|The Australian Defense ministry announced that two European companies - British BAE Systems and German Rheinmetall, as the bidders shortlisted as potential suppliers of armored combat vehicles for the Australian Army’s Mounted Combat Reconnaissance Capability, also known as 'Land 400 Phase 2' program, to become the successor of the 8x8 ASLAV currently in service. The Australian Minister for Defence Industry, Christopher Pyne, announced.|
Filed under: afghanistan, Australia, IAI, MDA, Syndicated Industry News
Filed under: Australia, BAE Systems, Syndicated Industry News
Filed under: Austal, Australia, Syndicated Industry News, U.S. Navy
Filed under: Australia, Business Line, Canada, Companies, Countries, Department of Defense, development program, England, Events, FMS, Holland, Israel, Japan, Lockheed Martin, Military Aviation, production program, Services, U.S. Air Force, U.S. Marine Corps, U.S. Navy, UAE
The F-35 “Lightning II” Joint Strike Fighter (JSF) will be used not only by the U.S. military to replace its aging F-16, A/V-8, F/A-18 and A-10 aircraft but also by many other NATO countries and allies. It is being purchased as a F-16 replacement by many of these and like the successful F-16 program will have manufacturing and parts co-share agreements with different international partners.
The delays and cost increases to the program have been well documented and these have caused some early planned users to question the financial sense of continuing the program. Many of these countries, though, have already contributed through development funds as well as already had their aerospace contractors sign contracts and agreements with Lockheed Martin (LMT) to produce parts for the aircraft which continues in its Low Rate Initial Production (LRIP).
Canada, the Netherlands and Australia have had and continue to have debates about their purchase of the advanced aircraft rather then existing systems like the F/A-18, Eurofighter, Rafael, SAAB Gripens and Russian alternatives. In Canada they are reviewing the whole cost analysis that had led to the decision to continue the purchase which could technically end it and look at other aircraft. That leads to editorials and articles like this one, “The Case for the Super Hornet As The RCAF’s New Fighter” from Canada or analysis in Australia such as this: “Politics first as white paper fails on big issues”.
At the same time the U.S. has been successful in adding Foreign Military Sales (FMS) of the aircraft most notably to Israel and Japan. There has also been interested expressed by other U.S. allies like the U.A.E.
The commitment of the foreign partners is somewhat critical to the whole program as a reduction in buy quantity will have a ripple effect on the whole program. Less purchased in total and annually will cause a cost increase for each aircraft and the whole program. The F-35 PEO, Lt Gen Bogdan, identified this risk in Congressional testimony in April. If somebody drops out the price the others pay will go up putting more pressure on their budgets and perhaps cause them to drop out too. This would then become a spiral causing issues for the U.S. and all of the other nations involved in the program.
Despite the issues with the aircraft over the last decade the U.S. remains committed to the program. Over 100 are on order and there is discussion to award a new 2 year production contract this summer for a further 60-70. Training is underway for both aircrew and maintainers of the U.S.A.F., Navy, Marines and allies. The big questions remain though about completing development, how many will be built, and who ultimately will operate the aircraft.
Filed under: Australia, Boeing, Syndicated Industry News, United States
Filed under: Australia, Business Line, Canada, Companies, Countries, development program, Events, Lockheed Martin, Military Aviation, production program, Proposal, Restructuring
One of the key components of the F-35 Joint Strike Fighter (JSF) program was the early participation by U.S. allied countries. Unlike traditional Foreign Military Sales (FMS) these countries provided some of the development costs and committed early to buy the the aircraft rather then wait for the establishment of production and get it after the aircraft entered U.S. service. These included Great Britain, Australia, Canada and The Netherlands.
These countries planned to buy different amounts of the three types of the F-35. Britain to operate from their new carriers and replace the Harrier Jump Jet, Canada to retire their CF-18 fleet and the other two to upgrade from the aging F-16. In fact the F-35 would be similar to the F-16 program with parts and components made by the buying countries. Norway, Japan and Israel have also decided to buy the F-35 over other potential aircraft.
The F-35 has seen serious delays and cost growth due to testing and development issues. It is currently in Low Rate Initial Production (LRIP) as well as continuing testing. The U.S. in their latest budget proposal have decided to stretch production out to save money in the near term. Australia has now decided to do the same thing.
That country’s budget plans now call for delays of accepting the majority of their aircraft to mirror current U.S. plans. The goal is to save over $1.6 billion in the next few eyars. The first two Australian aircraft are in production and should be delivered in 2014-15 to start training but their first squadron will not stand up now for a few years after that.
The problem with stretching out production buys is that while it does save money in the near term the same number of systems will have to be bought over a longer time. Due to inflation alone as well as the loss of production efficiencies the average price per aircraft will increase causing the whole program to get more expensive. One potential problem that may arise is that the total number to be bought will be reduced.
Canada is also re-considering their F-35 buy due to issues with how the contract was awarded last year. These decisions will be a blow to Lockheed Martin (LMT) as they reduce near term revenue and earnings.
Filed under: Alabama, Austal, Australia, Business Line, Companies, Congress, Contract Additions, Contract Awards, Countries, Events, Lockheed Martin, production program, Services, States, U.S. Navy
Following up on this mornings post about Lockheed Martin (LMT) getting a contract for two more Littoral Combat Ships (LCS) is an announcement that Austal USA, Austal’s American subsidiary, received a contract for two of their design as well.
The option for LCS-10 and LCS-12 was announced today. This is the third and fourth ship under the 10 ship contract the company received a little over a year ago. The ships will be built at Austal USA’s Mobile, AL yard.
LCS-10 will be named for Representative Gabrielle Giffords (D-AZ) who is recovering from an attempted assassination attempt.
Photo from Official U.S. Navy Imagery flickr photostream.
Filed under: Austal, Australia, Business Line, Companies, Contract Additions, Contract Awards, Countries, Department of Defense, Events, Federal Budget Process, logistics, Marinette Marine, production program, Proposal, Services, U.S. Navy, United States
Yesterday the U.S. Navy announced that it had executed a contract option for 2 more Joint High Speed Vessels (JHSV) from Australian ferry builder Austal. This brings the total number of these ships ordered to 9.
Austal is close to finishing the first and has two more in production. The contract yesterday will allow the builder to begin buying long lead items and components for the two ships.
The JHSV is a fast transport based on Austal’s ferry designs that was originally planned to be used by the Navy and Army for rapid transport of troops and supplies to needed areas. It was decided that the Navy would manage the whole program and the ships were transferred to them.
Originally it was thought that up to 23 of the ships would be procured but in their FY13 budget proposal the Obama Administration reduced the planned number to 10. This means that 9 of them are now on order with the chance that only one more will be purchased.
Austal is building the ships in their Mobile, AL yard where they also make the Littoral Combat Ship (LCS). They have a contract for up to 10 of these. Interest
Photo from HerrKrueger’s flickr photostream.
Filed under: Australia, Boeing, Business Line, Companies, Contract Additions, Contract Awards, Countries, Department of Defense, Events, FMS, logistics, Military Aviation, Pennsylvia, production program, Services, States, U.S. Army, UAE
The U.S. Army and other services have made heavy investments in their rotary wing forces over the last decade. Due to the terrain and the situation in Iraq and Afghanistan heavy use of helicopters were required to provide fire support and logistics transportation. This meant that not only was the existing fleet of aircraft being heavily used but more were needed as well as new systems.
The U.S. Army cancelled the RAH-66 Comanche program in 2004. This was an advanced scout attack helicopter. They utilized the funds to build new programs such as the UH-60M, UH-72A and CH-47F aircraft. The Marines and Air Force also made a heavy investment in the V-22 OSprey tilt rotor aircraft.
One aircraft that has made a major contribution to the fighting is the large, cargo helicopter CH-47 Chinook. Not only has the U.S. Army increased its inventory of these aircraft but also many other countries have bought it to support their combat troops in Afghanistan. These have included the U.K., Canada and Australia. Due to the altitude and temperature conditions the CH-47 is the most capable aircraft for carrying large loads of supplies or troops.
The CH-47 is manufactured by Boeing (BA) at their plant in Pennsylvania and they just received yet another production contract for the aircraft. A further 14 were ordered with an value of around $370 million.
These aircraft will be used by the U.S., Australia and the U.A.E. continuing to demonstrate the FMS value of the CH-47.
The expected budget cuts will most likely slow down the investment in aviation by the Army but not end programs. The U.S. needs to either re-capatilize or replace systems that have seen a great deal of use in Iraq and Afghanistan. Even with smaller ground forces it makes sense to continue to increase aviation assets as it is easier to quickly build up infantry units then rotary winged ones.
The CH-47 due to its demonstrated capability will remain a core component of the U.S. Army’s aviation forces and will continue to see steady overseas sales.
Filed under: Alabama, Austal, Australia, Business Line, Companies, Contract Additions, Contract Awards, Countries, development program, Events, General Dynamics, Lockheed Martin, production program, Services, States, U.S. Navy, Wisconsin
The Navy’s new Littoral Combat Ships (LCS) are small combatants that are optimized for missions in-shore. They are being designed to operate different modules depending on the missions that will add to and expand the capabilities of their standard gun and helicopter armament. One primary mission for them will be reconnaissance and clearing of minefields.
Currently there are over 20 LCS on order from two different builders who are offering two different designs. Lockheed Martin (LMT) and Willamette Marine are building a more traditional hull design while Austal USA, part of the Australian shipbuilder Austal, is offering a trimaran hull based on fast ferries they have previously built. Lockheed’s ships are being built in Wisconsin and Austal in Alabama. The decision to use two suppliers means that the LCS will be built and in service rather quickly.
Even though the two designs are very dissimilar they will operate the same weapons and combat modules. These will include ones that provide capabilities for the anti-air mission, to attack ships and mine warfare. The modules will be designed to plug into the ships.
Now General Dynamics (GD) has been awarded a contract to begin developing one of the mine warfare systems for the LCS. This is the Surface Mine Countermeasure Unmanned Underwater Vehicle (SMCUUV) which is an autonomous system that will be used to search and classify mines. It will also collect environmental data to support operations. The contract has an initial value of $87 million.
More details about the SMCUUV may be found at the U.S. Navy’s website here.
The key to the LCS will be the ability to develop these modules and make sure that they work efficiently with the two different designs of ships.
Photo of the Austal design from Surfaces Forces’ Flickr Photostream.
Filed under: Australia, Boeing, Business Line, Companies, Contract Additions, Contract Awards, Countries, D'Assault, Department of Defense, development program, England, Events, Holland, India, Japan, Lockheed Martin, MiG, Military Aviation, production program, Services, U.S. Air Force, United States
Currently there are two major fighter contests on-going as Brazil and India work to consider a new advanced fighter for their defense needs. Now it has been reported that Japan is interested in also starting a competition to add a later generation aircraft to its fleet of F-15J fighters. Sometime this month the country will want bids for 40 new aircraft.
In Brazil the discussion seems to be between the United States’ F/A-18 made by Boeing (BA) and the French company Dassault Rafael fighter. That contest continues to be delayed as Brazil faces some economic issues and re-thinks its commitment to spending so much money on defense items. One component of the contest that is key is the construction of manufacturing facilities in Brazil and the transfer of technology to help the South American country improve its aerospace industry.
In India the contest has reached a point where they downselected to only two bidders both European. After looking at proposals from Boeing, Lockheed Martin (LMT), MiG, Eurofighter and Dassault only the last two were chosen to proceed in the contest. The decision was a blow to the the American bidders as they had hoped this contract would offset potential reductions in U.S. defense spending.
Now the reports are that Japan will receive bids from Boeing, Lockheed and Eurofighter for their requirements. The Lockheed F-35 Joint Strike Fighter (JSF) is considered the front runner despite its cost and the current schedule issues the program is facing. This is primarily due to its more stealthy qualities over the earlier generation fighters.
The F-35 is in development and low rate production for the U.S. military, the U.K., Netherlands, Canada and Australia. Other foreign partners include Norway and Israel. The addition of Japan to the program would not be a big leap although they expect that the jet they order in the next few months would be in service by 2016. JSF production should be ramping up to higher quantities by then but any major cuts to the U.S. defense budget may affect production rates and quantities. If the JSF cannot meet the Japanese schedule they may end up considering one of the other options.
Filed under: Australia, Business Line, Companies, Contract Additions, Contract Awards, Countries, Department of Defense, development program, Events, Federal Budget Process, Lockheed Martin, Massachusetts, MDA, Military Aviation, missile defense, Northrop Grumman Corp., production program, Raytheon, S&T, Services, Spain, States, U.S. Army, U.S. Navy
Raytheon (RTN), the Massachusetts based large defense contractor, is a key contributor to the U.S. missile defense systems. It manufactures the radar and other parts of the Army’s PATRIOT air and missile defense system. It provides the Navy’s STANDARD Missile (SM)-3 interceptor for their AEGIS Weapon System based ship board system and it is heavily involved in Research & Development for the next generation of weapons being planned. Recently it continued this contribution in different ways.
First, it was awarded a contract by the Missile Defense Agency (MDA) to produce more SM-3 missiles for the Navy and select U.S. allies who operate the AEGIS system. The contract modification was for about $285 million and will buy a further 23 SM-3 and associated engineering services and support. These are the Block IA variant of the missile. Raytheon also recently began construction of a new manufacturing facility at Redstone Arsenal, Huntsville, AL to build the SM-3 and the improved version of the STANDARD Missile called the SM-6.
Raytheon also announced that last month it continued testing its new radar for a competition that MDA and the Navy is having to develop a new radar that could ultimately replace the AEGIS’s SPY-1 made by Lockheed Martin (LMT). The Air and Missile Defense Radar (AMDR) will go on the DDG-1000 and DDG-51 destroyers. MDA had awarded contracts to Raytheon, Lockheed and Northrop Grumman (NOC) to do basic development of the radar. Raytheon said that new Gallium Nitrade transmit/receive modules had completed over 1,000 hours of testing in support of the program.
The AMDR will combine S and X band radars for search and fire control. The current AEGIS radar is S band with separate radars that provide illumination and terminal guidance for missile interception. Systems like the Army’s THAAD land based missile defense system utilize a X band radar for its missions. The higher wavelength provides better target discrimination and precision for the high velocity intercepts required by missile defense.
Despite the coming cuts in U.S. defense spending the combination of a new radar and interceptor for U.S. Navy air and missile defense will be developed and produced. The only question is how fast and in what numbers. The MDA is looking at making a land based version of the AEGIS / SM-3 combination and Raytheon has propose that over the years as well. There are also several countries that operate the system for air defense and they could be upgraded to carry out the missile defense mission. Japan already does but countries like Spain and Australia also could. This foreign market could help Raytheon offset U.S. market changes.
The AMDR winner is also looking at steady business for several decades. The AEGIS has been used now for almost forty years from one source. The company that gets the contract for the AMDR at the end of the development phase should expect a similar situation providing a steady stream of revenues and earnings.
Filed under: Australia, Business Line, Companies, Countries, Elbit Systems, Events, Israel, Press Releases
On September 8th we ran a press release from Point Trading discussing a contract dispute they have with Elbit Systems of Israel. Elbit Systems contracted us and asked to run the following comment about the issue:
“Point Trading breached its commitment to ITL (which has since been acquired by Elbit Systems), and to this day has not paid its undeniable debt of over USD 1 million to ITL. Elbit Systems received the statement of claim and is studying it, though it appears from an initial review of the claim that it does not raise any issue that has not been discussed previously.”
Filed under: Australia, Business Line, Companies, Countries, Elbit Systems, Events, Press Releases, production program
Point Trading sues Israeli defence giant
Local company fights to protect Australian business and defence manufacturing jobs
Melbourne – 07/09/2011 – Australian owned defence contractor Faxtech Pty Ltd (trading as “Point Trading”) today struck a blow for the local defence manufacturing industry by issuing legal proceedings against Israeli arms conglomerate Elbit Systems Limited in the Federal Court.
Point Trading alleges that Elbit and its subsidiary ITL Optronics Limited have made serious misrepresentations to the Australian Department of Defence in regard to Point Trading’s exclusive rights to supply the Mini N/SEAS night vision monocular, N/CROS binoculars and other ITL products in Australia and New Zealand. Point Trading claims that the misrepresentations constitute misleading and deceptive conduct, and will ask the Court for an injunction to stop Elbit, ITL and Elbit’s local subsidiary, Elbit Systems of Australia Pty Ltd, from continuing to make misleading statements about Point Trading’s rights.
Elbit has attempted to circumvent the contract ITL signed with Point Trading by signalling to the Department of Defence to stop purchasing from Point Trading and to deal direct with Elbit and ITL. In doing so, Elbit has not only ignored the terms of the contract ITL signed with Point Trading, but has damaged the business and reputation of a long standing Australian company and jeopardised highly skilled Australian manufacturing jobs.
“We have been supplying these products to the Defence departments in Australia and New Zealand for over 20 years, and overnight Elbit has jeopardised the goodwill in our business. We have been in business for almost 25 years and employ 25 full time and 5 casual staff in Melbourne. By attempting to deal direct with our customers, Elbit is simply trying to tie up the market and put Australian manufacturers out of business” said Avner Klein, CEO Point Trading Group.
Point Trading has been the exclusive supplier of the ITL Optronics Mini N/SEAS and N/CROS product lines in Australia and New Zealand since 1989. In 2010 it signed a an agreement with ITL Optronics, under the terms of which ITL agreed to provide Point Trading with the right to locally manufacture, assemble and service night vision products until at least 2020, making it the last manufacturer of night vision products in Australia. In that agreement, ITL also promised it would not market, sell or manufacture the products directly or indirectly in Australia or New Zealand. By doing this deal, Point Trading ensured continuity of supply to both the Australian Defence Force and the New Zealand Defence Force.
“It was becoming increasingly clear that ITL was unable to meet its commitments to Point Trading and so we took the important step of securing supply for Australia and New Zealand by buying the rights to the products,” said Klein.
“Point Trading paid ITL for exclusivity rights for the manufacture and further development of the Mini N/SEAS and N/CROS products, and obtained production process files including drawings and processes, and letters of authority to be the exclusive supplier for the Australian and New Zealand Market until 2020,” said Klein.
Elbit Systems, one of the world’s largest defence companies, bought a majority share in ITL in October 2010 and since then has constantly attempted to circumvent the existing contract and damage Point Trading’s business by trying to trade direct in order to cut out Australian businesses.
Point Trading has attempted to resolve this matter to no avail and has now no option but to ask the Federal Court to adjudicate in order to protect its business.
“Large defence conglomerates like Elbit come to Australia and push around small organisations like us that have successfully served our Defence Force for more than two decades, use bullying tactics and contribute little to the local economy,” said Klein.
The case will be first heard on Friday 23 September 2011 at 9:30am at the Federal Court in Melbourne.
Filed under: Australia, Business Line, Companies, Contract Awards, Countries, Events, FMS, Lockheed Martin, Military Aviation, production program, Services, Sikorsky, UTC
The Australian Navy has selected a version of the MH-60R helicopter used by the U.S. Navy to equip its ships. The allied country plans to purchase at least twenty-four of the aircraft. This is the first sale of the aircraft overseas. The contract is estimated at around $3 billion. The MH-60R will be used to replace existing Sikorsky S-70B SeaHawks.
Built by Sikorsky, part of United Technologies (UTX), and Lockheed Martin (LMT)The MH-60R is the latest variant of the H-60 family developed for the U.S. Navy combining the missions of the SH-60B and the SH-60F. Originally designed for the ship based Anti-Submarine Warfare (ASW) to replace the SH-2 and SH-3 helicopters the missions of the H-60 have been expanded to include anti-ship, supply and personnel transport as well as communications relay. It has also been used to retire the older CH-46 helicopters from Boeing (BA) used for vertical replenishment.
The MH-60R is in full rate production and over seventy have been delivered to the U.S. Navy since 2006. This is the first Foreign Military Sale (FMS) for the system. This is the second large foreign contract for Sikorsky in recent weeks as earlier this spring Turkey announced that it would buy S-70 versions of the BlackHawk for its utility mission in a deal worth initially $3.5 billion.
Photo from jonworth’s Flickr photostream.
Filed under: Australia, Business Line, Companies, Contract Awards, Countries, Events, IT, L-3, logistics, Services, training, U.S. Air Force
The U.S. Air Force has developed various simulators to aid in the training for the operations and maintenance of its aircraft. The C-17 strategic transport which has been in service now for almost twenty years has two different ones in use. These are the Aircrew Training System (ATS) and the Maintenance Training System (MTS).
The use of these types of training aids greatly reduces the total cost of training aircrew and support staff. While it is not 100% realistic they allow skills to be learned and developed without relying on flying the aircraft which is not only expensive but frees them up to fly combat and support missions maximizing the use of the available aircraft. The training systems were developed separately and have been provided to ten sites in the U.S. and Australia.
Now the Air Force has awarded L-3 Link, part of L3 Communications (LLL), a contract to manage both parts of the training system under one contract. The base contract is for one year and has up to six option years. The total value if all options are awarded is almost $1 billion.
This contract illustrates that the training simulator market is quite large. Not only to develop and produce the simulators required by today’s modern military but also to operate and keep the simulators operating. Training programs now rely heavily on the simulators so having them available and operational also requires investment and effort.
Photo from Bytemark’s flickr photostream.
Filed under: Australia, Business Line, Companies, Countries, Events, Federal Budget Process, Military Aviation, production program, Proposal, Services, Sikorsky, UTC
Sikorsky, a United Technologies Company (UTX), has signed a MOU with Australian materials company Quickstep Holdings Limited (QHL:ASX) so that it may begin providing support to the American helicopter manufacturer. The MOU will allow Quickstep to be a supplier to Sikorsky global supply chain and will also allow development of Quickstep manufacturing technology in support of Sikorsky.
The deal helps supports Sikorsky bid for a new helicopter for the Australian Navy. Sikorsky has submitted a proposal based on a version of the MH-60R SeaHawk that they currently provide to the U.S. Navy.
If Sikorsky does win the contract which may be awarded before the end of this year having an Australian partner only helps as it means some of the contract cost remains in Australia. Some nations require a percentage of any new contract to be invested in their economy by the foreign winner. These offsets vary by government but right now Australia does not have such a policy. In some places such as India there large offset requirement has been a barrier for Western companies especially to sell to them and as part of their plans to modernize their military they have had to adjust them.
It only makes good business sense for a company to include domestic ones in support of their programs. It makes the government feel better that some of the money spent on the system remains in their economy. All of the teams bidding on the new armored vehicle for Australia for instance have teamed with a domestic provider in a move to aid their proposals.
Sikorsky will also gain by having a local supplier in Asia that will support their other efforts to win business including selling commercial products. This might speed up replacement parts and repairs while also reducing their costs meaning a better price for their customers. It does mean though less work in the long run for their U.S. support contractors and that consideration must balance any efforts to expand overseas.
Photo from Stephen Edmonds’ flickr photostream.
Filed under: Arizona, Australia, Boeing, Business Line, California, Companies, Congress, Contract Additions, Contract Awards, Countries, Department of Defense, England, Events, Federal Budget Process, logistics, Military Aviation, Missouri, production program, Qatar, Restructuring, Services, States, U.S. Air Force, UAE, United States
The Boeing (BA) C-17 Globemaster III has been one of the most successful military transport aircraft of recent time. Originally designed and manufactured by McDonnell Douglas in the early Nineties as a replacement for the C-141 Cold War era aircraft when Boeing merged with the California aerospace giant they took over production of this key aircraft. The U.S. Air Force has taken delivery of over 200 C-17 and there are several more in production at the Long Beach facility.
Unfortunately one of the areas that the Obama Administration targeted for cuts as part of their defense spending reforms was the C-17 program. They were not the first to do this as the Air Force had an acquisition objective of less then 200. Congress against the wishes of different defense secretaries consistently added C-17 aircraft production and support to the budget to get to the current planned quantity of around 220. Critics said this was only due to the fact that up to 50,000 people worked on the program across the United States and the additional aircraft were pure pork. Supporters countered that strategic airlift was critical to support U.S. operations in Iraq, Afghanistan and world wide.
This was continued in the 2009 defense supplemental and 2010 budget but with the 2011 budget this ended. There were no more C-17 aircraft to be ordered by the U.S. military.
Boeing has been able to sell the aircraft to some overseas customers. Currently the aircraft is operated by the United Kingdom, Australia, NATO and Qatar. The United Arab Emirates has entered into a contract to buy six aircraft and Kuwait one. India is considering the aircraft to supplement its fleet of Russian made IL-76 transports but right now that is the only major contract pending.
Because the future number of aircraft is limited right now Boeing announced yesterday that over one thousand employees would begin losing their jobs. Workers in Long Beach; St. Louis; Mesa, Arizona and Macon, Georgia will be affected.
In their press release Boeing said: “as the company moves to a new production rate of 10 C-17s per year. Boeing will reduce the production program’s work force by approximately 1,100 jobs through the end of 2012. The company delivered 14 C-17s in 2010.
The move to the new production rate, announced in February 2010, will be completed this summer and result in the elimination of the second shift at the C-17 final assembly facility in Long Beach. The lower production rate is designed to extend the line as Boeing works to capture additional international orders.”
Boeing hopes that new orders will materialize while they slow the production line down to continue it for several months. If the orders do occur they can adjust the speed of line to meet their obligations. If they do not the production rate will slow to zero and thousands more workers will lose their jobs.
Boeing has made it clear in the past that the Long Beach plant which is a legacy of McDonnell Douglas will be closed and not transferred to other Boeing aircraft projects.
All military acquisition programs have a definitive objective for how many systems will be purchased. The C-17 is no different then any other and eventually that number would be reached. Then production will stop.
Without any new major transport program on the horizon for at least the next several years there is no new system for Boeing to bid on and utilize their work force and production capacity.
The C-17 will remain a key system for the Air Force and Boeing will continue some business supporting it but large scale production is finished.
Photo from tony.evans flickr photostream
Filed under: Austal, Australia, Business Line, Companies, Congress, Contract Awards, Countries, Department of Defense, development program, Events, Federal Budget Process, Lockheed Martin, Marinette Marine, production program, Proposal, Restructuring, Services, U.S. Navy
With the split buy acquisition strategy approved by Congress the U.S. Navy wasted no time and ordered up to twenty more of the Littoral Combat Ships (LCS) from its two suppliers.
This week both the teams led by Lockheed Martin (LMT) and Austal America (ASB:AUS) received contracts for one ship plus up to nine more options. As Congress allowed the Navy went out and bought up to twenty ships. Each contract is worth between $460 and $500 million for the first ships. If all twenty are built the two teams will received close to $5 billion each.
While each team is building a dissimilar hull shape the two designs carry similar weapon loads. Lockheed is partnered with Marinette Marine’s yard in Wisconsin. Austal America is building their ships at their facility in Mobile, AL. The ships are designed to be built at smaller yards allowing more rapid construction.
So far the Navy has received three LCS ships. USS Freedom (LCS 1) and USS Fort Worth (LCS 3) were built by Lockheed Martin and USS Independence (LCS 2) by Austal America. The USS Coronado (LCS 4) is under construction in Mobile and is expected to be commissioned in 2012.
If all twenty ships are ordered and delivered under these contracts the LCS class will quickly become one of the largest in the current Navy. Ultimately up to fifty or more of the LCS could be acquired.
The decision to allow the split contracts in line with the original acquisition strategy for the ship rather then just using one source as the Navy had proposed when it restructured the program in 2009 is a boon to Austal and Marinette. Both companies had been planning layoffs and restructuring if they had not one the contract. Now they both will have to ramp up their capabilities to support the Navy’s program.
Photo from avhell’s flickr photostream.