and 5.2% over the last year.3) In 2013, certain
factors including gradual alleviation of the Euro Zone crisis, stronger response
to the economy due to the launch of new governments by some leading
countries, and stabilization of commodity prices will lead to slight growth of
about 3% in national GDP over the previous year.
However, core businesses of South Korea are expected to maintain their
superb global market shares through innovative production technology and
economies of scale. The global market share in the machinery industry is
steadily growing. Also, the technology competitiveness is at the 90% level
compared to Japan and is 15~20% higher than China.
On the other hand, the outlook of DREAMS4) for the next period is still dim.
Figure 4. Domestic Production Growth Rate Expectations (2012~2013)
Unit : %
Source : KIET, “2013 Economy & Industry Outlook”, 2012.11.
Note : Units based on dollar-denominated prices.
3) KIET, “2013 Economy & Industry Outlook”, 2012.11.
4) DREAMS is an acronym of Display, Robot, Energy, Aerospace, Mobile communication.,
Material, Software, Sensor & Safety.
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Figure 5.
Domestic Export Growth Rate Expectations (2012~2013)
Unit : %
Source : KIET, “2013 Economy & Industry Outlook”, 2012.11.
Note : Unit bases: automotive (built-up car), ship-building (ships built), steel (steel
materials), textile (quantity), others (prices).
In 2012, production and export performance for domestic “DREAMS” sectors
seemed to be generally weak due to the global economic recession, and the
trade balance in each sector was worse. Production in mobile communications
decreased -6.4%, and exports were also down -13.6% from a year ago.
However, display production increased by 4.0%, and exports went up by 1.0%.
The technology competitiveness of the mobile communications and display
sector is 90%, robot sector 82%, and materials sector 70%, in comparison with
developed countries. The trade balance was worse in each “DREAMS” sector
at the same time.5)
Such sectors as aerospace, industrial robot and sensors have robust growth
potential and are closely related with other sectors; therefore, core
competencies for such sectors need to be strengthened. For example, the
materials sector needs to be strengthened through the development of
differentiated “new materials” in both domestic demand and export segments.
The new trend should instead focus on enhancing the State-of-the-art
5) KIET, “2013 Economy & Industry Outlook”, 2012.11. display ($26.8B), mobile
communications ($15.1B) ; Trade deficits: materials ($5.1B), aerospace ($3.6B), sensors
(4B) ; Materials, aerospace, sensors: Based on 2010 data.
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technology competitiveness for sustainable growth in existing core businesses.
Promotion of such “DREAMS” sectors can be a pragmatic method to discover
next generation core businesses.
By strategic investment into such infant sectors as robot, aerospace,
high-tech new materials, precision optics and S/W, such “DREAMS” will have
an influential role to play as a dynamic force for new growth in the future.
2) Defense Industry
Recently, the production scale in the defense industry has had a slowing
growth rate. From the long-term perspective, it is necessary not to push
forward a domestic demand orientation, but to consider the economies of
scale and inter-industrial leverage effect: production of about $10 billion and
employment of 38,000 people.6)
Table 2.
The National Production of Defense Industry
(KIET Defense Statistical Analysis)
2008(A)
2009(B)
2010(C)
2011(D)
SI Company*
4,401
(57.6)
5,485
(57.9)
5,973
(59.8)
Designated
Defense company
2,564
(33.6)
3,110
(32.8)
Tier company**
671
(8.8)
Total
7,636
(100)
Unit : billion dollor, %
Increasing Rate
D/C
C/B
B/A
D/A
6,314
(62.8)
5.7
8.9
35.3
43.4
3,108
(31.1)
2,863
(28.4)
-7.9
-0.1
21.3
11.7
881
(9.3)
913
(9.1)
884
(8.8)
-3.2
3.7
31.3
31.8
9,476
(100)
9,994
(100)
10,061
(100)
0.7
5.5
24.1
31.8
Source : KIET, “defense statistical research”, 2012.12.
Note : 1) The national production 2008~2011 were converted into KRW based. 1$=₩1,100.
2) The data above are computed based on 259 companies for 2008~2010 and 454
companies for 2011 (13 SI companies, 80 Designated defense companies, 361 1st-tier &
2nd-tier suppliers), respectively. Based on such data, total production volume in the
defense industry of South Korea was computed with projections for outsourcing
balancing between SI companies and suppliers.
* 13 companies (i.e. Samsung Techwin, Doosan DST, KAI, LIG Nex1, Hanwha, Hyundai
Heavy Industries, etc.).
st
nd
** 2011 data: Designated defense companies and 1 /2 tier suppliers.
6) KIET, “Defense statistical analysis”, 2012.12.
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The volume of exports has grown tremendously, but still is less than that
for developed countries. Arms-exporting contracts are expected to make a
record high revenue, $2.4 billion, thanks to some successful projects like the
KT-1 trainer with Peru. Based on customs, arms-exporting in 2012 is expected
to record 94% growth over 2011, from $0.38 billion to $0.74 billion.
However, the export level compared to production was merely about 7%,
implying that the industry is still an industrial structure solely oriented toward
a domestic market. Compared to other developed countries, South Korea’s
export level compared to production is relatively low, at about 20~25%.
Therefore, sustainable export promotion policies need to be implemented.
Figure 6.
Value and Proportion of Exports (2008~2011)
(million $)
(%)
Source : KIET, Defense Industry Statistics, 2012.12.
Note : 1) Exports in 2011 were converted into KRW based. 1$=₩1,100.
2) Number of companies: 121 (2008), 122 (2009), 127(2010), 454 (2011).
3) Based on 454 arms manufacturers.
Figure 7.
Defense Industry’
s Civil-Military Compatibility (2010)
(%)
Source : KIET, Defense statistical research, 2012.12.
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The defense industry’s average civil-military compatibility is merely 25%
based on related facilities. For such arms manufacturers with lower labor
turnover ratios, their suppliers tend to have higher civil-military compatibility
than those of SI companies or designated defense companies. This implies
that defense companies tend to make enormous efforts to create certain
synergy effects through civil-military compatibility, as there are less supports
directly from the government and more fierce external competition.
3) Civil Military Technology Cooperation Areas
Compared to both the manufacturing and defense industries in Korea, CMTC
investment is not compatible. The average annual increase in CMTC
investment has been about $3~4 million (2006~2011) after 1999. A total of 193
projects have been performed and $613 million has been invested.
The technology development project budget is over 90%, but, the
technology transfer project budget is 2~4%. Among DREAMS industries safety
(including S/W, 22%), Materials (22%) is high, but, Display (1.3%) and
Aerospace (7.4%) are low.
The major investors of CMTC are MKE and DARA. Compared with total
R&D investments, CMTC investment accounts for only 0.3%. Also, CMTC
investment accounts for 2.3% in comparison with Defense R&D investment. If
Figure 8.
Specific CMTC Budget Composition Status (2010~2011)
(million $)
Source : Civil-Military Technology Cooperation Support Center, 2011.
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Figure 9. Specific CMTC Budget Composition by DREAMS (2010~2011)
Unit : Number of project, million $, %
Source : KIET, “Fundamental Civil-military Technical Cooperation Plan (draft)”,
2012. 4.
the Civil-military Compatible Technology Project Promotion Act is passed,
investment will be expanded.
Since 1999, the government mostly invested in non-defense areas (I), but
after 2008, defense R&D led CMTC (II). CMTC participation declined from 4 to
2 departments; civil investment has decreased, while defense investment has
increased due to the establishment of DAPA.
(2) Recent Trends of CMTC
There are some events related to CMTC in South Korea. In May 1997, the
“Civil-Military Compatible Technology Promotion Plan” was reported to the
President, and the “Civil-military Compatible Technology Project Promotion
Act” was enacted a year later. In early 2012, KIET formulated the “Civil-military
Technical Cooperation Master Plan (draft)” including the CMTC Project
Promotion Act (draft) and 14 detailed tasks addressing vision, purpose and
four strategies. 4 months later, the plan was reported at the “133rd Economic
Contingency Planning Meeting”. In November 2010, the Civil-military
Technical Cooperation Support Group was upgraded to the Civil-military
Technical Cooperation Promotion Center. Recently, the “Civil-military
Technical Cooperation Project Promotion Act (draft)” is being enforced and is
making progress.
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Of late, the concept and scope of CMTC has been extended farther. The
civil-military compatible technology project including civil-military compatible
technology development, civil-military technology transfer, civil-military
standardization, and civil-military information sharing has moved away from
conventional ideas and is reinforcing the connection.
The civil-military technology cooperation project, which extended the
concept further than the civil-military compatible technology project, is primarily
based on development and transfer of common technologies used in military
and non-military sectors, standardization, and technology information sharing.
The CMTC promotes projects including the inter-departmental cooperation
technology development project and the arms system development &
establishment system to generate positive results through utilization of
state-of-the-art-compatible technologies. Also, CMTC includes the strategy
support system project for development of civil-military compatible non-arms
Table 3. Scope Expansion of Civil-Military Technical Cooperation (Draft)
Category
Civil-military
compatible
technology
development
Technology
transfer project
Standardization
Information
sharing
Current Revision
O
O
O
O
Category
O
Inter-departmental
cooperation
technology
development
project
O
Arms system
development and
establishment
project
O
Strategy support
system
development
project
O
Current Revision
Reason
O
Generation of positive
results through utilization
of state-of-the-art
compatible technologies
based on civil-military
cooperation
X
O
Development and
establishment of
civil-military compatible
arms systems project
X
O
Development of
civil-military compatible
non-arms systems
X
Civil-military
technology
application
research project
X
O
Technology
commercialization
through civil-military
technology transfer
Civil-military
technology
commercialization
project
X
O
Military or civil application
of civil-military
cooperation technology
Source : KIET (re-written by KIET based on the ‘Fundamental Civil-Military Technical Cooperation
Plan (draft)’, 2012.4 and the revised draft (2012 version) of the ‘Civil-Military Technical
Cooperation Project Promotion Act’, 2012.12.
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systems. On top of that, it also supports projects such as the civil-military
technology application research project to commercialize technology.
Several CMTC pilot projects are currently underway. One of the
representative examples of inter-departmental cooperation projects is the
long-hours-stratosphere-staying pilotless project co-led by MCK, DAPA and
KMA. Another example of CMTC is common embedded SW compatibles
among arms systems, which are conducted by MKE and DAPA. In addition,
the real-time data distribution SW project is a type of civil-military compatible
technology project run by MKE and KAPA.
One of the features of CMTC is that the civil-military technical cooperation
authorities are extended through restructuring. In 2012, the civil-military
technical cooperation support group upgraded to the civil-military technical
cooperation promotion center to intensify planning and managing of CMTC
projects.
4. Guidelines for Activating CMTC and Future Challenges
In order to step up to “Global CMTC Industry G7” within 10 years, developing
strategic partnerships based on an incentive program supporting the
government and an active participation of corporations is essential. However,
there are significant challenges for vitalizing CMTC.
(1) Expand CMTC Scale
Currently, the CMTC budget scale is smaller than other R&D projects, and total
investments and average budgets are also low. Average investment per project
is $3.18 million, and projects totaling more than $9.1 million account for only
4% of the CMTC project. Thus, CMTC usually progresses on a small scale
because of the budget limit.
For expansion of the budget allocation, each of the government agencies
has to consider the possibility of CMTC and secure a budget before
proceeding in the massive R&D project.
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Figure 10.
Guidelines for More-intensified CMTC(ERRC Framework)
Source : KIET, “CMTC Master Plan (draft)”, seminar (2012.2) (re-written by KIET based on
the “CMTC Master Plan (draft)”).
Note : * Application of the Boston Consulting Group’s ERRC Framework.
** Highlighted in blue– Such texts imply that the Fundamental Civil-military
Technical Cooperation Plan (draft), Promotion Act (draft) and Civil-Military
R&D Cooperation, 2012. 11 have been actively adopted.
First, the rate of the budget will continuously increase for 10 years, and the
average budget scale will also expand similar to the other R&D projects, by
$13~18 million. In the US, the defense-related R&D budget such as
DoE(non-defense department) is 5~7%.7)
Also, the budget can be expanded by launching a new project. For
example, there is a 10-year initiative to encourage the CMTC project. Only
about 9~20 projects are currently in progress, but by steadily increasing the
7) GAO, 2009.
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number of launched projects from 20 to more than 80, it will be much easier
to secure a CMTC budget.
Finally, balancing between defense and civil R&D investment is another
pragmatic method. In this case, the principle that focused investment must be
made to the more useful tech should be applied; for example, DAPA 50%,
MKE 30%, MEST 20% in defense tech.
(2) Granting of Technology Development Outcomes into Intellectual
Property Rights
The key ingredient for success in civil-military technical cooperation is to
provide certain “incentives” to induce active participation by many companies.
Although “The Civil-Military Technical Cooperation Promotion Act (draft)” is
currently under enforcement, the act, unlike those of most developed countries,
does not include granting of intellectual property rights to lead research
institutes but merely specifies positive reviews (Article 21 of the Act (draft)).
According to the KIET’s defense industry research survey of 2012, about
72.9% of respondents were in favor of the improvement of the technology
ownership title and export-linked license fee system in Figure 11.
As shown in Figure 12, 21.3% of respondents answered that the
government’s ownership issue was the biggest problem in vitalizing CMTC,
followed by lack of technology innovation incentives (19.9%), excessive
Figure 11.
Necessity for Improvement of the Defense R&D IPR and
Export License Fee System
Source : KIET, Defense Industry Statistics, 2012.12.
Note : 96 effective answers (SI + designated defense companies + expert).
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Figure 12. Reasons for Improvement of the Current Military Technology
Ownership Title and Export License Fee System
(%)
Source : KIET, Defense Industry Statistics, 2012.12.
Note : 70 effective answers (SI + designated defense companies + expert).
expert-linked license fees (18.4%), and obsolescence of developed technology
(17.6%).
For developed countries like the U.S and Israel, intellectual property rights
for all the R&D outcomes resulting from the investment of national resources
are granted to the participating companies, hence generating economic
growth and creating multiple jobs.
In the case of the U.S., the participating companies hold the rights resulting
from governmental investment R&D while the U.S government owns certain
licensing rights.8) After the granting of ownership titles based on the “Bay Dole
Act” of 1980, economic values of over $30 billion have been created annually
by 8,000 new patents, 2,200 new companies, and over 250,000 new jobs.9)
Israel is another clear example where the government grants the
intellectual property rights to participating companies. These polices of
property rights lead to continued company participation in numerous
projects.10) Intellectual property ownership titles are proportional to the
investments made by the government and the participating companies. In
addition, participating companies can adjust their investment, but generally
8) Boeing presentation material, 2012.12.
9) U.S Council of Governments Relations, 1999.
10) Israel IAI presentation material, 2012.12.
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governments and companies split the investment on a 50:50 ratio.
Also, Israel is carrying out the policy of exempting export-linked license
fees except in some cases of the “Golden Key” transfer. Furthermore, there is
no licensing fee when applying military technologies to private products (spin
offs) such as robot technology applied to private jet delivery trucks or
capsule-type endoscopes.
In South Korea, however, such intellectual property rights are currently
owned by the government. Therefore, the government should be granting
intellectual property rights to private companies in order to provide certain
incentives for active participation in CMTC projects. First, the current system
needs to be improved in a way that leading research institutes and
participating companies are granted with pertinent licenses, while the “ADD”
possesses ownership title for a civil-military and defense technology
development project. Second, ownership titles and licenses should be granted
to private companies for active and efficient investment. Finally, when
early-stage arms manufacturers export some products, participants need to be
temporarily exempt from licensing fees in order to promote price
competitiveness.
(3) Strengthen the Pre-Feasibility Review System for CMTC
Currently, the “Civil-Military Cooperation Possibility Review System”, which
reviews possible upgrading of sizable R&D projects into civil-military
cooperation, is under progress.11) When reviewing civil-military cooperation
possibilities for such projects led by general departments12) and military
departments (long-term plan),13) the “Civil-military Cooperation Possibility
Review Sub-committee” consisting of such private sector specialists as the
national research institute and private companies needs to take strong
11) National Science & technology commission, Civil-military R&D Cooperation Action Plan,
2012.11.
12) Total project expenditure over $50 million (about $27 million to be subsidized).
13) Total project expenditure over $10 million (for those projects applicable to the long-term
plan).
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Figure 13.
Framework of CMTC Pre-Feasibility Analysis (Draft)
Source : KIET, “Fundamental Civil-military Technical Cooperation Plan (draft)”, 2012.4.
initiatives in reviewing issues including civil-military possibilities, marketability
and export possibilities.
(4) Modification of the Assessment System in CMTC Projects
As far as current civil-military technology cooperation projects are concerned,
there is no integrated civil-military feasibility analysis methodology. As the
scope of civil-military technology cooperation and its pilot projects is
expanded, the “integrated civil-military feasibility analysis methodology”
should be developed. With such methodology, future civil-military technology
cooperation projects can be successfully implemented.
The military application of civil-military compatible technologies is poor
due to certain characteristics of the current military test and assessment system.
There are only 1 to 2 military tests and assessments for civil-military
development products per year due to poor interfaces between technology
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development & system development and difficulties in applying the overall
system (system integration) characteristics.
Thus, more active early participation into the decision-making process is
necessary for wider application of civil-military products to weapon systems.
As part of a military test and assessment of a civil-military development
product, an organic cooperation system needs to be established at every
phase in order to promote active participation by military product developers
in key decision-making processes, like the cases of CDR, PDR, and ILS-MT.
(5) Establishment of CMTC Industry Statistics D/B
Currently, data associated with civil-military compatible technology projects
are simple statistical data. The current DAPA Statistics Book D/B is limited to
military use only, and their practical application is also very restricted for
effective analysis on civil-military technology cooperation policies. Basic
statistical data for the analysis of the civil-military industry and the proposal of
civil-military technology cooperation policies are very insufficient. Therefore,
there is a need for basic statistical data for the analysis on civil-military
technology cooperation policies and the implementation of research projects.
Most national research institutes such as KIET, KISTEP, and KISTI have
contributed to the proposal of government policies and the development of
related systems through establishment & management of research-oriented
industry statistics D/B and objective statistical analysis.
The government also needs to establish an objective and reliable
civil-military industry statistics D/B for more intensified civil-military
technology cooperation. An organization in charge needs to annually survey
the formulation of relevant policies and accordingly establish and manage the
industry statistics D/B. It is recommended that a national research institute be
appointed as a policy research center and accordingly establish the statistics
DB, with certain factors taken into account.
After the establishment of the D/B, it will be open to the public and is
expected to make a great contribution to in-depth research into civil-military
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Current Issues
cooperation policies and successful civil-military technology cooperation. Also,
there is a need for consistent collection and management of statistical data for
preliminary feasibility analysis and power consumption verification. Through
interfacing with other industries’ policy D/Bs, more in-depth research related
to certain topics should be conducted, such as the economic values of
civil-military technology cooperation projects and stronger industry
competitiveness.
(6) Establishment of CMTC Polish Research Center
Currently, there is no research center to make project proposals, perform
market assessments and support policy development. Thus, a comprehensive
research center is necessary to integrate and analyze civil and military
technology, markets, and economic feasibility. This center is expected to
achieve the CMTC vision and goals through the continuous research by the
“CMTC research center (draft)”. At the same time, the CMTC policy research
center should support policy development at the national level.
(7) Establishment of an Independent Civil-Military Technology Cooperation
Agency from the Long-term Perspective (Long-Term Plan)
The “Civil-military Technology Cooperation Support Center” has already been
established in order to promote civil-military technology cooperation projects.
However, it is simply a subsidiary agency of the Agency for Defense
Development (ADD). The current organization will not be able to handle all
the increased project budgets and related tasks triggered by the revision of
governing laws. On top of simple civil-military technology cooperation project
management, there should be an effective system that is capable of
maintaining certain impartiality between private and military parties for settling
certain conflicts between them and promoting their cooperation.
In the long-term, an independent agency that takes charge of coordinating
civil-military technology cooperation projects should be established. After the
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revised Promotion Act (draft) is put into effect, an independent civil-military
technology cooperation center needs to be established in the long-term, and
its labor & organizational competitiveness should be accordingly strengthened.
In addition to officers and civil-military technology experts, there should be
active recruitment of private sector specialists with expertise in industry,
technology transfer, and technology valuation assessment that are able to take
care of the actual technology transfer process.
In the case of the US, more than 700 public research institutes, including
military research institutes, are equipped with their own technology transfer
divisions such as OR&TA (Operations Research & Technology Applications).
Each division is staffed with one headcount of 200 researchers, and such
initiatives have promoted the transfer of publicly-developed technologies into
private sectors.14) In England, transfer of such technologies owned by the DSTL
(Defense Science Technology Laboratory) and special task forces designated
for commercialization are made frequently.
In order to be comparable to developed countries in civil-military
technology cooperation and to rev up “new national growth engines”, a
control tower with impartiality between private & military sectors and a
supportive independent agency should be established for the long-term
perspective.
5. Conclusion
In a global economic recession, CMTC has attracted public attention to
provide new national growth engines and improve the quality of life. Under
these circumstances, some advanced and developing countries like the U.S,
Israel, and China have revitalized their economies by strengthening the
connection between civilian and military industries.
Despite the promising potential, the efforts to activate CMTC are yet
insignificant in South Korea. CMTC must not be optional, but compulsory in
14) USC Title 15 Section 3710, interview with a US Department of Defense officer, 2012.
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Current Issues
Figure 14. Steps for Securing New Growth Engine and Quality of Life through CMTC
Source : KIET, “Fundamental Civil-military Technical Cooperation Plan (draft)”,
2012. 4.
order to increase national competitiveness and job creation. There are strong
desires not only to reduce the defense budget, but to use it more efficiently in
the near future. Also, it is hard to find new engine growth without any
conversion of general industries together.
CMTC has proven to be a new engine of growth from the extensive review
of advanced countries in the world today. Therefore, we must try to put our
whole effort into boosting CMTC as a new growth engine in Korea. It could
enhance the quality of life with the strengthening of the national defense, the
expansion of the industrial spillover effects, and the making of a positive cycle
system through civil-military technology cooperation.
Won Joon Jang
Associate Research Fellow
Defense & Aerospace Industries Research Division
[email protected]
Ja Young Yoon
Researcher
Defense & Aerospace Industries Research Division
[email protected]
Mi Jung Kim
Researcher
Defense & Aerospace Industries Research Division
[email protected]
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