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New Air Force Planes Go Directly to ‘Boneyard’

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All Good Things Must Come to An End: Boeing Begins Winding Down C-17 Workforce

The Boeing (BA) C-17 Globemaster III has been one of the most successful military transport aircraft of recent time. Originally designed and manufactured by McDonnell Douglas in the early Nineties as a replacement for the C-141 Cold War era aircraft when Boeing merged with the California aerospace giant they took over production of this key aircraft. The U.S. Air Force has taken delivery of over 200 C-17 and there are several more in production at the Long Beach facility.

Unfortunately one of the areas that the Obama Administration targeted for cuts as part of their defense spending reforms was the C-17 program. They were not the first to do this as the Air Force had an acquisition objective of less then 200. Congress against the wishes of different defense secretaries consistently added C-17 aircraft production and support to the budget to get to the current planned quantity of around 220. Critics said this was only due to the fact that up to 50,000 people worked on the program across the United States and the additional aircraft were pure pork. Supporters countered that strategic airlift was critical to support U.S. operations in Iraq, Afghanistan and world wide.

This was continued in the 2009 defense supplemental and 2010 budget but with the 2011 budget this ended. There were no more C-17 aircraft to be ordered by the U.S. military.

Boeing has been able to sell the aircraft to some overseas customers. Currently the aircraft is operated by the United Kingdom, Australia, NATO and Qatar. The United Arab Emirates has entered into a contract to buy six aircraft and Kuwait one. India is considering the aircraft to supplement its fleet of Russian made IL-76 transports but right now that is the only major contract pending.

Because the future number of aircraft is limited right now Boeing announced yesterday that over one thousand employees would begin losing their jobs. Workers in Long Beach; St. Louis; Mesa, Arizona and Macon, Georgia will be affected.

In their press release Boeing said: “as the company moves to a new production rate of 10 C-17s per year. Boeing will reduce the production program’s work force by approximately 1,100 jobs through the end of 2012. The company delivered 14 C-17s in 2010.

The move to the new production rate, announced in February 2010, will be completed this summer and result in the elimination of the second shift at the C-17 final assembly facility in Long Beach. The lower production rate is designed to extend the line as Boeing works to capture additional international orders.”

Boeing hopes that new orders will materialize while they slow the production line down to continue it for several months. If the orders do occur they can adjust the speed of line to meet their obligations. If they do not the production rate will slow to zero and thousands more workers will lose their jobs.

Boeing has made it clear in the past that the Long Beach plant which is a legacy of McDonnell Douglas will be closed and not transferred to other Boeing aircraft projects.

All military acquisition programs have a definitive objective for how many systems will be purchased. The C-17 is no different then any other and eventually that number would be reached. Then production will stop.

Without any new major transport program on the horizon for at least the next several years there is no new system for Boeing to bid on and utilize their work force and production capacity.

The C-17 will remain a key system for the Air Force and Boeing will continue some business supporting it but large scale production is finished.

Photo from tony.evans flickr photostream

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Boeing to Begin LRIP of AH-64 Apache D Block III

The U.S. Army awarded Boeing (BA) a contract to begin the Low Rate Initial Production (LRIP) of the AH-64 Apache D Block III. The value of the contract is about $247 million.

LRIP is the part of the acquisition cycle after completion of the Engineering and Manufacturing Development (EMD) phase. LRIP is normally ten percent of a program’s planned quantity and allows the contractor and the service the ability to demonstrate a proper production line and that the system is able to meet the requirements of the user. LRIP also allows gathering of information to support the full production of the aircraft and also begin the process of maintenance and support.

The decision to proceed to LRIP was given on 7 October at a Milestone C Defense Acquisition Board (DAB) meeting.

The AH-64D Block III is an incremental upgrade of the Apache which has seen heavy use in Iraq and Afghanistan providing direct support of U.S. and Allied troops. The AH-64 is not only flown by the U.S. Army but also the United Kingdom and the Netherlands in Afghanistan. With its 30 mm cannon and Hellfire missiles as well as unguided rockets it provides precision strike missions.

The U.S. Army is hoping to acquire almost 700 of the advanced attack helicopter. The Block III adds new rotor blades and transmission but its biggest upgrade is in the area of communications and data links. One requirement of the Block III is to be able to control Unmanned Aerial Vehicles (UAV) to improve ISR capabilities.

The Block III represents a significant upgrade and the decision to enter LRIP rewards the hard work of the Project Office and Army aviation.

Boeing will manufacture the new aircraft at their facility in Mesa, AZ.

Photo from SoloXis’ flickr photostream.

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Selling Overseas To Make Up For Coming U.S. Defense Cuts

Arizona is a top beneficiary of defense dollars. This is primarily due to Raytheon and Bell activities in the state. Raytheon makes missile defense systems and Bell helicopters. Now with the possibility that Obama’s cuts to the defense budgets starting in 2010 and out the companies there are looking overseas for work.

Unfortunately this will be the business plan for all defense contractors if their is a significant contraction in U.S. defense spending. The focus will be on selling systems and support to Asian, South American and Middle Eastern companies. India, Brazil, the U.A.E. and Qatar have already made major investments in U.S. and European equipment and there are several major contracts coming. In 2008 the U.S. already captured two-thirds of the market but overall purchases were the lowest they had been since 2005. If this trend continues due to the global downturn in the economy there may be less opportunity for these sort of sales.

These trends may lead to further consolidation of the defense industry in the U.S. and abroad as domestic and foriegn markets may not be able to support the amount of business built up since 2001 primarily by the United States. This will be the most important factor facing the industry which has not seen this situation since the early Nineties and the end of the Reagan arms build-up.

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Navy Awards Raytheon Contract for More Tomahawk Production

The U.S. Navy gave Raytheon a contract worth over $200 million for 207 new Tomahawk Block IV missiles. AzStarBiz reports that a good portion of the work will be carried out in Tucson. The award is a further option to an existing contract that Raytheon has had for several years. The Tomahawk can be launched from either surface ships or submarines and carry out precision strikes on ground targets. The missile is also used by the Royal Navy. The Tomahawk was used heavily in the first Gulf War but due to the proliferation of other precision strike systems launched by aircraft such as the GPS guided JDAM.

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Marines order more rockets and their launchers

Talley Inc, owned now by the Norwegian company Nammo, won a contract from the USMC to develop a launcher for 83mm rockets. The current system has been in use since 1984. The ammunition, currently produced by Talley, will remain the same, but a new system for firing the rockets from a Marine’s shoulder will be developed. The contract is for an initial buy of 146 launchers and 900 rounds of ammunition. Talley has produced over 40,000 rounds of this type. Nammo purchased the company last year as a way in to the US defense market.

See The Arizona Republic business site, here, for more on this contract.

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Future Combat Systems (FCS) technology acceleration good to Arizona

This article describes the economic effect of the Army decision to begin pushing components of the multi-system Future Combat System (FCS) out-the-door faster. Due to this decision several hundred million dollars are flowing to Arizona companies earlier then originally planned by the Army. The two systems with the most effect are the non-line of sight missile system that uses a box launcher with integrated fire control and several unmanned systems. The Army benefits two ways by this type of decision; first, they get needed technology upgrades into the field earlier; and secondly they get testing under real world conditions.

Picture by Derek Farr

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BAE grows in the US

This article discusses the effect BAE has had on Phoenix, AZ. It also illustrates how the non-US company has grown through the acquisitions of US companies and has gained more and more US defene business. In Phoenix alone the number of BAE employees has tripled in the last five years or so, and the company has been buying facilities and companies. The article also shows how some in Congress feel a British company is better than a joint German and French, making it easier for BAE to continue to gain work in the US.

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Arizona Democrats write letter in support of Boeing bid for KC-X

January 11, 2008 by · Comment
Filed under: Alabama, Arizona, Boeing, production program, U.S. Air Force 

Several of the Democratic members of the Arizona State House sent a letter to DoD and the Air Force in support of Boeing being awarded the KC-X new tanker contract arguing that it would protect jobs in the state.. See The Daily Dispatch here for more. The Air Force is considering proposals from Boeing and Northrop Grumman, although the Northrop deal would see Airbus build the tankers in Mobile, AL. For more on the KC-X program see this.

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Arizona Republic surveys defense spending in state

January 6, 2008 by · 2 Comments
Filed under: Arizona, Federal Budget Process 

The Arizona Republic writes here about the defense industry in the state. It highlights that the steady growth in Federal dollars flowing to the state has leveled off a little. See the article here. Arizona was 6th overall in value of defense contracts received, while California came in first. The classic quote from the article is this: “Defense powerhouse Raytheon Co. in Tucson, a missilemaker, is looking beyond the current wars. Louise Francesconi, president of Raytheon’s Missile Systems, is working to move the company into new businesses such as space and lasers to absorb a reduction in wartime spending.” It is always good to be looking forward to future wars.

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