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Canada shelves plans to Renew its Arctic Air Patrol Fleet

February 16, 2014 by · Comment
Filed under: Canada, Syndicated Industry News 

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GDLS Canada to Deliver Armored Vehicles Worth $10 Billion To Saudi-Arabia

February 15, 2014 by · Comment
Filed under: Canada, Saudi Arabia, Syndicated Industry News 

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Oshkosh Defense Canada Delivers MSVS SMP Bid with Next-Generation Capabilities for Canadian Armed Forces — Press Release

image004Industry team members and a growing network of more than 700 Canadian suppliers set to return exceptional value to the Canadian economy

OTTAWA, Ontario (Jan. 8, 2014) — The Canadian Government is taking important steps in modernizing its logistics vehicle fleet by advancing the Standard Military Pattern (SMP) component of the Medium Support Vehicle System (MSVS) project. Oshkosh Defense Canada, Inc., a subsidiary of Oshkosh Corporation (NYSE:OSK), responded to the Government of Canada’s MSVS SMP Request for Proposal (RFP), offering a high performance, low risk solution to meet the Canadian Department of National Defence’s (DND) mission requirements and protect Canadian Soldiers for decades to come.

“Working closely with our Canadian industry partners and a growing network of Canadian suppliers, our Oshkosh MSVS SMP offering provides superior vehicle performance, sustainment across six continents, and ultimately, the best overall value for Canada,” said John Urias, Oshkosh Corporation executive vice president and president of Oshkosh Defense. “The Oshkosh MSVS SMP family of vehicles is the next generation of the world’s most trusted, battle-proven military platform in the field today. We are proud to present the Government of Canada with our MSVS SMP bid that meets or exceeds all project requirements, and most importantly, provides Canadian Soldiers with the modern logistics vehicles they need to perform their missions.”

The Best Value for Canada

Oshkosh, in collaboration with its Canadian team members and suppliers, will return 100 percent or more of the MSVS SMP contract value to the Canadian economy. Oshkosh’s strategic team members for the project include DEW Engineering and Development, General Dynamics Land Systems – Canada, and Link Suspensions of Canada – Raydan Division.

“Our MSVS SMP team aligns core Oshkosh design, production and sustainment strengths with Canada’s finest technology, manufacturing and services capabilities,” said John Lazar, senior director of Global Strategic Initiatives for Oshkosh Defense. “We are committed to supporting MSVS SMP and future Canadian vehicle modernization programs by working with companies across Canada and creating new economic value in the process.”

Exceptional Performance, Without the Risk

Oshkosh designed, extensively tested and built its MSVS SMP solution to bring the latest ground vehicle technologies to the Canadian Armed Forces. The Oshkosh MSVS SMP vehicles and trailers are built to serve a full range of logistics missions from disaster recovery at home to major conflicts abroad. Key vehicle subsystems, including a high-performance drive train, advanced suspension and braking systems, and a state-of-the-art armour protection system, allow the Oshkosh MSVS SMP to achieve a 70 percent off-road mission profile and a 98 percent mission reliability rate – both of which will enable Canada’s ground forces to more safely operate in a vast array of threat levels, climates and terrains.

The Oshkosh MSVS SMP builds upon decades of in-theatre experience around the globe and more than one billion real-world operational kilometres accumulated on the Oshkosh Heavy Expanded Mobility Tactical Truck (HEMTT) platform. The acclaimed HEMTT platform is a purpose-built military vehicle that has been chosen by the United States Department of Defense and more than 20 allies worldwide – consistently outperforming commercial vehicle derivatives in competitive scenarios.

Canada’s MSVS SMP RFP also includes five years of In-Service Support (ISS). With Canadian troops more frequently mobilized around the world for defence and humanitarian missions, complete life cycle sustainment is increasingly important to ensure mission readiness.

The Oshkosh team’s ISS offering leverages decades of performance based contracting and major repair/overhaul programs experience to minimize MSVS SMP life cycle costs while maximizing reliability and readiness rates. “Our ISS plan is based on a robust global supply chain and a mature logistics system that spans six continents,” added Lazar. “By applying our logistics supportability analysis methodology to manage fleet health, Oshkosh has helped reduced military vehicle fleet life cycle costs as much as 70 percent.”

About Oshkosh Defense

Oshkosh Defense is a leading provider of tactical wheeled vehicles and life cycle sustainment services.  For more than 90 years, Oshkosh has been mobilizing military and security forces around the globe by offering a full portfolio of heavy, medium, light and highly protected military vehicles to support our customers’ missions.  In addition, Oshkosh offers advanced technologies and vehicle components such as TAK-4® independent suspension systems, TerraMax unmanned ground vehicle solutions, Command Zone integrated control and diagnostics system, and ProPulse® diesel electric and on-board vehicle power solutions, to provide our customers with a technical edge as they fulfill their missions.  Every Oshkosh vehicle is backed by a team of defence industry experts and complete range of sustainment and training services to optimize fleet readiness and performance.

To learn more about Oshkosh Defense, please visit us at www.oshkoshdefense.com.

About Oshkosh Corporation

Oshkosh Corporation is a leading designer, manufacturer and marketer of a broad range of specialty access equipment, commercial, fire & emergency and military vehicles and vehicle bodies. Oshkosh Corporation manufactures, distributes and services products under the brands of Oshkosh®, JLG®, Pierce®,McNeilus®, Jerr-Dan®, Frontline, CON-E-CO®, London® and IMT®. Oshkosh products are valued worldwide in businesses where high quality, superior performance, rugged reliability and long-term value are paramount. For more information, log on to www.oshkoshcorporation.com.

®, TM All brand names referred to in this news release are trademarks of Oshkosh Corporation or its subsidiary companies.

Photo courtesy of Oshkosh Corporation.

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US-Canadian JV Wins Philippine Huey Helicoopters Tender

December 31, 2013 by · Comment
Filed under: Canada, Syndicated Industry News, United States 

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Saab partners on bid for $2 billion Close Combat Vehicle Program in Canada — Press Release

WASHINGTON, Oct. 28, 2013 /PRNewswire/ — Defence and Security company Saab and ABB is partnering with BAE System in a competitive bid for the Department of National Defence (DND) $2 billion Close Combat Vehicle (CCV) program. The Canadian Army requires high survival medium weight vehicles for future missions. The bid includes a total of 108 vehicles along with an option for the purchase of an additional 30 vehicles.

A significant portion of the vehicle will be manufactured in Canada through the government’s Industrial Regional Benefits (IRB) program. IRB policy requires business activity in the Canadian economy equal to 100 per cent of the contract value.

Saab has named ABB Analytical to source, supply and produce an electro-optic control system. This program that will have important impact on the local economy, creating about 50 jobs for ABB and sub-contractors located in the provinces of Quebec and Ontario as well as extend economic value across Canada.

“The Saab model ensures job maintenance for engineering and technical staff as well as the creation of new jobs. Producing in Canada will provide stability to the site and will allow ABB Analytical Measurements to increase its contribution to the local aerospace sector in the province of Quebec, Canada,” confirmed Marc-Andre Soucy, director of the Remote Sensing Industry at ABB Analytical Measurements.

In Canada Saab has been executing IRB obligations for about 25 years, and to facilitate the IRBs, as well as provide service and support capabilities Saab has established three companies across the country in Dartmouth, Ottawa and Ralston and add to that the lately acquired Klein Systems Group Ltd in British Columbia.

“With the CCV program Saab is continuing to grow and invest in Canada, and in order to be ready for the start of the program, Saab has already transferred its technology to ABB creating opportunities, for the Canadian industry into major worldwide procurement programs, ” says Patrick Palmer, Executive Vice President of Sales and Marketing Saab Technologies Canada, Inc.

For ABB and its Canadian partners, this project represents an important springboard for future expansion of existing capacity as well as collateral benefits for other markets. As a key industrial partner to SAAB, ABB long-term benefits arising from expanded capabilities and introduction to new business areas has a direct impact on its local community.

“The $2 billion IRB program requires 100 per cent Canadian content, and some 50 Canadian Companies from coast to coast are expected to be part of the BAE Systems team and technology transfer during acquisition and the In-service Support phase delivers a significant number of high quality jobs for Canada.” declares Mikael Segerman (Lt Col), Sales Director Canada, BAE Systems Hagglunds.

Saab serves the global market with world-leading products, services and solutions ranging from military defence to civil security. Saab has operations and employees on all continents and constantly develops, adopts and improves new technology to meet customers’ changing needs.

www.saabgroup.com
www.saabgroup.com/Twitter
www.saabgroup.com/YouTube

Founded in 1973, the ABB Measurement Products facility in Quebec City employs more than 200 employees. The company designs, manufactures and markets high-performance spectrometers, and is an optical systems integrator and a leader in the space and defense markets. The ABB Group of companies (www.abb.com) operates in some 100 countries and employs approximately 140,000 people. In Canada, ABB employs more than 5,000 people from coast to coast.

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F-35 Joint Strike Fighter (JSF) Foreign Intrigues Continue

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.

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Heron, Reaper and Hermes 900 Compete for Canada’s Arctic mission

Hermes 900 Maritime Equipped with Maritime Patrol Radar (MPR) and EO & IR Payloads. Photo: Elbit SystemsThe Israel Aerospace Industries (IAI) Heron unmanned air system (UAS), General Atomics Reaper and Elbit Systems' Hermes 900 are among three platforms eyed for a Canadian tender to supply an advanced system for operation in the Arctic.

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Canada to Look at Other Aircraft for F-35 Mission

After considering the independent auditor’s report submitted to the Ministry of Public Works earlier this year the Conservative government of Canada announced yesterday that they would now look at other aircraft rather then the F-35 to meet the CF-18 replacement requirement. The major reason cited was the much higher estimate of the lifetime cost to procure and operate the advanced aircraft.

The new estimate is almost $46 billion over a projected 42 years. The estimate used to justify the sole source contract for the F-35 was $25 billion for 20 years of operations. The auditor also estimated that due to the cost increases in the F-35 that with the current available funding only 55 aircraft could be bought and not 65.

Canada will now establish a new group to look at aircraft. These could include Boeing (BA) F/A-18 fighters, Eurofighter Typhoons and Dassault Rafale aircraft. The loss of the Canadian buy while a small part of the total planned quantity of over 2,000 F-35 would be a blow to the program and Lockheed Martin (LMT).

The increases in unit cost of the aircraft along with the delays in schedule have caused other partners to reconsider. The Netherlands has also looked at the program’s cost growth over the years as a reason to reconsider. It would allow less aircraft to be purchased to replace their aging F-16 fighters. There is also a requirement to continue using the older aircraft longer then originally planned with associated costs.

Canada could in the end still choose the F-35 but the fact that they are conducting the review is a negative for the overall program.

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Canada Mulls Independent Report on F-35 Contract — Updated with Rumors of Cancellation Plans

Update – On the morning of 7 December reports were starting to be made that after reviewing the report and the latest cost estimates the Government of Canada had decided to cancel their procurement. This has yet to be confirmed by the Government. If the decision is true it will be the first of the planned participants to leave the program.

The Canadian Conservative government as part of their response to criticism of the analysis supporting the decision to go ahead and commit to their F-35 Joint Strike Fighter buy had commissioned an independent audit of the process by KPMG. They had also transferred the authority to review and make decisions about the contract to the Ministry of Public Works rather then the more traditional National Defence department.

Now the report supposedly is in government hands and there is speculation about the results and when they will be released to Parliament and the public.

There are concerns that if the report is not released soon it will have to be after the Christmas recess and then the cost figures involved will be over a year old.

The 2010 decision to go ahead with the buy has been controversial not only for the price of the aircraft, which is estimated at $14 billion Canadian for the procurement, but also concerns about the analysis and decision process that went into award to Lockheed Martin (LMT). An earlier report by the nation’s Auditor General revealed that the cost estimate used to support the purchase was arbitrarily lowered from earlier ones by not considering the sustainment and operating costs of the 65 aircraft reducing it by 10 billion.

Canada has been one of the original partners on the F-35 program contributing about $330 million in R&D funding. The F-35 has been considered the replacement for the current CF-18 aircraft. Now, though, the Defence Ministry has said that while the CF-18′s need to be replaced it may not be by the F-35 and other aircraft might be more cost effective.

The cost growth and schedule delays of the JSF program have been a major concern for several of the international partners in the program as they have delayed replacing aging systems as well as having to rework cost estimates and the number of aircraft they are buying.

Even so the program continues with training of pilots and ground crew from the U.S. and other nations on-going in the United States. The 5th production buy was just recently awarded and over 150 F-35 of all 3 variants are now either delivered or in production.

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General Dynamics Awarded $133 Million to Upgrade 66 Additional LAV III Vehicles by the Government of Canada — Press Release

EDMONTON, Alberta and LONDON, Ontario, Nov. 9, 2012 /PRNewswire/ — The Honourable Rona Ambrose, Minister of Public Works and Government Services and Minister for Status of Women, announced today that the Government of Canada has awarded a contract modification valued at $133.5 million to General Dynamics Land Systems-Canada to upgrade an additional 66 LAV III vehicles. This award modifies a contract previously announced in October 2011 to upgrade 550 LAV III vehicles, valued at $1 billion.

The LAV III Upgrade Project will now modernize 616 vehicles, significantly enhancing their survivability, mobility and firepower and extending the fleet’s lifecycle to 2035. Survivability upgrades will include the introduction of double-V-hull technology, an innovative enhancement developed by General Dynamics Land Systems-Canada engineers, as well as add-on armour protection and energy-attenuating seats. These improvements will provide crew members greater protection against mine blasts, IEDs and other threats.

The LAV III’s automotive performance, handling characteristics and payload capacity will be optimized with mobility system upgrades including a more powerful engine, more robust driveline and suspension, and a height management system (HMS). The 25mm turret’s crew ergonomics will be improved by incorporating larger hatches, and its capabilities will be enhanced by the addition of the latest technologies, including improved fire control, thermal, day and low-light sights and data displays.

“Helping to protect the men and women of the Canadian Forces is a privileged role, and we understand our responsibility and what is at stake,” said Danny Deep, vice president of General Dynamics Land Systems-Canada. “The upgraded LAV III will provide our Canadian soldiers with one of the most advanced and modern vehicles of this type in the world. It will also provide much-needed job stability throughout Canada’s high-value defence sector.”

The upgrades represent the latest armoured vehicle technologies developed by General Dynamics Land Systems-Canada’s engineers and its Canada-wide supplier base. Significant work will be performed at General Dynamics’ facilities in London, Ontario, and Edmonton, Alberta, as well as the company’s nationwide network of over 500 Canadian suppliers. All regions of Canada will benefit from this work, which is expected to be completed in 2017.

For information about General Dynamics Land Systems–Canada, please visit www.gdlscanada.com.

More information about General Dynamics is available on the Internet at www.generaldynamics.com.

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F-35 JSF News Roundup

The F-35 Joint Strike Fighter (JSF) is the largest defense acquisition program ever and it continues despite the budget uncertainty in the United States. If sequestration is implemented the program will most likely see across the board reductions in funding. This could lead to reduced production numbers and delays in the test and development program. The JSF while it is in low rate production is still facing concurrency as it moves toward a final design. The program is led by Lockheed Martin (LMT).

Some recent stories about the program include:

The new test plan for the program was reviewed by DoD leadership and did not win approval. There are major concerns with the pace of development for the new helmet the pilot wears that provides data directly to them rather then relying on their instruments.

Lockheed received a contract from the U.S. Navy worth over $200 million to begin implementing Israeli specific modifications to support that country’s buy of the aircraft.

In another move related to the foreign sales of the program Canada has hired KPMG to analyze the cost basis used by the government to award their contract for 65 F-35 to replace existing CF-18 fighters.

Despite all of this news the program continues with training, testing and development as Lockheed steadily delivers aircraft from the first 4 production batches. They also continue to work with the Government on the next buy.

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Innovation Metals Corp. Selects Site in Quebec for Independent Heavy Rare Earth Separation Plant — Press Release

TORONTO, June 1, 2012 /PRNewswire/ — Innovation Metals Corp. (“IMC”) today announced the selection of an industrial park in Quebec as the future home of the world’s first independent, centralized rare-earth element separation facilities, with a focus on the production of heavy rare earths.

The Becancour Waterfront Industrial Park, located in Becancour, Quebec and operated by the Province of Quebec, is situated on a major highway on the southern shore of the St. Lawrence River. Approximately halfway between Montreal and Quebec City, the location was chosen as the result of a comprehensive site-selection process, managed by engineering consultants GENIVAR Inc.

“Becancour is an outstanding location for our future plant,” commented Patrick Wong, CEO of IMC. “The industrial park has direct access to multiple hydroelectric power sources, through a modern electricity distribution network. It also hosts extensive deep-water port facilities with full year-round access, a bulk-liquid terminal and a railway line connected to the CN railway network.”

A shortlist of five candidates in Ontario and Quebec was reviewed during the site-selection process. Each site was visited and their characteristics evaluated with the assistance of the GENIVAR team.

“What clinched the Becancour site for IMC was the presence of a leading industrial producer of hydrochloric acid and caustic soda, already located in the industrial park,” said Gareth Hatch, President of IMC. “These bulk chemicals are an essential part of the rare-earth separation process, and could be inexpensively piped directly to our future facilities.”

IMC has taken out an option on a specific site within the industrial park, near to the chemical producer, with the choice of converting this option to a long-term lease or purchase agreement. The next steps will be the environmental assessment and permitting for the chosen location, followed by a pre-feasibility study on the design and construction of a 15,000 t / year rare-earth separation plant to be built on the site.

“Our business model is built on the provision of low-cost tolling facilities for rare-earth separation, with some of the lowest operating costs in the world,” added Mr. Wong. “Siting our facility at Becancour will further enhance our ability to deliver on this vision.”

IMC has also recently commenced discussions with sovereign governments and other entities that have an interest in the processing of rare-earth-bearing mineral sands. IMC would provide assistance in the design and construction of appropriate local facilities for initial rare-earth processing, with heavy-rare-earth concentrates being shipped to Quebec for subsequent separation and purification.

About Innovation Metals Corp.

Innovation Metals Corp. (“IMC”) is a private Canadian-based company founded in 2011. IMC’s goal is to alleviate the bottleneck that has formed in the rare-earth supply chain, through the creation of the world’s first independent, centralized rare-earth separation facilities. The company intends to bridge the gap between producers and end users via the creation of a Consortium, through which it will provide low-cost material tolling programs to producers, and assuring security of supply for end users and sovereign governments. IMC is also developing innovative trading platforms, to further increase the opportunities within the rare-earth sector for traders.
Read more

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Lockheed Martin Completes Delivery of 17 CC-130J Super Hercules Aircraft to Canada — Press Release

MARIETTA, Ga., May 8, 2012 /PRNewswire/ — The Royal Canadian Air Force formally accepted the 17th Lockheed Martin [NYSE: LMT] CC-130J Super Hercules in ceremonies here today, completing the order placed in December 2007. The aircraft will be flown to Canadian Forces Base Trenton later this week.

The original contract called for all 17 aircraft to be delivered by the end of 2012. The first CC-130J was accepted in June 2010 and today’s acceptance demonstrates the success of the program and the completion of deliveries ahead of schedule.

“The delivery of the final CC-130J Hercules to the RCAF represents a significant milestone in the history of the RCAF,” said Lt. Col. Colin Keiver, Commanding Officer, 436 (T) Squadron. “The aircraft has already proven its worth around the world in places like Afghanistan and Libya, as well as here at home in Canada. Our partners at Lockheed Martin have delivered us an aircraft that more than lives up to the motto of 436 Squadron, Onus Portamus or ‘We Carry the Load.’”

“The C‑130 Hercules has acquired many nicknames and affectionate titles over the years, but it is in Canada that the aircraft has earned a name that I think summarizes the true meaning of this aircraft – Workhorse,” said George Shultz, Lockheed Martin vice president and general manager, C-130 Programs. “Today recognizes another great chapter in Canadian airlift history and in the continuation and expansion of the long and strong relationships with our industrial partners in Canada.”

To date, Lockheed Martin has delivered more than $350 million in Industrial and Regional Benefits (IRB) to Canadian industry as a result of the Government of Canada’s procurement of the CC-130J aircraft and In-Service Support.

Headquartered in Bethesda, Md., Lockheed Martin is a global security and aerospace company that employs about 123,000 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 net sales for 2011 were $46.5 billion.

For additional information, visit our website: http://www.lockheedmartin.com

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Australia to Stretch Out F-35 Deliveries

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.

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Canadian F-35 Controversy Continues

The fall out from the controversial decision by the Canadian government to commit to the F-35 Joint Strike Fighter without conducting a competition continues. The execution of the contract with Lockheed Martin (LMT) and the U.S. has been placed on hold as a new group outside the traditional defense procurement organization re-examines the contracting process.

The latest fall out from the Auditor report released earlier this year is that the Government underestimated the total cost of the program by $10 billion. Rather then then fixed costs being in the $15 billion range they are actually close to $25 billion. This is because ten years of operational costs (training, personnel, fuel, etc) were not included in the original estimate.

With the current issues it is not inconceivable that Canada could re-start their procurement process. This may lead to a new competition for the contract to replace the current CF-18 fighters that could include multiple competitors like the Eurofighter Typhoon, the Dassault Rafale and American aircraft like Boeing’s (BA) F/A-18.

The loss of 65 aircraft to the F-35 program is a small part of its over 2,000 planned deliveries but the loss of Canada’s participation would be a blow to the whole concept of the program with its shared development, production and operational cost. If Canada reconsiders then other nations who have hinted they could might follow. This could include Japan and the Netherlands both of whom have questions about the cost increases and schedule delays facing the program as a whole.

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Canada’s F-35 Contracting Process Criticized

The Government of Canada’s Auditor General released a report this past week looking at how the country came to the decision to invest in Lockheed Martin’s (LMT) F-35 Joint Strike Fighter. The aircraft as with many other U.S. allies will be used to replace older American aircraft, in this case the CF-18 variant of Boeing’s (BA) F/A-18 fighter.

The report made clear that in the eyes of the Audit the government failed to provide legislators correct or sufficient cost and schedule information to support the decision. The decision made in the summer of 2010 will see Canada by up to 65 of the advance fighters. The estimated costs for acquisition will be about $10 billion and another $15-16 billion on maintenance and modernization.

The reports says that this cost estimate was not properly developed or reviewed and was not properly documented. Continued delays in the schedule for the aircraft which will be purchased in the thousands by the U.S., Canada, the U.K., Australia, Norway, Holland and other countries have already led the U.S. to delay production and caused large price increases. These would also have the potential to affect the price Canada will pay.

The government defended itself by stating that no formal contract has yet to be entered into for the aircraft leaving open either outright cancellation or re-negotiation. The Canadian military like others could look to existing platforms like the F/A-18 Super Hornet or Europe’s Eurofighter and Dassault Rafale.

The F-35 has proved controversial and the current price and schedule issues are not going away anytime soon. Canada like other planned buyers may be reviewing their commitments and plans.

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Canada Reconsidering F-35 Buy?

Canada like many of the U.S. allied nations that purchased U.S. fighter aircraft in the 80′s is facing the need to upgrade their forces. They have used the CF-18 now for several years. They like others joined the Joint Strike Fighter (JSF) program early on providing R&D funds for the new aircraft. In 2010 the Conservative government decided to go ahead and commit to the production part of the contract with plans to buy 65 of the advanced fighters from Lockheed Martin (LMT). The move was controversial with the opposition ending up forcing a vote of no confidence in the government over the decision.

The Conservatives did well in the following election and actually increased their hold in Parliament.

The JSF program has seen major schedule slips as well as cost increases. This is why it is controversial in Canada, the U.S. and other potential buying nations. The U.S. has recently announced in their upcoming budget plans to reduce the annual buys of the aircraft in order to save money. This will stretch out the delivery times and further increase the price of the aircraft. Their also continue to be nagging technical problems common in any development program that has restricted testing and training.

Now there are reports coming out of Canada that it may be reconsidering their plans to buy the JSF. In testimony to Parliament defense officials stressed that they are still intending to buy the aircraft but there is no contract and they could leave the program if they wanted to. Canada has already stated that they will not spend more then they currently plan on the JSF which could lead to reduced numbers if the prices continue to increase.

If Canada does not buy the F-35 they will be faced with deciding between a variety of current aircraft. These include the Boeing (BA) F/A-18, Eurofighter Typhoon and France’s Rafale. The U.S. remains committed to the program and it will replace the F-16, F/A-18, and other aircraft.

If Canada does leave it would be a blow to the program and might encourage other purchasers like Holland and Japan to reconsider their choice.

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P-8 Orders for Boeing Spill Over into Canada

The Boeing (BA) manufactured P-8 Poseidon is the new maritime patrol and anti-submarine warfare aircraft for the U.S. Navy. A version has also been sold to India. The P-8 is based on the 737 commercial airliner and will ultimately replace the Cold War era P-3 Orion aircraft manufactured by Lockheed.

Boeing has recently received the Low Rate Initial Production (LRIP) orders from the Navy and the system is currently undergoing testing at NAS Patuxent River in Maryland. So far the contracts issued for the aircraft are well over $1.5 billion and ultimately 100 of them could be operated by the Navy. India has also ordered 12 of the new aircraft.

As with many new systems Boeing is providing not only the aircraft, but things like spares, support and training. As part of this they recently placed an order themselves with Canada’s CAE (CAE) for six more operational flight trainers to support the U.S. Navy’s program. These OFT are part of Boeing’s recent LRIP order.

The OFT’s along with Desktop Environment Trainers (AeDTE) are key components of the program and will support aircrew transitioning to the new aircraft as well as maintaining proficiency. Due to the high cost of operating aircraft more-and-more services are investing in high fidelity simulators and training devices to aid these efforts while reducing flight time on the actual aircraft.

CAE and its American subsidiary have over the last several years established themselves as one of the premier designers and manufacturers of simulators and training devices like these for the P-8.

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Canada Considering New Search and Rescue Aircraft

Canada due to its size and terrain relies on a fleet of different helicopters and fixed wing assets to provide civil search and rescue for its population. Many of these are quite elderly and the current government is considering a program to replace the older Lockheed Martin (LMT) produced C-130 transports used for this mission as well as other systems.

One of the contenders for the new contract would be Lockheed who could offer a version of their new C-130J aircraft. Canada has already invested in several of these to perform transport missions primarily in support of their troops in Afghanistan. The United States’ northern neighbor has bought these as well as Boeing (BA) CH-47 Chinook cargo helicopters for this mission as part of a general upgrade of their military capabilities.

Lockheed is also the prime contractor on Canada’s largest military program — the purchase of F-35 Joint Strike Fighters (JSF) to replace the current CF-18 jet aircraft. Canada is one of the most important foreign partners for the advanced stealth aircraft along with Australia, the U.K. and the Netherlands.

The cost of the F-35 has become controversial in Canada as well as the current delays in the fielding of the aircraft. There have also been concerns about the how and the amounts of offsets Lockheed will use in connection with its contracts. Another issue is a belief that like with the C-130J contract the current Government may just go ahead and sole-source this new program to Lockheed without a contest.

As with a great deal of defense contracts the politics need to be worked out before movement can be made on generating a Request for Proposals. There certainly would be synergy with using an aircraft already in the inventory for a different mission but at the same time the C-130J may not represent the best value in order to meet the requirements of the mission. There is a review of these requirements currently underway that will then lead to the RFP preparation.

There is still no timetable for the contest.

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Boeing Awards Offset Contract in Canada

Boeing (BA) recently announced a contract award to Messier-Dowty Inc, part of the Safran Group (SAF:P), located in Toronto to continue to make lander gear assemblies for the F/A-18 and EF-18 aircraft. The contract has a value of about $200 million.

Messier-Dowty has made such assemblies for Boeing for the F/A-18 and V-22 Osprey aircraft for several years. They also make brakes and landing gear parts for the 737 and 787 commercial aircraft. This is not a surprising contract as aerospace manufacturers rely on parts providers across the globe as they search for the best price and most efficient delivery but this contract is special to Boeing as it counts as an offset for an order the Canadian government placed for C-17 strategic transports and CH-47 heavy lift helicopters.

Canada has an aggressive offset policy that requires companies from outside the country receiving government deals to invest an amount equal to almost 50% of the contract. This is fairly easy for companies like Boeing or General Dynamics (GD) as they rely on Canadian companies for components and support. Other companies have found it easier to buy spare parts or logistics support to make up their offset amount.

The F/A-18 is due to be replaced by the F-35 Joint Strike Fighter in both U.S. and Canadian service. Due to delays in that system entering large scale production and service the U.S. Navy in 2010 ordered another 120 odd F/A-18 fighters to bridge the gap while maintaining a relatively young and capable aircraft fleet. The U.S. Air Force and some foreign customers are looking at their F-16 and F-15 aircraft getting old as they wait for the JSF to arrive.

These delays increase the amount of support costs paid by the services to keep the older aircraft flying which puts pressure on the budget and may lead to cuts to the number of F-35 aircraft being bought which will cause even further delays.

The Boeing contracts are good for the Canadian economy as well as the U.S. as it keeps the F/A-18 line going providing production jobs.

Canada over the last few years has invested heavily in new aircraft and helicopters and plans major upgrades to its Navy and Army as well. Much of this has been sold as a way to keep the economy going during the global economic strife. Due to their reliance on U.S. contractors it is also good for the U.S. economy and defense spending as well.

Photo from fanavaiation Flickr photostream.

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Boeing Sees Two Major Helicopter Deals on the Horizon

Boeing (BA) along with its industry partner Bell Helicopter, part of United Technologies (UTX), produces two major helicopters for the U.S. military as well as export and the only tiltrotor in use today. These are the AH-64D Apache attack helicopter and the CH-47 Chinook heavy lift cargo helicopter as well as the unique V-22 Osprey used by the U.S. Navy, Marines and Air Force.

Boeing is looking forward to two major contracts involving the helicopters that will continue their production for the next several years.

First there is word that the AH-64 easily won a contest with the Indian Army to serve in limited numbers in attack and reconnaissance missions. The U.S. Army had earlier this year informed Congress of their intent to sell over twenty of the aircraft along with engines, Hellfire and Stinger missiles and other support. The estimated value of that contract was about $1.4 billion.

India, it turns out, conducted a “Fly Off” between the Apache and a similar Russian Mil-28 Havoc helicopter. Based on reports the AH-64 bested the Russian in most major areas including performance, armor, electronics and overall capabilities.

The AH-64 has seen a great deal of use in Iraq and Afghanistan providing fire support to ground troops using its Hellfire missiles and 30mm chain gun. The U.S. Army, Great Britain, and the Netherlands have all had successful deployments of the aircraft to Afghanistan. It has also been sold to countries like Israel, Egypt and Singapore.

Boeing has also submitted its proposal to the U.S. Army for the next multi-year production contract for the CH-47. The CH-47 like many major U.S. aircraft is able to negotiate five year contracts for deliveries rather then just one year as most programs as it is felt this saves money by allowing smoother production lines and the ability to order more parts and components at a time. The CH-47F is the current model in production under a 5 year contract signed in 2008.

The new contract is for a further 155 helicopters and could be worth several billion. The U.S. Army has invested heavily in CH-47 as their heavy lift capabilities are at a premium in Afghanistan’s high and hot conditions. Canada and the U.K. have also invested in the Chinook. Because this is a sole source contract the Army will be negotiation with Boeing on pretty much on price and schedule and not with multiple companies to provide the aircraft.

The U.S. has spent a great deal of money the last decade on Army aviation. With the coming decline in defense spending and the ending of the fighting in Iraq and Afghanistan that level of funding will not continue. Cuts to annual buy quantities will most most likely occur reducing Boeing’s sales to the U.S. military. This will be true for the AH-64 and V-22 as well. Foreign sales like the Indian Apache deal will make up some of the cuts to help Boeing keep its revenue and earnings up.

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Two More Major Armored Vehicle Contracts Announced

Following up on Canada’s decision to award General Dynamics (GD) a contract to upgrade their existing fleet of LAV III armored vehicles two more major contracts were announced this week by the U.S. and United Kingdom related to their existing vehicle systems. While there are new armored vehicle programs in development the trend right now is to continue to procure and upgrade existing ones.

First the U.K. Ministry of Defence announced that they had awarded Lockheed Martin (LMT) a contract to upgrade their Warrior Infantry Fighting Vehicle (IFV) personnel transports. The Warrior is similar to the M2 Bradley and did see heavy use in Iraq. The goal of the over $1.6 billion contract is to extend the life of the Warrior out beyond 2040. The work will be done in Britain at the Lockheed facilities there. The upgrade program will add armor, new weapons and improvements to the turrets.

General Dynamics in the U.S. also received a production contract for more Stryker Interim Combat Vehicles (ICV). The Stryker is a wheeled armored vehicle that comes in different versions including troop transport, mortar, ambulance and anti-tank vehicle. It was originally planned to be a bridge between the current heavy armored force of M1 Abrams tanks and M2 Bradly IFV until the new Future Combat Systems (FCS) program delivered its family of vehicles. The FCS was cancelled in 2009. The Stryker has been used in Iraq and Afghanistan and this contract worth about $350 million is for a further 177 vehicles with improved armor and double hull to provide better protection against IED and mines.

The U.S. is working on a M2 replacement called the Ground Combat Vehicle (GCV). This is in the early stages of development with two EMD contracts recently awarded. Due to a protest by one of the losing bidders the program is on hold. Canada and the U.K. have decided for now to invest in upgrading the capabilities of their existing systems rather then develop a new one. The GCV and these different upgrades reflect the experience of fighting in Iraq and Afghanistan with a focus on better armor, improved weapons and networked capability.

With the withdrawals from these countries there should be a decline in investment in new systems and the manufacturers will have to look to other sources for contracts. The work though upgrading and “resetting” existing systems should be available over the next 5 years or so.

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Canada Makes Big Investments In Its Defense, U.S. Industry To Benefit

Since 9/11 Canada has been one of the most supportive allies of the United States committing troops multiple times to Afghanistan. They have suffered over 150 military casualties and four civilian ones in that fighting. The Canadian government has also made efforts to modernize and equip their forces with better equipment to aid in their operations such as Boeing’s (BA) CH-47 heavy lift helicopters and Lockheed Martin’s (LMT) C-130J transport aircraft.

At the same time both the Liberal and Conservative Party government’s that have been in power since 2001 have planned to improve the nation’s basic armed forces. One of their responses to the world economic downturn since 2008 has been to spend targeted funds on selected military projects to aid the economy and counter unemployment. This has included investments in infrastructure and training capabilities. Canada has benefited from these contracts even when they award them to foreign suppliers, primarily the big U.S. defense contractors, because they have a 100% offset requirement.

This means that the foreign company must invest an amount equal to 100% of the value of the contract in the Canadian economy. This means they may hire Canadian suppliers for parts or maintenance or just do it in a completely unrelated part of the economy. For example Sikorsky Aircraft, part of United Technologies (UTX), sold helicopters to upgrade Canada Navy’s anti-submarine, search and rescue and surveillance capability. The program has seen delays and cost growth and Canada adjusted it by accepting more offsets from UTX.

In this vein the country announced two major contracts this week to continue their improvement of their military. The first is a major new armored vehicle upgrade contract that will go to General Dynamics Land Systems (GD). GD has been building wheeled military vehicles for Canada and the U.S. for several years. This $1 billion contract will allow the current LAV III fleet of vehicles to remain in service for another 20 years by improving armor, weapons as well as survivability against the IED and mine threat. GD is an American company and the contract will help it weather cuts in the U.S. defense budget but it will also help Canada as most of the work will be done in that country and it will employ significant amounts of domestic workers.

Also this week the Canadian government announced the results of a contest among its domestic shipbuilders for contracts to construct a new fleet of large naval combatants and patrol ships. This contract is worth over $32 billion total and was awarded to two shipyards, Irving Shipbuilding Inc. and Seaspan Marine Corp. Irving will build up to 15 warships and 6 patrol craft while Seaspan 8 support vessels such as icebreakers.

While the contract is a huge deal for the nation’s shipbuilders it will have spill over effects into the U.S. Most of the weapons and combat systems will have to be provided by U.S. defense contractors since Canada tends to use their guns and missiles. There is a chance that radar will come from Europe as it has in the past. Either way this is win-win for Canada as they recipients of the sub-contracts will have to invest to meet the offset requirements. This means that billions of dollars will flow back into the Canadian economy one way or another.

Canada has been very proactive over the last decade in their military spending. This has meant not only benefits for their economy but also the U.S. and other countries. There offset policy allows money spent on non-domestic defense goods to grow their economy as well. The U.S. and some European defense contractors also gain as they provide some key components and systems not available on the domestic Canadian market. Canada is able to take advantage of this to gain state-of-the-art, modern equipment without having to build up their defense industry.

Article first published as Canada Makes Big Investments In Its Defense, U.S. Industry To Benefit on Technorati.

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General Dynamics to Provide More Uparmored Strykers

The U.S. Army has been buying Stryker Combat Vehicles for several years. They are wheeled armored transports that are made in different configurations including mortar, ambulance and other support vehicles. They are based on Canadian systems and are manufactured and supported by General Dynamics (GD).

The Stryker at one point was the “Interim Brigade Combat Vehicle” which was supposed to bridge the gap between the M1/M2 heavy armored vehicles until the new Future Combat System (FCS) was developed. FCS was going to be a range of wheeled armored systems to perform all of the Army’s missions. The goal was to trade armor for speed and increased digitization to improve situational awareness and reaction time. FCS was cancelled early in the Obama administration due to its cost and schedule problems.

The Stryker like all U.S. lighter vehicles have been developed into better armored systems to help counter the mine and IED threat in Afghanistan and Iraq. For the Stryker this meant designing a new hull with a double-V in the bottom to help protect and channel the blast from mines and IED. This is a similar idea to the vehicles developed in Africa to counter the mine threat in the Seventies and Eighties.

The Army ordered about 450 of the new double-V systems last year. Of that order two-thirds have been delivered and the contract for the remaining 150 was awarded yesterday. It has a value of about $240 million for 150 of the Strykers.

The Army and Marine Corps have invested heavily the last few years in systems like Mine Resistant Ambush Protected (MRAP) vehicles, up-armored HUMVEE’s and trucks, and other counter IED systems and technology. At the same time the threat has influenced the requirements and designs for new systems like the Ground Combat Vehicle (GCV) to replace the M2 Bradley and the Joint Light Tactical Vehicle (JLTV) that may replace the Humvee. The services are struggling with how to integrate the MRAP and other systems into their tactical organizations to support more conventional actions. The Stryker, including the double v version, is a kind of bridge between the two.

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Labor Woes Add to Oshkosh’s Struggles

Further Update – It has been announced the Union has accepted the latest offer from the company and a new five year contract has been signed.

Update – The Union voted on Saturday the 8th on an updated proposal from the company and again turned down the offer. The Union has offered to continue negotiations.

Oshkosh Corp. (OSK) is one of a few, recent stories of success where a company is able to expand its business into defense from its more traditional lines of work. Oshkosh is traditionally a manufacturer of construction and emergency vehicles but was able to win two major defense contracts for support vehicles in the last five years. These have generated a great deal of revenue and some profit for the Wisconsin company when its traditional work was declining due to the global economic downturn.

Oshkosh was able to win the production contract for the U.S. Army’s standard truck, the Family of Medium Tactical Vehicles (FMTV), as well as a new Mine Resistant Ambush Protected (MRAP) for Afghanistan called the MRAP-All Terrain Vehicle (ATV). This was designed to be lighter and more maneuverable for use in Afghanistan’s rougher terrain with its limited roads.

The MRAP contract, though, is winding down as the need for the vehicles declines. The U.S. is planning on leaving both Iraq and Afghanistan in the next few years and is struggling with fitting the MRAP, which is primarily a heavily armored bus, into its tactical Table of Organization and Equipment (TO&E). If the next war includes a different threat then the role of the MRAP will be limited. This means that Oshkosh needs to find new customers or new work for their rapidly built up production capability for the MRAP.

The winning of the FMTV contract from BAE Systems (BAE:LSE) who had purchased the company that had that work for over twenty years was driven by price. Oshkosh bid very aggressively and hoped to make money off of modifications and other work related to the vehicles. Even though the Army and Marine Corps are buying thousands of those vehicles the margin on them is very low.

These two issues have combined to limit Oshkosh’s profit. The company is bidding on Canada’s new contract for an armored vehicle to help its situation but budgetary pressures will probably reduce its options for new contracts and new systems.

Now Oshkosh faces labor issues. Unlike BAE’s Sealy, TX workforce its is unionized. There current contract expired last Friday and the new one was voted down by the United Autoworker’s Union (UAW). As with many current labor negotiations healthcare costs and other issues remain the primary areas of disagreement.

Right now the union workers are not on strike and Oshkosh has not locked them out and the two sides met this weekend for more discussion. If the problems are not resolved in the near term though either could happen disrupting production for the military and affecting Oshkosh’s revenue.

Strikes are uncommon in the defense world as few major contractors are unionized. Sikorsky, part of United Technologies (UTX), had an ugly strike about six years ago that caused issues with UH-60 Black Hawk and CH-53E Sea Stallion helicopter production and took several months to recover from. Oshkosh is not facing that situation but it does add pressure to the company as they are trying to negotiate limited cost growth to maximize the profit from their products.

The next few months could be critical to the company’s defense prospects as the opportunities for new contracts in the U.S. are limited and there may be cuts to existing ones if there is a big decline in defense spending. This means it would be best for the union and the company to resolve their issues quickly and avoid a long term conflict.

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