Textron’s Earnings Reflect The Market
Filed under: Bell, Business Line, Companies, Earnings, Events, Military Aviation, Textron, commercial aviation, logistics, production program
Textron reported their third quarter earnings yesterday. They did beat expectations by not having a loss but had a profit of about 1 cent a share. This was a decline of ninety-eight percent from the year before. Despite all this the company is confident they will make a profit for a year and earnings would be as predicted.
Textron decline is caused by financial products and their civil air division. Sales of Cessna aircraft a luxury item right now were down a lot. The company has been reducing their participation in the financial sector due to the general downturn there. Despite Bell Helicopter’s struggles with the Armed Reconnaissance Helicopter (ARH) the military part of the company saw some growth.
There have been previous reports that Textron might sell Bell or other parts as it reorganizes to face the current economic downturn but so far that has not happened. As with everyone the company will have to wait and see how the economy recovers and what growth occurs.
Orbital Earnings Take A Hit
Filed under: Boeing, Business Line, Companies, Department of Defense, Earnings, Events, Federal Budget Process, IT, Military Aviation, Orbital Systems, S&T, SAIC, Satellites, Services, development program, logistics, missile defense, production program, space
Due to some restructuring of its work due to the Obama Administration’s efforts to reorient defense spending Orbital Sciences Corporation reported a downturn in revenue and operating income in its most recent quarterly results. The company saw a missile defense contract ended and some delays in satellite work leading it to reduce its estimates for the full year.
Of the major defense companies reporting so far results have been mixed. Some have seen better quarters then others. The effects of the major changes planned by Obama and Secretary of Defense Gates may take some months to have effect. The large programs they have ended will still be paying termination costs to the companies as they figure out what fees are needed and what work will be paid for. There are also chances that new contracts will be awarded in the next year or so.
Several programs will be continued in another form it may take two or three years for the next iteration to start. The Army’s Future Combat System (FCS) contract with Boeing and SAIC ended but the technology and work has been inserted into a new program. The contracts for the new program have not been fully awarded, so Boeing and SAIC may end of with revenue from that effort. In the end despite the cancellation the companies may not end up losing much revenue.
Australia To Expand And Restructure Military
Filed under: Australia, Business Line, Countries, Events, Military Aviation, Restructuring, development program, production program
The current government of Australia under Prime Minister Rudd has announced major plans to restructure the country’s military for the Twenty-First Century. A white paper describing the proposed changes was released late last week. The focus will be on expanding the ground forces, re-equipping the Navy and general modernization.
The government is also looking at this increased investment in the military as a sort of stimulus for the Australian economy during the current downturn in the world’s finances. As much of the work possible will be done in Australia and for the Navy especially there are plans for significant new construction of submarines and ships.
The core of the plan is to add twelve new submarines and new destroyers and multi-role patrol craft. There will also be new helicopters for the Navy to replace the SH-2 fiasco. The Air Force modernization will be built around 100 F-35 Joint Strike Fighters (JSF). The ground forces will see a slight growth with new vehicles.
The way this is structured shows that Australia is looking at defending themselves with the submarines and aircraft. The ground forces will allow intervention in regional conflicts if necessary. The submarines as well will provide the core offensive capability if required. The White Paper makes it clear that China will be the dominant Asian power for the next several years and Australia must adjust their capabilities for this.
While Australia has spent more since 9/11 and used their forces in Afghanistan the major modernization programs were carried over from the Nineties. This is the first stop and relook at the country’s needs and rebaseline of capabilities.
Florida Worries About the Defense Budget
Filed under: Department of Defense, Federal Budget Process, Florida, Lockheed Martin, Military Aviation, Restructuring, production program
This article in the OrlandoSentinal.com describes concerns that with the continued payout of money to save finance and other companies the US government may be forced to cut the defense budget. Concern surrounds the two big ticket fighter aircraft currently in production for the US military. The F-22 program is winding down unless Congress decides to extend the production beyond current planned numbers. There are also worries that the F-35 JSF program will be cut back or canceled. These programs provide a lot of work to Lockheed in the Orlando area. Read more
Defense spending to continue in 2009
Lockheed Martin’s CFO, Bruce Tanner, gave an interview to CNNMoney.com. His key point is that with either the election of Senator Obama or McCain there will be no real downturn in defense spending. Many have felt that the Democrat might slash defense spending in order to pay for the other programs he has proposed. The last two Democratic administrations, Carter and Clinton, are not well remembered within the Department of Defense due to their reduction in funding. Both of these administrations cut back heavily on spending, especially in the area of investment for new weapon systems. Read more
JLTV very important to Oshkosh
Filed under: Department of Defense, Federal Budget Process, Northrop Grumman Corp., Oshkosh Truck Corp, Proposal, logistics, production program
Oshkosh Industries has struggled over the last 18 months with the downturn in the economy. The stock is down almost 75% since last September. The slowdown in the world economy, especially the construction industry, has hit the company hard. It has received several US defense contracts for heavy vehicles and MRAPs. It also is teamed with Northrop Grumman on the Joint Light Tactical Vehicle (JLTV) proposal for a new tactical vehicle for the US military. If its team wins that will be a lot of work replacing the ubiquitous HUMVEE used by all four of the US services. That would offset the struggles it has been having with its conventional business lines.
See The Milwaukee Journal-Sentinal article for more.
Continued conflict good for US defense contractors
Filed under: Congress, Earnings, Federal Budget Process, IT, Military Aviation, Satellites, development program, logistics, missile defense, production program
CNNMoney has a preview of the upcoming earnings report for a variety of US defense contractors. See this for more. Not surprisingly the outlook is good. The US defense budget remains large and will probably not see any downturn until 2010 at the earliest depending on the US election. Rockwell Collins reported yesterday and they came in with 24% improvement over last quarter. See the press release here.
Company to expand in Michigan
Ace Electronics, a maker of wiring for military vehicles, plans to expand it facilities in Michigan. See a story here. This is due to an increase in the orders they are getting from the US military. The company made automotive wiring products but now are doing a substantial expansion to support their military contracts. Military vehicles, even the humble HUMVEE, are getting more and more complicated electronics to include remote control turrets that are requiring more sophisticated wiring harnesses and installations. These are much like those for aircraft and since most of them are almost handmade they require skilled labor. Ace feels that this is available in Michigan due to the downturn in the auto business.
Congressional micromanageing of the Defense Budget screws up Force Protection
Filed under: Congress, Federal Budget Process, Force Protection, Restructuring, production program
This article in The Charleston Post-Gazette discusses how Force Protection Inc. went through a boom period, and now seems to be heading towards a downturn. This is all due to Congress suddenly deciding that the Army and Marines need more MRAPs. Read more
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