A new law and Pentagon procurement program should assist in leveling the playing field for the US, but companies have to step up their game

• By Thomas Black /
  Bloomberg Opinion

The US has been a dominant player in aerospace ever since engine-powered flying machines took to the skies more than a century ago. From warplanes to airliners to private jets, the US has been a leader in the industry.

The US government put people on the moon, and private US companies, with Space Exploration Technologies Corp out front, are most likely to be the first to get people to Mars. US companies are also rushing to compete in the large electric vertical takeoff and landing aircraft sector.

There is one chief exception to the US’ aerospace leadership: small commercial drones.

Chinese companies dominate the market. Da-Jiang Innovations (DJI, 大疆創新) has a commanding lead, followed by Autel Robotics Co, another drone maker championed by the Chinese government. These drones are mostly quadcopters, which have four or more electric motors and carry cameras, thermal sensors, ground penetrating radar and other gadgets.

Insurance companies have found them valuable in assessing damage. Railroads fly them around bridges for safety inspections. Construction companies can take quick inventory from the air. Film companies love them because they are cheaper and easier to use than helicopters.

They also have a military use, as Russia’s war in Ukraine has demonstrated. Platoons usually have a member who packs a drone to launch and reconnoiter enemy positions.

Resourceful soldiers even strap a grenade onto first-person view drones, which are popular with drone-racing enthusiasts, and use them as weapons. Dramatic photographs of these drones detonating on transport trucks and even tanks have spread on the Internet.

The Pentagon and the US Congress are so alarmed at how far behind the US trails on manufacturing commercial drones that the American Security Drone Act, which bans federal agencies and contractors from using Chinese drones, was signed into law in December last year.

The US Department of Defense also introduced a procurement program called Replicator, which is designed to spur homegrown production of drones. These steps should help level out the playing field.

The Chinese takeover of the commercial drone industry was not an accident, industry trade group Association of Uncrewed Vehicle Systems International has said.

With the help of government subsidies, Chinese drones have flooded the global market.

“The results of Chinese drone dumping have been devastating to the US drone manufacturing industry,” the trade group said in a January study.

Chinese drones command about 90 percent of the US consumer market and 70 percent of the industrial one. US drone makers were decimated early by the onslaught of cheaper and more capable DJI and later Autel drones. The DJI Phantom 4, which came equipped with a great camera and object-avoidance technology, profoundly changed the industry when it was introduced in 2016.

The problem has its roots with China’s entrance in 2001 into the WTO, which opened the once-closed Asian country for business. The hope was that after China joined the rest of the trading world with a market-based economy, its political system would also open up and allow for the free flow of ideas that drive innovation and competitiveness.

That hope has been slowly dashed, as China never opened its domestic economy fully to foreign competition, failed to protect intellectual property and coerced technology transfers by requiring partnerships with local companies, not to mention Chinese President Xi Jinping’s (習近平) increasingly hardline stance.

Russia’s war in Ukraine is a wake-up call regarding the dangers of letting an unfriendly nation dominate the drone market.

Both sides are deploying thousands of Chinese drones, Center for a New American Security senior fellow Stacie Pettyjohn said.

“Most of the drones are pretty cheap, and you’re seeing a lot of them lost. They’re being used like munitions,’’ said Pettyjohn, who wrote a report on drone use in the conflict.

The US is a leader for large, long-range drones, including General Atomics’ MQ-9 Reaper and Northrop Grumman Corp’s MQ-4C Triton. These are more like airplanes and are as sophisticated as they are expensive.

These drones are crucial for the long-range missions that would likely be required in a sea conflict, such as one involving Taiwan, Pettyjohn said.

With government assistance, US manufacturers can get back in the game regarding smaller and less costly drones. Skydio, the largest US producer of commercial drones, has expanded its factory in Hayward, California, and expects the higher production to help drive down costs.

The company’s latest drone, the X10, has closed the capability gap on DJI, said Mark Valentine, Skydio’s president and general manager of global government.

“We’re a little bit more expensive than a DGI system,’’ said Valentine, whose team has been to Ukraine 17 times in the past year. “We now beat them when it comes to features, whether that’s sensor capability, software capability and connectivity.’’

Some US companies are concerned that the restrictions on Chinese drones could keep them from using the best-performing machines at the lowest cost.

They say that they can secure their data from being misused by Chinese drone makers.

While it would be a step too far to ban Chinese drones completely from the US market, it is important that US drone makers increase production capacity and develop supply chains that do not depend on China.

With the potential to supply federal agencies, companies such as Skydio must step up their game and produce small drones that compete on quality and price to win against DJI and Autel.

Thomas Black is a Bloomberg Opinion columnist writing about the industrial and transportation sectors. He was previously a Bloomberg News reporter covering logistics, manufacturing and private aviation.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.