Unarmed Reaper Crashes Into Lake Ontario

New Air Force Planes Go Directly to ‘Boneyard’

Montie Design Ranked in Top 50 Area Companies in Web Traffic and User Engagement — Press Release

National Rankings List Innovation and Commercialization Firm at Number 42

MORRISVILLE, N.C.–Innovation and commercialization firm Montie Design is generating enough buzz about its expertise in taking products from concept to marketplace to merit a place in the top 50 of greater Raleigh area companies in terms of user engagement and website traffic.

The rankings, from AreaStartups.com, lists Montie Design at number 42, joining such high-profile companies as Channel Advisor, iContact, SAS, Global Knowledge Training, and Bandwidth.com as online destinations for customers and prospects interested in securing top-quality products and services.

The list is compiled monthly using data to measure overall traffic and engagement. The founders of Area Startups provide the rankings to promote information about companies in each major startup geographic area across the U.S., track their progress, and deliver relevant news and job listings in the various coverage areas.

Paying special attention to achieving excellence in functionality, operability, value and aesthetics regardless of market or industry, Montie Design staffers have helped turn over 750 exciting product ideas into reality. The team is active in the product design and engineering market sector, utilizing a combined 140 years of knowledge and experience helping clients realize products that are economical to manufacture, elegant and robust.

In addition to serving customers in a myriad of industry sectors, Montie Design produces its own Montie Gear line of outdoor equipment, including a slingshot; ultralight knife; multi-purpose tree hook archery rest for sturdy support of a bow, crossbow, or rifle with a sling; a camp rack designed to hold pots, lids, serving bowls and utensils off the ground to dry after cleaning; and the popular X-Rest and AR-Rest shooting supports for hunters and recreational shooters.

All equipment in the Montie Gear line is heirloom quality, Troublesome Gap tough. Located near the peak of Hap Mountain overlooking Spring Creek, North Carolina, Troublesome Gap is a rugged mountain area where Montie Gear prototypes are tested and evaluated.

About Montie Design

Montie Design is an innovation and commercialization firm with core competencies in mechanical engineering and industrial design. Active in the product design, defense, and technology sectors, we leverage years of industry leadership and extensive technical capabilities to help clients take products from concept to marketplace that are economical to manufacture, elegant and robust. Montie Design is a North Carolina company headquartered in the Research Triangle region with clients across the country and overseas. We are dedicated to economic development throughout our home state and furthering excellence in design and engineering. For more information, visit www.montie.com.

U.S. Navy Sea Based Missile Defense Advances to Shore

In the early 1990’s in a response to Iraq’s use of Scud missiles during Desert Storm the U.S. military, led by the then Ballistic Missile Defense Organization (BMDO), now the Missile Defense Agency (MDA), began investing in defenses against shorter range threats. Previous efforts had been oriented to defending the United States from the large the Intercontinental Ballistic Missile (IBCM) based in the Soviet Union. All three of the major services had programs but the focus was on U.S. Army and Navy missile systems.

The Navy began developing 2 different systems that mirrored the Army’s path. Both involved modifying their current primary long range air defense system, AEGIS. This utilized large phase arrayed radars and the STANDARD Missile-2 (SM-2) interceptor. The AEGIS radars and other systems had originally been developed by General Electric (GE) but by the mid-1990’s had transitioned through Martin Marietta to Lockheed Martin (LMT). The SM-2 was produced by Hughes Missile Systems and Raytheon (RTN) but ultimately Raytheon acquired the whole business.

First, the missile, radars and command and control systems would have capability added to defense against shorter range missiles but still maintain their air defense mission. The Army was doing the same thing with their Patriot surface-to-air missile system. Secondly, a dedicated missile utilizing an exo-atmospheric kill vehicle would be developed. That meant the missile would not be able to engage air breathing targets but much longer ranged missiles.

By the early part of this century the air defense capable version, SM-2 Block IVA, had been cancelled due to budget and schedule issues. The long range SM-3, though, continued development and testing. It has proved successful including being able to intercept and destroy a failing satellite in 2008. The system has entered production and several cruisers and destroyers have been modified to utilize it. The Navy has continued development and the new SM-6 missile has just entered production at a new factory in Huntsville, AL.

The MDA has also decided as a way to supplement the current Ground Based Mid-Course System based in Alaska to develop “AEGIS Ashore”. This places the radars, other systems and missiles in trailers and containers that can be set up in different places and even moved around as necessary.

This program made a major step forward recently with the build up of the first test set that will be installed ultimately at the Pacific Missile Range Facility (PMRF) in Kauai, Hawaii for testing. Once that system is moved a second one will be installed at the main AEGIS production and development center in New Jersey. Ultimately the first set will be set up in Eastern Europe.

Originally the Bush Administration had planned on an expansion of the Alaskan ground based system into Poland and other parts of Eastern Europe. This was cancelled by the Obama Administration and AEGIS Ashore substituted. There is also plans to utilize AEGIS ships to provide missile defense converge of parts of NATO in Europe.

AEIGS Ashore is just one part of the continued Navy and U.S. investment in missile defense as it includes upgrades to the AEGIS radars, C2 systems and steady development of the STANDARD Missile. All of this will be to the advantage of key contractors like Lockheed and Raytheon. Further developments of a new radar, the Air and Missile Defense Radar (AMDR) also include bidders like Northrop Grumman (NOC) so as the program develops there will be chances of contract wins and work for other contractors. These efforts could also flow into the AEGIS Ashore or its replacement system in the future.

F-22 Raptor Resume Airspace Control Alert Missions After Restrictions Are Lifted

The U.S. Air Force announced the F-22 Raptor has resumed normal flight operations after modifications to aircrew life-support equipment were completed across the fleet. F-22 crews have also resumed their aerospace control alert mission in Alaska... Read the whole post... »

Navy Awards Contracts for New Ship Components

The building of a modern warship requires not only the initial large contract with the builder but numerous other ones to buy components and support for the actual ships. Other systems are purchased with separate contracts and then items are provided to the builder for installation on the ships as they are assembled. The U.S. Navy is currently building new aircraft carriers, missile destroyers, Littoral Combats Ships (LCS), amphibious warfare ships as well as support vessels.

The LCS is being built by 2 different yards under 2 separate contracts. The LCS-1 design are made in Wisconsin by Marinette Marine and Lockheed Martin (LMT). The LCS-2 in Mobile, AL by Austal America and General Dynamics (GD). While they have dissimilar hull designs the basic weapon fit remains the same and both will carry mission modules. Up to 20 LCS are on contract to be built with the Navy periodically issuing contracts for 2 from each builder.

2 related contracts were recently awarded to support U.S. Navy ship construction. First General Dynamics (GD) received one for 8 MK 46 Naval Weapon Systems. The MK 46 is a 30mm cannon mounted in a stabilized turret. These will be installed on LPD-12 amphibious assault ships and the LCS. The contract is worth $26 million and is a follow on to previous contracts under which 30 systems have been delivered.

Then ATK (ATK), the ammunition and explosive manufacturer, received a contract for 30mm ammo. This $12 million contract is for incendiary rounds for the MK 46. It is a 5 year Indefinite Delivery / Indefinite Quantity (ID/IQ) contract with 1 base and 4 option years. As an ID/IQ the Navy will order off of the contract what is required to outfit ships with the Mk 46 weapon.

With Sequestration and the budget reductions recently passed by Congress and agreed to by the Obama Administration FY13 will probably not see many more major contracts awarded. There may be many though like these to support bigger programs already underway.

Alaska’s Ground Based Interceptors to Pivot US Defenses Against North Korea

Secretary of Defense Chuck Hagel announced yesterday the increase in the number of Ground Based Interceptors to be positioned in Alaska, and the planned deployment of a second TPY-2 radar to Japan, two immediate steps to better protect the United States of America from potential missile attacks from North Korea and Iran. The US is also scaling down the European Missile Defense program, by limiting the system’s interceptors against intercontinental ballistic missiles, a step that could pave the way for further agreements between Washington and Moscow.

Beechcraft Corp. to Protest Again on the US Air Force Decision to Award LAS Contract to Embraer

Beechcraft Corporation today announced that it will formally protest to the U.S. Government Accountability Office (GAO) the U.S. Air Force’s (USAF) recent award of the Light Air Support contract to its Brazilian competitor, Embraer. “We simply don’t understand how the Air Force can justify spending over 40 percent more – over $125 million more – for what we consider to be less capable aircraft,” Bill Boisture, CEO, Beechcraft said.

KC-46A Program Moving Forward

The Air Force and Boeing (BA) have been working hard on the KC-46A contract since its award. There have been some major developments including Boeing’s decision to move most of the work to Washington with plans to close their Wichita, KS military aircraft facility.

At the same time there is progress being made. Boeing has opened one of five simulation laboratories (SIL). This one is in Washington and will focus on avionics and software development. The use of the SIL will aid in risk reduction and program development.

There has also begun discussions of possible basing sites across the U.S. The first one chosen will be for crew conversion and training but ultimately the 767 based tanker will have several operational bases as well as flying from overseas locations such as Guam.

Bases also will be selected depending on how many aircraft the National Guard will operate. Already states like Vermont, Maine and Kansas are talking about being used.

“Burlington mentioned as basing possibility for new Air Force tanker” — Burlington Free Press

“McConnell awaiting decision on home for Air Force tankers” — The Wichita Eagle

“Military brass, state delegates christen new hangar for MAINEiacs” — Bangor Daily News

Small, Disabled Business Bags Bag Contract

The United States Department of Defense buys many things to support its troops, their dependents, employees and retirees. One of the services it does provide is Commissaries and Exchanges on bases that allow grocery and household goods to be purchased. As with all stores they need supplies to function.

Envision is a small, disabled business in Kansas. They recently were awarded a contract to provide plastic bags for use at Commissaries and Exchanges. The contract is worth over $47 million.

Envision has already executed several of these contracts and were the only bidder on the new one. It is estimated they will provide over 1 billion bags under this contract.

Federal procurement regulations state that a company employing disabled people is a preferred source. Along with these are Native American owned and those that employ prison labor.

More Machineguns from GD

The U.S. military even though the fighting is winding down in Afghanistan still needs to invest in new equipment to replace older weapons. Demand will be going down after 2014 when the last troops return and so without sequestration contractors will see reduced orders for their products.

The M2 50 caliber machine gun has been in use with the U.S. and its allies since before World War II. It is mounted on aircraft, vehicles and used from tripods carried by Soldiers. There have been tens of thousands of them made and even though a new design was recently developed it is still manufactured by General Dynamics (GD). The original weapon was made by Browning and has gone through a series of owners since originally delivered.

GD just received yet another contract for these weapons to be manufactured at their Maine plant. The almost $30 million contract will be for 12,000 of the systems.

As the defense budget begins its decline next year and the military adjusts to new requirements the demand for weapons like these will most likely decline as well. Less will be used in combat meaning existing ones will last longer. There may be more work refurbishing existing weapons then buying new ones.

More Missile Defense Work for Raytheon

As the Fiscal Year 2012 comes to an end contracts continue to be awarded although they should dry up as the government moves to begin closing out the books on this year and begin executing next year’s budget. FY 2013 looks to start with an extended Continuing Resolution Authority (CRA) which could limit what can be done with available funds.

One program that has had steady awards is Raytheon’s (RTN) work producing the SM-3 missile for the U.S. Missile Defense Agency (MDA). The SM-3 is part of the ship based AEGIS system and is optimized to engage enemy ballistic missiles. Further versions are being developed to deal with more complicated and longer range threats but the SM-3 has been tested several times in Hawaii and is equipping the U.S. and Japanese AEGIS ships.

The most recent award was for 19 missiles and has a value of over $200 million. This follows a contract awarded in July worth almost a billion dollars for development effort for a new version of the missile.

Raytheon is building a new facility in Huntsville, AL to produce the SM-3 missiles.

More CROWS for the Army from Kongsberg

Kongsberg is a Norwegian conglomerate that supports the maritime and oil industries as well as having a fairly active defense group. One of its more important products this last decade is supporting the U.S. Army through the production of Crew Remote Operated Weapon Systems (CROWS).

CROWS allow a soldier to aim and fire his weapon while inside his vehicle under maximum protection. The CROWS consists of a turret mounting a variety of machine guns or grenade launchers, visual detecting and aiming systems, and controls for the gunner. The use of these type of mountings has greatly reduced casualties by reducing the exposure of the crews to direct fire as well as the mine and Improvised Explosive Device (IED) threat.

The Army has just awarded Kongsberg a further five year contract for production of the systems. If all options are exercised the contract could be worth up to just under a billion dollars. Previous contracts have seen Kongsberg deliver almost 10,000 systems for use on HUMVEE’s, MRAP vehicles and other support vehicles.

The company operates a plant in Pennsylvania to support these efforts.

Curtis LeMay’s Old Headquarters to be Replaced

The Air Force recently awarded a contract to build a new headquarters for the Strategic Command (USSTRATCOM). This will be like its predecessor at Offut AFB, Omaha, Nebraska. USSTRATCOM replaced the old Strategic Air Command (SAC) merging control of all of the U.S. nuclear weapons on aircraft, missiles and submarines. Previously SAC controlled the bomber and ICBM fleets while the Navy kept control of its ballistic missile submarines.

The original SAC headquarters was built about 50 years ago. The new almost 1,000,000 square foot facility’s initial construction contract worth about $120 million was awarded to Kiewit Phelps. The total construction could cost close to $500 million. This does not include the costs of installing new IT and support equipment.

General Curtis LeMay was commander of B-29 aircraft bombing Japan during World War II and went on to command SAC in the Fifties building it into the force it was. He then became Chief of Staff of the Air Force.

Exclusive Article at Seeking Alpha on EADS Move to Alabama And Spirit Aerosystems

This is an article I wrote for Seeking Alpha discussing the decision by EADS to build a facility in Mobile, AL and its potential affect on Spirit AeroSystems.

Navy Awards Prototype Production Contract for LCAC Replacement

The Farnborough Air Show in the U.K. is ongoing and normally one expects companies to announce large, aviation contracts. Even so one of the more interesting contracts awarded recently was by the U.S. Navy. This was to Textron, Inc. (TXT) and will begin initial production of the new hovercraft based landing craft for fast delivery of men and equipment from amphibious ships.

In the Eighties the Navy developed the Landing Craft Air Cushion (LCAC) for this mission. The advantage of the hovercraft based system was that it was much faster then traditional landing crafts, could drive further onto the beach and also traverse other types of terrains. The LCAC have seen heavy use in humanitarian operations as the U.S. Navy and Marine Corps have not done an amphibious assault in many years.

The close to $213 million contract is to build the first prototypes of the new Ship-to-Shore Connector (SSC) as well as design efforts and training material. Textron was the original designer and manufacturer of the LCAC.

The SSC is an improved version of the LCAC able to carry heavier loads as well as be easier to maintain. Many of the requirements have been driven by the need to transport heavier, more armored vehicles now used by the Marine Corps. This heavier weight has been caused by the IED and mine threat most common in Iraq and Afghanistan

If things go well Textron will receive follow-on contracts to begin larger scale production of more SSC to replace the aging LCAC fleet.

Article in The Baltimore Sun on U.S. New Rifle Contest

I was quoted in an article in The Baltimore Sun about one of the entrants in the U.S. Army’s new rifle competition.

House Begins Markup of 2014 Budget with Add of Submarine

The House and Senate are in the process of considering the President’s 2014 budget request. As often different committees will review it and make changes sometimes based on their own priorities which means adding things or removing items from the original request. The budget has to go through two committees in each the House and Senate. Then it is voted on and a Conference Committee held. This means that often the final budget is not necessarily similar to what was submitted in February.

Not only do different companies lobby Congress for inclusion of their products and projects but sometimes the Services will indirectly. There exist lists of “unfunded priorities” and needs that Congress may address even though they are not part of the budget request.

The House Armed Services Committee as part of its review has reportedly increased the Navy’s buy of U.S.S. Virginia class attack submarines by 1 more then requested. The Navy had originally planned to buy two a year but in order to meet budget cut goals and reduce spending only 1 was asked for in 2014. The HASC has bumped that back up to 2.

Congress also wants the Navy to consider signing a multi-year contract for 10 submarines. Multi-year contracts are normally for five years and done for systems, especially aircraft, in steady state production. This allows efficiencies and better pricing due to stable quantities and funding. Virginia submarines are currently built by two companies – Huntington Ingalls Industries (HII) in Virgina and General Dynamics (GD) Electric Boat in Connecticut and Rhode Island.

One of the problems that the Pentagon will face as it tries to cut money required to meet budget goals is that Congress is loathe to reduce programs. There are 435 House members and 100 Senators who see defense spending as a way to bring money and jobs into their districts. The idea of keeping one more submarine in the current budget will do so. It will also require the Navy to cut less money or take it from other budget priorities.

U.S. Continues Investment in AEGIS Ashore

The AEGIS system is the primary ship based anti-air warfare weapon used by the U.S. Navy and some allied Navies. It consists of radars, fire control software, vertical and rail launchers and version of Raytheon’s (RTN) STANDARD missile. It has been in use since the 1970′s and consistently upgraded.

Using modified software and the SM-3 missile it provides ballistic missile defense. The SM-3 has the ability to engage targets at high altitude. More advanced models of the SM-3 are being developed with a new plant being constructed in Huntsville, AL at Redstone Arsenal.

A few years ago the Obama Administration decided to end deployment of the Ground Based Mid-course system in Europe. That Army operated ballistic missile defense program now has interceptors based in Alaska and sensors across the globe. A similar installation of interceptors was planned for Eastern Europe but it was decided to pursue other ways to provide the defense for NATO allies.

Part of this is to take an AEGIS system and base it on the land. This “AEGIS Ashore” will make the majority of the ship installed components and make them transportable. This includes radars, fire control installations, the SM-3 and a version of the Mk 41 Vertical Launch System.

BAE Systems (BAE:LSE) is the manufacturer of the Mk 41 through the acquisition of a U.S. defense contractor several years ago. The just received a further contract for Mk 41 components for both AEGIS ashore and new DDG-51 class destroyers. This contract has a value of about $23 million.

The contract will see Mk 41 components for DDG-116 and parts of the AEGIS Ashore installation. The use of the Navy’s missile system to provide land based missile defense is rather innovative and combined with ship based systems as well as the Army’s shorter ranged PATRIOT and THAAD provide some layer of defense for an area.

Pratt & Whitney and Boeing Representatives Sign Engine Contract to Power U.S. Air Force’s KC-46 Tanker — Press Release

MUKILTEO, Wash., March 27, 2012 /PRNewswire/ — Bennett Croswell, president of Pratt & Whitney’s Military Engines division, and Maureen Dougherty, Boeing vice president and program manager, KC-46 Tanker Program, hosted a ceremonial engine contract signing event today at Boeing’s Tanker Program Office in Mukilteo, Wash., for contracts previously awarded to Pratt & Whitney. The contracts support PW4062 engine purchases to power Boeing’s KC-46, the U.S. Air Force’s new airlift tanker. Pratt & Whitney is a United Technologies Corp. (NYSE: UTX) company.

“The PW4000 engine family that will power these aircraft has an exceptional track record of performance and reliability with numerous commercial customers operating the engine globally,” said Croswell. “We are confident these engines will continue to perform exceptionally well in a military application for Boeing and for our ultimate customer, the men and women in uniform.”

Two Pratt & Whitney PW4062 engines, each with a 94-inch fan blade diameter, will exclusively power each U.S. Air Force KC-46 aircraft. The program’s scope, if fully exercised, calls for as many as 368 PW4062 engines to be delivered between 2013 and 2027. Actual production engine procurement quantities will be determined over the life of the program as established by future purchase orders.

“Pratt & Whitney’s PW4062 engine offers the KC-46 program an engine that has proven performance, fuel economy, and durability – qualities that make it the clear choice to power the KC-46 Tanker,” said Dougherty. “These engines bring tremendous capability to the KC-46, which supports superior multi-role mission performance by delivering more fuel, transporting more passengers and cargo, and offering enhanced aeromedical capabilities to our United States Air Force customer.”

Pratt & Whitney has delivered more than 2,500 PW4000-94″ engines that have collectively logged nearly 110 million flight hours on commercial aircraft around the world. The PW4062 is the highest thrust model in Pratt & Whitney’s PW4000-94″ commercial engine family and is offered for both commercial freighter and military tanker applications. The two PW4062 engines that will power the KC-46 each deliver 62,000 pounds of thrust.

The PW4000 engine family has an outstanding safety record, high reliability, excellent performance and low maintenance costs. The PW4000-94″ family meets emissions and noise regulations, and offers superior fuel economy and maintainability. The PW4000-94″ engine operates commercially on the Boeing 767, MD-11 and earlier Boeing 747 models.

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

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

Austal Gets Their 2 Littoral Combat Ships As Well

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.

Two More Littoral Combat Ships for Lockheed and Marinette Marine

The U.S. Navy in late 2010 awarded contracts to the two teams building the new Littoral Combat Ships (LCS) for ten platforms each. These were Lockheed Martin (LMT) whose mono-hull design will be built at the Marinette Marine yard in Wisconsin and Austal America in Mobile, AL. Austal America is the U.S. subsidy of Austal (ASB) the Australian manufacturer of fast ferries. The Austal design utilizes a catamaran hull.

Prior to these contracts each team was building two of the small warships. They have received orders under the new contract for two more and last week the Navy issued Lockheed a contract worth about $700 million for two more. This brings the total of LCS under order from Lockheed to six.

The Navy ultimately plans to operate 30 or more of the ships. They are designed to be equipped with different mission packages depending on the requirements. This includes anti-air, anti-ship and mind warfare among others. Like their name implies they are optimized for in-shore activities such as anti-piracy operations in the Indian Ocean and special warfare.

Even though the defense budget is being cut the Navy remains committed to building substantial numbers of the ship. The fact that it is built in smaller yards allows such construction.

New Report Expands on Vital Role of Aerospace and Defense Industry to U.S. Economy — Press Release

New Report Expands on Vital Role of Aerospace and Defense Industry to U.S. Economy

Industry and Labor Join to “Stop the Clock” – Avoid Sequestration

ARLINGTON, Va., March 7, 2012 /PRNewswire-USNewswire/ — A new report commissioned by AIA demonstrates the irreplaceable impact the aerospace and defense (A/D) industry has on America’s economic and national security. Addressing the current economic crisis, the report emphasizes the industry’s support of more than three million American workers. With federal budget sequestration looming and DOD, FAA and NASA budgets facing severe cuts, the International Association of Machinists and Aerospace Workers and Aerospace Industries Association have escalated efforts to educate the public and elected officials on the need for alternatives to budget sequestration.

“The data speaks for itself, America’s aerospace and defense industry is a sector that punches far above its weight,” said AIA President and CEO Marion C. Blakey. “And it’s not just the numbers, which are impressive by themselves— it’s how this industry makes a difference in the lives of all Americans.”

The aerospace and defense industry booked $324 billion in sales in 2010 in every state of the union. The report by Deloitte details state-by-state A/D industry employment, revenues, taxes paid and more. And, following recent White House efforts to promote increased export opportunities for American business, the report details the industry’s position as the number one contributor to the country’s positive trade balance, at a net $42 billion.

A study conducted by Dr. Stephen Fuller of George Mason University in October, 2011, projects that more than one million American jobs could be lost as a result of defense budget cuts if the sequestration trigger is pulled. Unemployment would go up .6 percent and GDP projected growth would be cut by 25 percent.

“Sequestration threatens to devastate our industry’s contributions to America’s bottom line,” Blakey said. “This report sends the clear reminder that sequestration is a local, community issue, the jobs at stake are not here in Washington, D.C. Over 1 million American jobs and the security of our nation are at stake.

“The American aerospace worker is counting on voters and elected officials to take notice of what sequestration will do to our country,” said R. Thomas Buffenbarger, International President of the International Association of Machinists and Aerospace Workers. “As this new report highlights, sequestration will result in two indisputable outcomes – more unemployment and a country that is less secure.”

“Although the aerospace and defense industry will never stop defending this country, it’s capabilities to do so will surely be reduced if sequestration is not stopped,” said Blakey. “The countdown has begun and it is now up to us to stop the clock.”

The Budget Control Act of 2011 requires Congress to identify one trillion in savings. Failure to do so by the end of the year will result in a $600 billion cut to the defense budget on top of $487 billion in reductions it is already planning. In addition, cuts will impact FAA’s Next Generation Air Transportation Program and NASA funding to develop a new vehicle to go to the International Space Station.

The complete study, The Aerospace and Defense Industry in the U.S: A financial and economic impact study, is available at http://www.aia-aerospace.org/assets/deloitte_study_2012.pdf

(1) The Aerospace & Defense Industry in the U.S.: A Financial and Economic Impact Study – Copyright 2012 Deloitte
(2) Private sector job losses projected from $1 trillion sequestration level defense budget cut, $45.01 billion per year in defense spending on investment accounts (only) – The U.S. Economic Impact of Approved and Projected DOD Spending Reductions in Equipment in 2013 by Stephen S. Fuller, Ph.D., George Mason University (NOTE: Fuller study did not account for private sector job losses resulting from NASA and FAA budget cuts.)

SOURCE Aerospace Industries Association

Alliant Techsystems Faces Double Dose of Bad News

24 January – Updated to reflect the loss of the Lake City contract would be a blow to the company instead of “will be”.

Over the last ten years the U.S. military has consumed large amounts of ammunition. This includes not only small arms and support weapons like machine guns and mortars but also larger and more sophisticated weapons such as tank rounds, artillery shells, aerial bombs and guided missiles. Alliant Techsystems (ATK) has become one of the largest suppliers of ammunition and other pyrotechnics to the U.S. military during this time.

Up to last year they had contracts to run two of the largest government owned plants involved in this process — the one in Radford, VA that manufactures nitrocellulose used as the basis for ammunition as well as the one in Lake City, MO which makes small arms ammunition.

Last year the Army awarded the contract for Radford to BAE Systems (BAE:LSE) in the spring. Alliant protested that decision and the Army agreed to revise the competition and conduct another source selection. In October the new contract bids were received and again BAE won. Alliant protested that decision too.

Unfortunately the Government Accountability Office (GAO) announced today that it had denied that protest upholding the award to BAE. Alliant will lose a key contract that it had had since 1995. BAE’s 10 year initial contract also has multiple five year options that could make the contract last until 2036. The value could be well over a billion dollars if all options are exercised and production at Radford remains fairly steady.

Alliant will also face a challenge this year for the Lake City contract as BAE announced it will team with ammunition manufacturer Olin (OLN) to form a team to bid on that one. The Lake City contract could be worth up to $200 million a year to the winner. With the knowledge used for their successful Radford contract proposal BAE and Olin should have a good chance of winning the Lake City one as well.

The loss of these two contracts would be a hard blow to Alliant as they form a decent portion of their revenue each year. They have already seen declines in revenues the last few quarters and this would continue that negative trend. In 2011 their total sales to the U.S. Government, primarily ammunition and explosives, was about $3.3 billion. In their annual report the company stated that they “derived approximately 15% of our total fiscal
sales from the military small-caliber ammunition contract at Lake City”. The loss could be made up if their were other contracts to win or demand for their other products would increase. Unfortunately with the fighting winding down in Afghanistan and budget cuts predicted this might be hard.

Alliant may have recognized that the future might get tough as they moved their headquarters from Minnesota to the Washington D.C. area. In this they followed Northrop Grumman (NOC) which left California. It places them nearer Congress and the Pentagon and will facilitate engagement. This should aid them in keeping work and perhaps gaining new efforts.

All defense contractors no matter what the size are facing the same problems that Alliant is. Cost pressure on the Defense Department will make them look at new providers who may offer the best price meaning contracts will be harder to keep. There will also be less contracts due to the retrenchment from the recent fighting and budget cuts. If the 1990′s when a similar decline in defense spending is a guide then some contractors will have to adjust or face converting to new markets or just merging with other companies.

Army Orders More CH-47 from Boeing

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.

Photo from The California’s National Guard Flickr photostream.

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