BAE Systems Prepares for Contraction

As the large defense contractors continue to post their results with most of the large U.S. companies reporting a fairly good quarter one of Europe’s two largest defense suppliers also announced. Unfortunately BAE Systems (BAE:LSE) did not do as well and is continuing to make preparations for a downsizing of its workforce.

The company put out an update prior to their upcoming annual meeting that made clear that 2011 will see further reductions in defense sales for this year. Much of this is due to the reduced size of the British military and its operations due to the planned strategic reorganization of the the U.K.’s defense forces.

In February when it announced results for the whole of 2010 the company made clear that it expected 2011 to be difficult. Even though it made a slight profit compared to 2009 when the London based company was buffeted by the loss of the U.S. FMTV truck contract as well as fines for settling a bribery investigation it still felt that the future as a whole would be challenging. The company needs to restructure some of its business groups and offerings to maximize profitability.

This has led to large amounts of job reductions in the past and more will be expected as 2011 goes forward. The loss of the FMTV contract was a big blow and will lead to large losses in Sealy, Texas where the plant was located. Oshkosh (OSK) won the latest production contract and moved the work to their facilities in Wisconsin.

The expected decline in U.S. defense spending will have similar results with contraction and reductions by all the different contractors. Northrop Grumman (NOC) has made the first major change through spinning off its shipbuilding parts to a new company, Huntington Ingalls Shipbuilding.

The large companies will see the first major job losses as they tend to make major systems which may require substantial workforces. If these systems are cut or cut back then the need for the production base will shrink. It may also be expected that more M&A will take place as it did nit he Nineties as company’s focus on less business areas.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Teledyne Wins $9 Million Littoral Combat Ship Mission Modules Manufacturing Contract

THOUSAND OAKS, Calif.--(BUSINESS WIRE)--Teledyne Technologies Incorporated (NYSE:TDY) announced today that its subsidiary, Teledyne Brown Engineering, Inc., in Huntsville, Ala., was awarded a $9 million contract from Northrop Grumman Corporation (NYSE:NOC) to manufacture four Littoral Combat Ship (LCS) Gun Mission Modules (GMM). Teledyne Brown will manufacture each of the modules and assemble and test them at the company’s Huntsville manufacturing facility. Each module will be equipped with a 30

Add to digg Add to del.icio.us Add to Newsvine Add to Reddit Add to Google Add to Yahoo My Web Email this Article

More Defense Layoffs in Orlando Area

The U.S. defense industry is a complex group of companies large and small that constantly win and lose contracts. This leads to turn over in hiring and firing as sometimes work moves across the country as the Department of Defense seeks the best supplier at the best price. Most defense contracts have fixed times of five years or less which means contractors must plan to recompete their work and winning the same contract adds some consistency to their business.

The U.S. military also often buys a fixed amount of a system. This means that contracts providing logistical and maintenance support for an aircraft, helicopter or vehicle are often more valuable in the long run then actually making the system. This work too does not have to be done by the OEM but also can be awarded to another company or government depot. What all this means is that one company could be hiring people to work on a new contract while another will be laying them off due to the lost work.

With the potential for budget cuts in the future the situation of losing work and workers may become more common. The Orlando, FL area has already seen Northrop Grumman (NOC) make some strategic workforce decisions which led to shedding employees. Now one of their smaller defense contractors, DSE Fuzing LLC, has decided to end operations in that area which has led to the loss of over 100 jobs.

DSE makes fuzes for different weapon systems. They have opened a new factory in South Carolina and plan to consolidate operations there. As with all of these moves the goal is to reduce costs and increase revenue and profit. The company made clear that they are expecting future reductions in business from the military and this is part of the equation in their move.

DSE made news last year when some of the detonators it was making proved faulty and an employee was injured. This led to a fine and audit that found issues with its production practices. The company says that those issues have been resolved.

The company has been making military munitions in Orlando since after World War II when it was originally part of Martin Marietta. It has been sold and transferred a few times since.

If predicted trends in defense spending continue then there will be more stories like this as companies seek out the best place to do business in terms of cost. Unfortunately this means that other parts of the U.S. will face a negative economic effect as the work ends or moves.

Photo from Official U.S. Navy Imagery’s flickr photostream.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

BAE Systems Adds Northrop Grumman to Its JLTV Team

ARLINGTON, Va.--(BUSINESS WIRE)--BAE Systems announced today it has added Northrop Grumman Corporation to its Joint Light Tactical Vehicle (JLTV) team. The team currently consists of BAE Systems, Navistar Defense and Meritor Defense (formerly ArvinMeritor). Northrop Grumman will serve as the C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) lead, responsible for the integration of command and control hardware and software, computers and communicat

Add to digg Add to del.icio.us Add to Newsvine Add to Reddit Add to Google Add to Yahoo My Web Email this Article

Lockheed Martin-Built Missile Warning Satellite Encapsulated in Launch Vehicle Payload Fairing — Press Release

Lockheed Martin-Built Missile Warning Satellite Encapsulated in Launch Vehicle Payload Fairing

Team Prepares U.S. Air Force’s SBIRS GEO-1 for Early May Liftoff

CAPE CANAVERAL AIR FORCE STATION, Fla., April 26, 2011 /PRNewswire/ — The first Lockheed Martin (NYSE: LMT) – built Space Based Infrared System (SBIRS) geosynchronous (GEO-1) spacecraft was encapsulated into its payload fairing April 20 in preparation for an early May liftoff aboard an Atlas V rocket from Cape Canaveral Air Force Station, Fla.

SBIRS GEO-1 will enhance the nation’s missile warning capabilities and improve other critical mission areas simultaneously including missile defense, technical intelligence and battlespace awareness.

The GEO-1 satellite includes highly sophisticated scanning and starring sensors that will deliver enhanced infrared sensitivity and a reduction in area revisit times over the current constellation. The scanning sensor will provide a wide area surveillance of missile launches and natural phenomena across the earth, while the staring sensor will be used to observe smaller areas of interest with enhanced sensitivity. When GEO-1 is launched, declared operational and its data is fused into the current constellation, SBIRS will deliver unprecedented, global, persistent, taskable infrared surveillance capabilities to the warfighter, nation and allies for decades to come.

The SBIRS team is led by the Infrared Space Systems Directorate at the U.S. Air Force Space and Missile Systems Center. Lockheed Martin is the SBIRS prime contractor, with Northrop Grumman, as the payload integrator. Air Force Space Command operates the SBIRS system.

Headquartered in Bethesda, Md., Lockheed Martin is a global security company that employs about 126,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The Corporation’s 2010 sales from continuing operations were $45.8 billion.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Lockheed Martin F-35 Flight Test Program Shows Progress in First Quarter — Press Release

Lockheed Martin F-35 Flight Test Program Shows Progress in First Quarter

FORT WORTH, Texas, April 4, 2011 /PRNewswire/ — Lockheed Martin (NYSE: LMT) F-35 Lightning II test jets made considerable flight test progress during the first quarter of 2011, conducting 199 test flights versus a plan of 142 flights. Additionally, the F-35B short takeoff/vertical landing (STOVL) variant logged six times more vertical landings in the first quarter than in all of 2010. The test program remained ahead of plan despite the grounding of various test fleet aircraft for 4-15 days during the period as officials investigated the cause of a dual generator/starter failure during a flight on March 9.

The following totals and highlights provide a snapshot of flight test activity in the first quarter:

Conventional takeoff and landing (CTOL: F-35A) aircraft conducted 82 flights against the plan of 62.
STOVL (F-35B) aircraft conducted 101 flights against a plan of 62.
Carrier variant aircraft accomplished 16 flights of 18 planned.
Two production-model aircraft, AF-6 and AF-7, flew for the first time in preparation for delivery to the U.S. Air Force this year. AF-6 and AF-7 flew seven times in the first quarter.
The STOVL variant performed 61 vertical landings (compared with 10 vertical landings in all of 2010). BF-1 performed the first touch-and-go maneuver in VL mode this quarter.
From the start of flight testing in December 2006 through March 31, 2011, F-35s have flown 753 times, including production-model flights.

The F-35 Lightning II is a 5th generation fighter, combining advanced stealth with fighter speed and agility, fully fused sensor information, network-enabled operations and advanced sustainment. Lockheed Martin is developing the F-35 with its principal industrial partners, Northrop Grumman and BAE Systems.

Headquartered in Bethesda, Md., Lockheed Martin is a global security company that employs about 132,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The Corporation’s 2010 sales from continuing operations were $45.8 billion.

For additional information, visit our websites:

http://www.lockheedmartin.com

http://www.codeonemagazine.com

SOURCE Lockheed Martin Aeronautics

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Northrop Grumman’s Shipbuilding Spinoff Proceeds Smoothly

The first major shake up in the U.S. defense industry since the implementation of the reforms by Secretary of Defense Robert Gates completed last Thursday as Northrop Grumman (NOC) spun off its shipbuilding arm to its shareholders. One of the biggest defense contractors in the world the company had announced last year that they were looking at leaving the business of building warships primarily for the U.S. Navy due to contraction in that service’s plans and expected budget reductions in the future.

As soon as the transfer of the assets to the new company, Huntington Ingalls Industries (HII), was complete the U.S. Navy followed up with the announcement of an order for the tenth San Antonio class amphibious assault ship, the U.S.S. John P. Murtha. The $1.5 billion ship is named for the former Congressman from Pennsylvania and Marine Corps veteran. Huntington has also inherited four other LPD-17 class ships already under construction at their Pascagoula, MS and Avondale, LA yards.

Prior to the decision to spinoff the business Nortrop had announced plans that they would consolidate their capabilities which would lead to the closing of the Avondale facility. This is still on track to be done by 2013 but the new company says there are opportunities to keep it open if viable work can be found for the shipyard. As well as the two Gulf Coast yards Huntington Ingalls now also operates Newport News shipbuilding which constructs aircraft carriers.

The decision by Northrop has led to rumors that the remaining company now separated from its services arm, TASC, and no longer building ships might be planning on merging with one of the other large defense contractors such as Boeing (BA), Lockheed Martin (LMT), General Dynamics (GD) or Raytheon (RTN). Moves like that were not uncommon in the Nineties when last the defense budget declined precipitously. This time around, though, the Pentagon has made it clear that it does not want to reduce industrial base capabilities and may not allow such mergers.

Huntington Ingalls must compete with primarily General Dynamics for a small shipbuilding budget for cruisers, destroyers and larger amphibious ships. The Navy is building at least twenty Littoral Combat Ships (LCS) over the next several years but these are smaller combatants made in smaller yards owned by Austal America and Marinette Marine. The U.S. if it wants to preserve industrial base must award enough ships to keep both companies going and their yards open.

Photo from surfaceforces’ flickr photostream.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Boeing’s Contract for Army Intelligence Aircraft Thrown Back to Source Selection

Boeing’s Contract for Army Intelligence Aircraft Thrown Back to Source Selection

The Enhanced Medium Altitude Reconnaissance Surveillance System (EMARSS) is a progrm for the U.S. Army to purchase aircraft based intelligence collection, processing and targeting support capabilities. It is a program that was started after the failure of the Aerial Common Sensor (ACS) program a few years ago. ACS was an attempt to buy a suite of intelligence gathering and analysis equipment that would be used by both the Army and Navy.

The ACS contract had begun in 2000 with a goal of replacing the Army’s RC-12 and the Navy’s EP-3 aircraft. A contract was awarded to Lockheed Martin (LMT) to develop the system but it was canceled in 2006 due to concerns the aircraft platform chosen would not host the necessary equipment.

EMARSS was competed last year and bids were received from four different companies: Lockheed Martin, L-3 Communications (LLL), Boeing (BA) and Northrop Grumman (NOC). In November Boeing was announced the winner of the initial Engineering, Manufacturing and Development (EMD) contract worth about $90 million. A month later the losers filed protests of this award.

The Government Accountability Office (GAO) is responsible for evaluating the protests and they ruled last week that the contract with Boeing should be withdrawn on hold while the Army re-examines the award and the criteria used to choose the winner. Due to the protest Boeing’s had not been working on the contract as they waited for a decision.

The GAO ruling means that the Army will review the proposals submitted by all of the bidders. There are three outcomes of this. They may affirm the award to Boeing and that company may keep the contract. They could decide to award it to one of the other bidders because their proposal in the end was the better one, or they could decide to have another competition.

Since one of the goals of the program was the rapid acquisition and deployment of the new aircraft this decision may lead to further delays. The work has already been delayed almost four months due to the protest. The Army could take several more weeks to review their decision and make a new one. Finally the decision to have a whole new contest would add several months to the initiation of work and the ultimate fielding of the aircraft.

The Navy after the ACS program ended began the EPX development effort to replace their EP-3 abandoning the idea of working on a joint effort with the Army. That program has seen multiple companies awarded concept development efforts that will lead to a competition for the development and production of the new aircraft.

Photo from Freelancer1’s flickr photostream.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Northrop Grumman Goes Ahead with Plan to Exit Shipbuilding

Last year Northrop Grumman (NOC) one of the last two major companies building ships and submarines for the U.S. Navy announced that it would explore separating that part of their corporation. Based on their analysis of future Navy plans for building ships they decided that it would not make sense for them to stay in that business. Management had said that they might sell the whole unit to another company and some other bidders did emerge.

It was felt by some analysts that if Northrop did divide their corporation this way it would set the remaining core company on a path of potential merger with another large contractor such as Boeing (BA). This began to spark concerns that another major round of consolidation was about to happen leading to further shrinkage of the U.S. industrial base. This in turn led to the Department of Defense to state that they would prefer this kind of move not to happen and that the big defense contractors who provide most of the hardware to the U.S. military remain.

Northrop has decided in a way to partly to mollify these concerns to spin off their shipyards into a new company owned by its shareholders. The establishment of Huntington Ingalls Industries would mean that twenty percent or so of Northrop would now reside in the new company. This follows the letting go of TASC two years ago due to Conflict of Interest concerns which had represented another $1.8 billion of business for Northrop and had been a growth area for the company.

The decision to set up the new company rather then sell it to a rival was coordinated with the Navy and is considered by them one way of maintaining both competition and the industrial base in their supporting builders.

Right now the Navy is limited in what they are buying with the largest program in number of ships being the Littoral Combat Ship (LCS) program which is built in smaller yards managed by Mariette Marine and Austal America. The new Huntington will compete for destroyers, submarines and aircraft carriers the number of which ordered will be very small for the foreseeable future.

If the U.S. defense spending does decline in the next few years there will be some consolidation in the defense industry. There has already been a great deal of smaller companies involved in M&A and it would not surprise anyone if one of the larger ones did combine with another. There are only so many programs out there and competition will be fierce for them. The budgetary pressures that the U.S. faces with the current deficits means some sort of cuts will be made especially once the troops return from Afghanistan and Iraq.

Photo from Kevin Burkett’s flickr photostream.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Commercial Air Sales Turn EADS Back to Profitability

Sales of their Airbus commercial airliners has somewhat tempered EADS (EADS:P) feelings about losing the KC-X contract to rival Boeing (BA). In the last year thanks to large orders the European aerospace company returned to profitability after a few years of struggles.

Revenue in 2010 was over $60 billion and the company earned a profit of around $1.5 billion. The company has also been able to increase its cash holdings dramatically with an eye on expanding U.S. defense business through acquisitions.

Boeing and EADS unlike other large defense contractors do have the commercial aviation market to help temper ups-and-downs in military spending. They are though soon to be facing more competition from companies like China’s CAI who especially want to enter there own domestic airline market.

EADS has carefully looked at different potential acquisitions in the U.S. to help grow its nascent defense work there. Certainly they now have the necessary funds to do even a rather large one although something like buying Northrop Grumman’s (NOC) shipbuilding group would seem a little too large and ambitious. EADS will most likely target a medium sized defense contractor who provide services or limited hardware.

Lockheed Workers Agree to New Contract Will Aid in Lowering Costs for Company

Most people do not realize that the large defense contractors in the United States have a unionized workforce. It is more then just their manufacturing related employees but often includes engineers and support staff as well. Boeing (BA), Lockheed Martin (LMT) and Northrop Grumman (NOC) who make aircraft and ships especially have this as one of their considerations because it does effect costs.

One of the advantages that EADS North America (EADS:P) was going to offer with their tanker program was a non-unionized workforce in Alabama that should have been a lower cost then Boeing’s unionized one in Washington state. Boeing though was able to get their costs in line and propose a cheaper solution to the KC-X mission.

While labor relations in the defense industry have tended to be fairly stable there have been strikes in the recent past. Both Sikorsky (UTX) and Boeing faced labor stoppages that did have some effect on their production of aircraft for the military and other defense customers. As with many recent contract negotiations the issues had more to do with benefits and health care costs rather then wages and work rules.

Now Lockheed Martin’s workers represented by the machinists union have signed a new deal rather then go on strike as recommended by the union. These workers are primarily in Georgia and are involved in C-130 production and other work. The major dispute in this negotiation was the company’s plan to have new employees get a much less generous pension plan then existing ones.

Lockheed’s goal was to reduce their costs and with most companies their labor is their biggest expense. They face extreme pressure from the Defense Department to control costs on the F-35 program and this type of contract with a sizable portion of their workforce will aid them in doing that. The problem though is that whether in the long run the company can reduce benefits and maintain their experienced, effective workforce who are key to production of systems on time and to meet the military’s needs.

Photo from Beige Alert’s flickr photostream.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Pratt & Whitney to Deliver First JT8D-219 Engine for Re-engined Joint STARS Aircraft — Press Release

Pratt & Whitney to Deliver First JT8D-219 Engine for Re-engined Joint STARS Aircraft

EAST HARTFORD, Conn., March 3, 2011 /PRNewswire/ — Pratt & Whitney will deliver its first reconfigured JT8D-219 engine, to Northrop Grumman later this month as part of the U.S. Air Force’s re-engined E-8C Joint Surveillance Target Radar System (Joint STARS) aircraft program. This delivery comes on the heels of FAA certification of several modifications to the engine. Pratt & Whitney is a United Technologies Corp. (NYSE: UTX) company.

“This delivery is yet another notable milestone in the long history of the JT8D engine,” said Bev Deachin, vice president, Military Programs and Customer Support, Pratt & Whitney. “The JT8D-219 engine will enable a re-engined Joint STARS aircraft to operate with more thrust, while consuming less fuel, compared to the TF33 engines originally installed. This gives the Joint STARS aircraft higher operational altitude and longer mission duration, while significantly reducing the maintenance burden of the older engines. It’s a win-win proposition for our U.S. Air Force customer.”

Among the engine’s configuration modifications are: a nickel high-pressure compressor rotor system that provides enhanced corrosion resistance, external changes to accommodate mounting the engine under the aircraft’s wing, an enhanced bleed override system, and higher load-carrying towershaft and gearbox elements to accommodate increased power extraction.

If the U.S. Air Force chooses to retrofit its entire Joint STARS fleet, production quantities could be in excess of 80 engines. The JT8D-219 engine is assembled and tested in Pratt & Whitney’s Middletown, Conn., facility.

The current commercial JT8D-219 engine with external modifications has been certified to support B707 re-engining via the Supplemental Type Certificate approved by the FAA for Pratt & Whitney’s Joint Venture partner, Seven Q Seven. Seven Q Seven is a San Antonio, Texas-based company that converts and upgrades aircraft, primarily Boeing 707s, for commercial and military support applications. The E-8C is a modified B707-300.

Pratt & Whitney is a world leader in the design, manufacture and service of aircraft engines, space propulsion systems and industrial gas turbines. United Technologies, based in Hartford, Conn., is a diversified company providing high technology products and services to the global aerospace and building industries.
Read more

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Will EADS Protest?

Now that the U.S. Air Force and Defense Department have awarded the KC-X new aerial tanker contract to Boeing (BA) for their KC-46A aircraft the major question is whether the losing EADS NA (EADS:P) bid will protest? In 2008 when the Air Force selected Northrop Grumman (NOC) and EADS Boeing did protest and the choice was overturned leading to this current iteration of the contest. Considering this is the only fixed wing aviation program in the near future or at least until the Next Generation Bomber program emerges it may be hard for EADS not to protest on the chance that they might win or at least there would be another competition.

In their public statement the company is non-committal about the chances of filing a protest with the Government Accountability Office (GAO). They say “EADS North America officials today expressed disappointment and concern over the announcement by the U.S. Air Force that it had selected a high-risk, concept aircraft over the proven, more capable KC-45 for the nation’s next aerial refueling tanker.” but they also say ““Though we had hoped for a different outcome, it’s important to remember that this is one business opportunity among many for EADS in the United States,”. So read into that what you may.

At a minimum the filing of an unsuccessful protest would delay the initiation of the contract for about 100 days making the delivery of any new tankers to the Air Force even later then they will be after an almost ten year process to build a new one.

And the KC-X Winner is Boeing!!

The U.S. Defense Department and Air Force announced that Boeing (BA) has been selected to provide the new KC-X aerial tanker. The design submitted by EADS NA (EADS:P) was not chosen.

The new KC-46A will be based on Boeing’s 767 airliner design.

The Secretary of the Air Force, Mr. Michael Donley, stated that the decision was based on “mission effectiveness in wartime and life cycle costs as embodied in fuel efficiency and military construction costs”. This might be a hint that the larger KC-30 aircraft from EADS might have required more investment in new and bigger facilities then the smaller 767 tanker.

The contract has been very political with states that stand to gain thousands of jobs from the program using their Senators and Representatives to push for the respective bidders.

EADS does have the right to protest the decision as Boeing did in 2008 when the contract was awarded to Northrop Grumman (NOC) and EADS. They will have to wait until their debrief by the Air Force before making any decision about that.

Even an unsuccessful protest may delay the start of the program for several weeks and the Air Force plans on receiving the first 18 aircraft in 2017. The new KC-46A will replace Cold War era KC-135R tankers some of which have been flying for fifty years.

Cross posted at KC-X Tanker News.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

And the Winner is Boeing!

The U.S. Defense Department and Air Force announced that Boeing (BA) has been selected to provide the new KC-X aerial tanker. The design submitted by EADS NA (EADS:P) was not chosen.

The new KC-46A will be based on Boeing’s 767 airliner design.

The Secretary of the Air Force, Mr. Michael Donley, stated that the decision was based on “mission effectiveness in wartime and life cycle costs as embodied in fuel efficiency and military construction costs”. This might be a hint that the larger KC-30 aircraft from EADS might have required more investment in new and bigger facilities then the smaller 767 tanker.

The contract has been very political with states that stand to gain thousands of jobs from the program using their Senators and Representatives to push for the respective bidders.

EADS does have the right to protest the decision as Boeing did in 2008 when the contract was awarded to Northrop Grumman (NOC) and EADS. They will have to wait until their debrief by the Air Force before making any decision about that.

Even an unsuccessful protest may delay the start of the program for several weeks and the Air Force plans on receiving the first 18 aircraft in 2017. The new KC-46A will replace Cold War era KC-135R tankers some of which have been flying for fifty years.

Cross posted at Defense Procurement News.

CPI Aero Awarded $4 Million Order for E-2D Seats from Northrop Grumman Corporation

EDGEWOOD, N.Y.--(BUSINESS WIRE)--CPI Aerostructures, Inc. (“CPI Aero®”) (NYSE Amex: CVU) announced today it has received a purchase order to manufacture seats for the E-2D Advanced Hawkeye aircraft from Northrop Grumman Corporation (NYSE: NOC) valued at approximately $4 million. There are a total of five seats in three different designs in an E-2D; one for the pilot, one for the co-pilot and three seats for the crew members. The period of performance is through 2013 with first delivery scheduled

Add to digg Add to del.icio.us Add to Newsvine Add to Reddit Add to Google Add to Yahoo My Web Email this Article

KC-X Soon? Protest Coming

At a recent press availability during the Air Force Association’s winter conference the Secretary of the Air Force indicated that the KC-X new aerial tanker contract will be awarded as early as this week. Earlier rumors had it being done in the next month or so.

Mr. Donley also made it clear that there is a potential for a protest of the award by either Boeing (BA) or EADS NA (EADS:P) if they don’t win and that the Air Force and the Defense Department are prepared to deal with it.

This is the third attempt to award this contract with the last contest won by Northrop Grumman (NOC) and EADS in 2008 overturned on Boeing’s protest. Due to the size, importance and the conflicts between the U.S. contractor and its supporters and the European aerospace giant this may continue to be an messy, extended affair.

For now everyone must wait until the decision is announced which could occur as early as tomorrow after 5:00 Eastern.

EADS Claims Able to Lower Price on Offer This Time Around

With the submission of their second proposal for the KC-X aerial tanker program EADS (EADS:P) stated that due to production increases they were able to lower the price on their KC-30 tanker aircraft. Chairman of EADS North America, Ralph Crosby, said by about six percent.

EADS and Boeing (BA) are trying for a second time to win the new tanker for the U.S. Air Force that will replace the aging KC-135R aircraft. In 2008 EADS which was teamed with Northrop Grumman (NOC) won the last contest which was overturned on protest by Boeing. The two companies submitted their final proposals last week.

Boeing has not provided such details but has previously stated that their smaller KC-767 aircraft has better fuel efficiency and maintenance costs that will save the Air Force money over the long run.

In recent testimony the Secretary of Defense, Robert Gates, indicated that the award announcement will be made in a few weeks following up on the Air Force’s budget document which indicated prior to April 1st.

Chromalloy Crosses One-Year Milestone on Northrop Grumman KC-10 Contractor Logistic Support Team — Press Release

Chromalloy Crosses One-Year Milestone on Northrop Grumman KC-10 Contractor Logistic Support Team

U.S. Air Force Saving Millions with Non-OEM Engine Services That Deliver Improved Performance, Reduced Fuel Consumption

PR Newswire

ORANGEBURG, N.Y., Feb. 15, 2011

ORANGEBURG, N.Y., Feb. 15, 2011 /PRNewswire/ — Chromalloy announced today that it has crossed the one-year milestone as a member of the Northrop Grumman team on the KC-10 Extender Logistics Support program, overhauling 48 CF6-50C2 aircraft engines in the initial program year while meeting turnaround time requirements and improving engine performance.

The contract provides support for the U.S. Air Force KC-10 refueling fleet of 59 aircraft. Under the $540 million, six year contract with up to three incentive years that commenced in 2010, Chromalloy, with team member MTU Maintenance, is overhauling and repairing a fleet of 204 engines and an additional 77 auxiliary power units that provide energy for secondary electrical systems.

“Chromalloy is servicing the CF6 engine fleet and replacing worn parts using proprietary Designated Engineering Representative repairs and Parts Manufacturer Approval components,” said Armand F. Lauzon, Jr., President. “Our FAA-certified DER repairs and PMA components have flown successfully for years in commercial airliners and now are delivering the same savings and performance improvement to the KC-10 fleet.

“When compared with the previous contract we are pleased that the U.S. Air Force is saving more than $1 million per engine shop visit,” Lauzon added.

The Air Force service contract represents a first within the Department of Defense because it is the first major program to provide blanket approval for the use of FAA-approved alternative – or non-OEM – parts and repairs.

Use of FAA-approved parts and repairs developed for the commercial CF6-50 engine that has been in service for more than 40 years allows Chromalloy and MTU to deliver cost and engine performance benefits with every overhauled engine.

Approximately $500,000 of savings per engine is attributable to the use of alternative parts and repairs.

In addition, each of the 48 engines was delivered with Exhaust Gas Temperature margins above the U.S. Air Force threshold requirement, allowing the engines to run longer on wing and increasing the mean time between removal. “The team believes this engine performance will translate to greater savings from significantly increased time on-wing,” Lauzon said.

With 52 sales, repair and manufacturing locations in 17 countries, Chromalloy is the world’s largest independent supplier of technologically advanced repairs, coatings, and FAA-approved replacement parts for turbine airfoils and other critical engine components for commercial airlines, the military and industrial turbine engine applications.

The company’s engineered components and blades are subject to the same FAA requirements and scrutiny as OEM-produced equipment.

Chromalloy’s replacement parts for aircraft engines are FAA certified to meet or exceed the performance, reliability and durability specifications of original equipment manufacturer parts. In support of marine and land-based gas turbines, the company employs identical engineering disciplines used to produce its FAA-certified parts.

The company’s continued investment in research and development of coatings and repair and manufacturing technology has led to the development of electron beam physical vapor deposition with ceramic materials, vacuum plasma, diffused precious metal / aluminide coatings, and vision-guided interactive laser welding and drilling for most advanced turbine engine components, as well as many other advanced technologies. More information is at www.chromalloy.com.

Chromalloy has evolved from a gas turbine parts repair business into the leading independent supplier of advanced repairs, FAA approved replacement parts and maintenance, repair and overhaul for gas turbines used in aviation and land-based applications. Chromalloy serves the airline, military, marine and industrial gas turbine segments with a broad range of services at locations in 17 countries around the globe. Chromalloy is authorized by the FAA and EASA and many other NAAs, and is qualified under ISO and NADCAP. Chromalloy is a subsidiary of Sequa Corporation.

Sequa Corporation is a diversified industrial company with operations in the aerospace, metal coatings and automotive industries. Sequa is a Carlyle Group company. For additional information, visit www.sequa.com.

SOURCE Chromalloy

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Despite Record Defense Spending Layoffs Starting to Mount

The Obama Administration submitted its 2012 budget to Congress yesterday and it contains a record request for defense funding. This includes over a $100 billion to conduct operations in Afghanistan and Iraq while continuing the investment in new equipment to improve capabilities against other threats. Despite this and due to the cyclical nature of defense programs and spending several companies, large and small, announced recently a restructuring of their workforces.  As the U.S. defense budget adjusts to fiscal reality and requirement changes more companies may be in this situation.

Defense acquisition programs tend to be built in large quantities over a span of several years as the military attempts to field its needs quickly. This can lead to a requirement for a contractor to ramp up facilities, staff and production very quickly and then just as quickly cut it back as the U.S. military meets its requirements. It behooves a contractor to identify other customers or programs that it may support to try and maintain a steady production line and workforce. This is not always possible and the history of the Mine Resistant Ambush Protected (MRAP) vehicle production in America illustrates this as several companies invested in large plants that are now running at a much lower capacity as the U.S. has met its needs for the MRAP.

Recent layoff announcements include:

  • Amherst Systems of New York, which is a subsidy of Northrop Grumman (NOC), the engineering and manufacturing company provides systems to support electronic systems and test ranges.  They will be laying off over one hundred people or almost twenty percent of their workforce due to “a drop in orders”.
  • Northrop Grumman itself is eliminating 150 jobs at its Laser Systems facility in Florida.  The company had won a contract to produce laser rangefinders and designators.  Again the reduction is related to a future lack of work.
  • BAE Systems (BAE:LSE) is letting go about 50 people at a plant in Pennsylvania that makes MRAP vehicles.  The U.S. has shifted to one supplier, Oshkosh (OSK), for its new MRAP and relies on others to support and repair the existing fleet mainly purchased in 2005-2009.  Companies will now have to look for other countries to invest in MRAP to maintain their production and right now that is not happening.

Stories like this may accelerate in the near future as companies figure out what will be needed by the Defense Department in a time of reducing budgets.  At the same time there are other defense contractors who need to hire people to support their new work or programs.  Many times, though, the new company is not located near places where the layoffs are happening so that transferring people may not be so easy.

The history of the U.S. defense budget has been cycles of rapid, large expenditures followed by years of smaller budgets.  The U.S. may be entering a period of extended decline in defense spending with a negative effect on the defense contracting industry.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

U.S. Department of Defense Concerned About Industry Consilidation

At a speech yesterday the Undersecretary of Defense for Acquisition Ashton Carter discussed the potential for shrinkage in the U.S. industrial base due to declines or flat spending by the Government on defense. He made it rather clear that while mergers and acquisitions would not be discouraged the Obama Administration is concerned about consolidation among the biggest defense contractors.

After the decline in spending in the Nineties caused by the collapse of the Soviet Union and the “Peace Dividend” the U.S. defense contracting world ended up with five big companies. These were Boeing (BA), which absorbed McDonnell Douglas; Lockheed Martin (LMT), which merged Lockheed and Martin Marietta; Northrop Grumman (NOC); which combined Northrop and Grumman; Raytheon (RTN) and General Dynamics (GD).

These companies became the major developers of systems and suppliers of large aircraft, ship, space and missile programs. The U.S. defense budget is very diverse and allows many other companies to participate including those that primarily provide services and consumable items such as fuel, ammunition and food to the military. The fighting in Iraq and Afghanistan has also allowed innovative systems like Unmanned Aerial Vehicles (UAV) to become important and a company like General Atomics can do very well through there product line.

The Nineties also led to penetration of the U.S. market by the large European defense contractors like BAE Systems (BAE:LSE) and EADS (EADS:P) necessitated by the need for competition and their acquisition of U.S. companies that provided or maintained systems like the M2 Bradley Infantry Fighting Vehicle (IFV).

Carter made it clear that the desire to maintain competition for future contracts and projects will outweigh thoughts on future efficiencies caused by the lack of work for many different contractors. He was asked point blank about Northrop’s plans to either sell or spin off their ship building division due to concerns about the amount of work available for it in the future. Carter expressed concerns that if Northrop did separate this part it had to be a viable stand alone company able to support the U.S. military.

As the fighting in Iraq and Afghanistan winds down and the continued pressure to reduce overall government spending rises the defense budget will see reductions. This will most likely affect new, future programs as the budget for their development and production will take the biggest hit. The Defense Department is committed to the Joint Strike Fighter as the biggest item in future spending. That program alone may eat up most of the available investment funds in the near term.

The government may be faced with problems as it tries to maintain a competitive industrial base while reducing the amount of spending to a point where they might not be enough work to go around.

Photo from Kevin Burkett’s flickr photostream.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Pratt & Whitney Propulsion System Successfully Powers First Flight of X-47B Navy/Northrop Grumman Unmanned Combat Air System Carrier Demonstration Program — Press Release

Pratt & Whitney Propulsion System Successfully Powers First Flight of X-47B Navy/Northrop Grumman Unmanned Combat Air System Carrier Demonstration Program

EAST HARTFORD, Conn., Feb. 7, 2011 /PRNewswire/ — Pratt & Whitney’s F100-PW-220U engine and exhaust system have successfully powered the first flight of the Navy / Northrop Grumman (NYSE: NOC) X-47B flight test aircraft for the U.S. Navy’s Unmanned Combat Air System Carrier Demonstration (UCAS-D) program. The successful flight took place at Edwards Air Force Base in California on Feb. 4 and lasted for approximately 29 minutes. Pratt & Whitney is a United Technologies Corp. (NYSE: UTX) company.

“Powering the first flight of the X-47B is a momentous event which we are proud to celebrate with our teammates from Northrop Grumman and the United States Navy,” said Jimmy Reed, director of Advanced Engine Programs for Pratt & Whitney. “This is a significant milestone for the UCAS-D flight test program, and initiates the flight evaluations of the unique capabilities of the X-47B.”

Northrop Grumman awarded a contract to Pratt & Whitney in 2008 to develop and integrate the engine and exhaust system for the X-47B. The Pratt & Whitney F100-PW-220U engine, a derivative of the F100-PW-220 and -220E engine models that power the F-15 Eagle and F-16 Falcon, enjoys the maturity gained from over 11 million hours of operational experience.

The F100-PW-220U engine is capable of providing up to 16,000 pounds of thrust and is intended for operation in a maritime environment, including carrier deck operations. The X-47B will demonstrate the capability of an autonomous, low-observable relevant aircraft to be integrated into carrier operations and perform the first-ever unmanned carrier launches and recoveries. Additional flight testing of the X-47B and certification for carrier operations will be conducted in preparation for at-sea carrier trials planned in 2013.

Pratt & Whitney is a world leader in the design, manufacture and service of aircraft engines, space propulsion systems and industrial gas turbines. United Technologies, based in Hartford, Conn., is a diversified company providing high technology products and services to the global aerospace and commercial building industries.

This press release contains forward-looking statements concerning future business opportunities. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to changes in government procurement priorities and practices or in the number of aircraft to be built; challenges in the design, development, production and support of technologies; as well as other risks and uncertainties, including but not limited to those detailed from time to time in the companies’ Securities and Exchange Commission filings.

SOURCE Pratt & Whitney

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Big Defense Contractors Duel for Missile Defense Contract

Since Desert Storm the United States has spent billions on developing different missile defense systems. While they have invested in more exotic systems such as the Air Force’s Airborne Laser (ABL) which uses a large chemical laser on a Boeing (BA) 747 to engage long range missiles the majority have been based around ground or ship launched interceptors. One of the largest programs and a priority of the previous George W. Bush Administration was the Ground-based Midcourse Defense system.

At one point called the National Missile Defense (NMD) system this consists of several silo mounted interceptors in Alaska supported by a collection of radars and other sensors across the world. The new Obama Administration canceled the expansion of the program which included more missiles in Alaska as well as building a site in Europe but has continued to maintain and keep ready the existing parts of the program.

The primary contractor on the systems has been Boeing and this has included a contract to maintain and run the deployed missiles and radar. This contract is coming up for renewal and the Missile Defense Agency (MDA) has decided to compete it. The contract has an initial value of about $600 million and has attracted interest from the major U.S. defense contractors.

Boeing obviously plans to try and win their existing work and has teamed with Northrop Grumman (NOC) to submit a proposal. Northrop has worked with Boeing since the Nineties on the system as it was developed, tested and deployed. As the incumbents they do have extensive experience with the system.

Lockheed Martin (LMT) and Raytheon (RTN) form the other team that has so far submitted a proposal. These two companies have worked extensively together on Army and Navy missile defense programs such as THAAD, PATRIOT and AEGIS. There teaming to try and win this contract away from Boeing is only natural.

The total value of the contract if all options are exercised could be as much as $10 billion. In a time when it looks like the U.S. defense budget may be flat or even decline large support contracts like these are attractive to many companies.

The MDA is hoping that with competition they will be able to get a better deal to maintain the system and the fact that they have attracted at least two bids seems to indicate there will be some price variation that must be balanced against technical capability and past performance.

The source selection will take several months and there is always a chance of a protest by the losing team. If defense funding does decline competition for these contracts will become more fierce leading to potential delays for the government in awarding work to the winner and saving money compared to the current contract.

Photo from Irish Typepad’s flickr photostream.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Major Defense Contactors Post Mixed Results

The latest quarterly earning reports are starting to come out from the big United States defense contractors and they have had mixed results. In many cases earnings and revenues are down although profits have been steady. Boeing (BA) due to issues with its commercial aviation side had a drop and did not perform as well as its peers.

Due to the ongoing delays with the 787 advanced airliner and the 747-800 transport aircraft both of which continue to have delayed entry into service as well as some declines in defense business Boeing reported an eight percent decrease in earnings. They were only about $1.16 billion or a decline of over $100 million from the previous year’s quarter. Revenue also dropped a similar amount to $16.55 billion. Boeing’s guidance for the full year is now below analyst expectations.

General Dynamics (GD) on the other hand had a banner quarter. Profits and earnings increased almost twenty percent. Much of this was driven by demand for their commercial Gulfstream corporate jets. The company also said that for the year earnings would improve over sixty cents a share.

Raytheon (RTN) also announced improved results. Earnings were higher then projected at $1.47 a share much higher then the estimated $1.16 although net income were down about five cents at $1.25. Even so the company is projecting that annual results will be slightly higher then last years. Sales in the quarter were up slightly to almost $7 billion.

Lockheed Martin (LMT) the lead contractor for the struggling Joint Strike Fighter (JSF) program which has seen delays and cost adjustments by the Defense Department posted mixed results. Revenue was up but earnings down slightly but missed analyst’s projections. Lockheed was helped by the award of the LCS contract for up to ten ships. The company predicts that 2011 annual earnings will be almost a dollar below 2010.

Northrop Grumman (NOC) has delayed its earning announcement a week until 9 February. Read into that what you may and in the same announcement Northrop reiterated its desire to separate its shipbuilding division from the main company.

Results were rather a mixed bag and depended upon the balance between commercial and defense products and recent awards by the military. The long term trend though seems to be slow growth if not almost stagnant. The continuing use of CRA right now is affecting the U.S. Defense Department’s ability to award new contracts or increase funding to existing programs. Secretary of Defense Robert Gates has referred to this as a “crisis” and needs Congress to get the 2011 budget passed. This means that some major contracts will be pushed into the second half of 2011 which could seriously impact annual revenues for this year.

The defense industry continues its boom-or-bust cycle and 2011 on out may be a down year overall although several companies stocks are at or close to recent highs.

Photo from Bob the courier’s flickr photostream.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

BAE Systems-Northrop Grumman Team Submits Bid for an Affordable, High-Performing Ground Combat Vehicle Solution

ARLINGTON, Va.--(BUSINESS WIRE)--The BAE Systems-Northrop Grumman team submitted a proposal for a U.S. Army Ground Combat Vehicle (GCV) that emphasizes affordability, performance and future scalability. “Our proposal delivers an affordable, high-performing infantry fighting vehicle built from the ground-up that satisfies the needs of our soldiers today and has room for technological growth in the years ahead,” said Mark Signorelli, vice president and general manager of Ground Combat Vehicle at B

Add to digg Add to del.icio.us Add to Newsvine Add to Reddit Add to Google Add to Yahoo My Web Email this Article

« Previous PageNext Page »

>