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August 14, 2020 | International, Land

AM General CEO on acquisition by a private equity firm

WASHINGTON ― KPS Capital Partners is acquiring Humvee-maker AM General, the private equity firm announced last month, marking a new chapter for the South Bend, Indiana-based vehicle maker.

AM General President and CEO Andy Hove will continue to lead the company, and KPS Partner Jay Bernstein said the firm would continue to build on the ubiquitous Humvee, leveraging the company's “research, technology, innovation and new product development, as well as its heritage and iconic brand name.”

The Humvee appears to have some growth ahead. For one, U.S. Army budget documents call for $1.5 billion through 2025 to pay for modernization of its fleet of High Mobility Multipurpose Wheeled Vehicles and their up-armored variant. That can include replacing major components, applying new technologies or replacing vehicles entirely. After the Army reaches its procurement objective for the Joint Light Tactical Vehicle, made by Oshkosh, it will have an enduring requirement for 54,800 Humvees.

Otherwise, AM General ― which has advertised both its Brutus 155mm and Hawkeye 105mm mobile howitzers ― is expected to participate in the Army's mobile howitzer shoot-off evaluation at Yuma Proving Ground, Arizona, next year.

Meanwhile, the Army is expected to complete a new tactical wheeled vehicle strategy in fiscal 2021, which has thus far received congressional support, per the House and Senate versions of the annual defense policy bill.

Hove, who has said KPS will continue to execute AM General's existing strategy, spoke with Defense News on Aug. 6. This interview has been edited for brevity and clarity.

Private equity firm KPS Capital Partners is in the process of acquiring AM General. At this preliminary stage, what would you say are KPS' plans and vision for the company?

I think [KPS partner] Jay Bernstein represented it in his quote in the announcement that they feel really good about the capabilities of AM General and the strategy we've been executing. We've discussed with them where we can go. They're confident in our business and the growth prospects of AM General. They feel good about and stand behind our strategy, and we're going to work together with them.

Will the company focus more on the Humvee, or do you see it becoming more flexible? What is the future for the Humvee? Who are its customers these days?

To say we're only focused on the Humvee today would not be a correct premise. We've made investments across the board, in base automotive systems, and then automotive systems that have a particular special use. Our core focus is in solving very complex mobility challenges for customers. So the Humvee has a great future. I would offer that you turn to not what I say about what the Army will do but what the Army says they're going to do on the Humvee fleet, which is to steadily and systematically manage a very large fleet by systematic replacement of that fleet and recapitalization of that fleet going forward.

They've been buying new-built Humvees to replace old Humvees over the last four years at a pretty heavy clip and have announced their intention to continue to do that going forward.

We're obviously going to focus on the Humvee because there's significant demand. It is today the world's leading military 4x4 in its class, and we build more of them than any other military vehicle manufacturer in the world, and especially more than anybody in our weight class.

That won't be the only thing we invest in. You can see our investments in the Hawkeye, which brings game-changing breakthrough technology [in relation to] how artillery systems are moved around and employed on the battlefield, together with a whole other range of implementing technologies such as autonomous navigation, off-board power and those kind of things. The U.S. Defense Department is an important customer, but a considerable portion of our businesses is global business, so we take a global view of how we solve mobility challenges for our customers around the globe.

The Army recently issued a request for information about replacing heavy trucks. Is that a potential opportunity?

We certainly feel like we have something to offer, a range of things to offer there, and that RFI's only been out for a couple of weeks. We'll will certainly take a closer look at that. We're also taking a look at the JLTV competition they announced back in February.

Defense News recently characterized AM General as “largely stagnant” since losing the competition for the JLTV in 2015 to Oshkosh. Do you want to push back at all to talk about AM General's time under McAndrew & Forbes?

The JLTV decision was 2015, and the four years since the announcement on the JLTV competition we've built more military vehicles than Oshkosh or any other military vehicle manufacturer by a long shot, and sold them to more customers around the globe than anyone else. I think that's far from being stagnant. There are a lot of adjectives you can apply to the company. “Stagnant” would not be the one I would apply.

Private equity firms will typically set up companies they buy for faster growth, and then potentially that'll lead to a future sale. Do you think that's something that might happen here, and what do you predict? Is there any indication of time horizons for KPS?

KPS has made a lot of smart investments, they have a pattern, but they're not going to be pigeonholed into a particular time frame for a next-step strategy.

https://www.defensenews.com/interviews/2020/08/13/am-general-ceo-on-acquisition-by-a-private-equity-firm/

On the same subject

  • Parsons acquires geospatial intelligence provider OGSystems

    January 10, 2019 | International, C4ISR

    Parsons acquires geospatial intelligence provider OGSystems

    By: Mark Pomerleau California-based Parsons Corp. announced Jan. 8 it has acquired OGSystems, which provides advanced technologies in geospatial intelligence, big data analytics and threat mitigation. According to a press release, the move follows “a series of strategic investments” and is the third acquisition by Parsons in the last 14 months. Terms of the deal were not disclosed. OGSystems' main customers include the National Geospatial-Intelligence Agency, the National Reconnaissance Office, and Special Operations Command. The company's VIPER Labs and Immersive Engineering techniques were the catalysts for deployment of geospatial systems and software, embedded system threat analytics and cloud engineering solutions, the release stated. “OGSystems will expand our position in critical markets, including space operations, cybersecurity, critical infrastructure, and beyond,” Carey Smith, Parsons' chief operating officer, said. “Parsons' existing artificial intelligence and cloud computing expertise will augment OGSystems' support for customers demanding more efficiency in analyzing overwhelming volumes of geographic imagery and data.” Parsons' last major acquisition, in May 2018, was Polaris Alpha, which provides innovative mission solutions for complex defense, intelligence, security customers and other U.S. federal government customers. Parsons noted at the time that its artificial intelligence, signals intelligence and data analytics expertise supporting defensive and offensive cybersecurity missions will be expanded by integrating Polaris Alpha's machine learning, data, video, multi-source analytics and automated reasoning technologies. Moreover, Polaris Alpha's portfolio of electromagnetic warfare, signals intelligence, space situational awareness and multidomain command and control technologies will “significantly increase the scale and scope of Parsons' capabilities and customer relationships.” “Parsons' strategy is focused on disruptive, differentiated technologies demanded in high-growth, mission-oriented programs in the defense, intelligence, and critical infrastructure sectors,” Chuck Harrington, Parsons' chairman and CEO, said following the acquisition of OGSystems. “The actionable intelligence that geospatial imagery and data analytics brings to Parsons' portfolio through OGSystems is a game changer. Whether informing our national security customers' mission planning or designing tomorrow's resilient smart city, Parsons now brings deeper intelligence expertise to the challenge.” https://www.c4isrnet.com/industry/2019/01/09/parsons-acquires-geospatial-intelligence-provider-ogsystems

  • Industrie : Lourds investissements chez Thales à Saint-Héand

    February 27, 2020 | International, Land

    Industrie : Lourds investissements chez Thales à Saint-Héand

    Par Stéphanie Gallo Triouleyre Créée par Pierre Angénieux en 1932, autour des zooms pour le cinéma et la télévision, puis rachetée en 1994 par le groupe Thales, l'entreprise de Saint-Héand dans la Loire réalise aujourd'hui 4/5e de sa production dans le secteur de la Défense. Elle vient justement de démarrer les livraisons de ses nouvelles jumelles de vision nocturne O-NYX à l'armée de Terre. Elle investit par ailleurs lourdement pour développer l'ensemble de ses activités. La Direction Générale des Armées avait notifié à Thales le marché des jumelles O-nyx fin 2017, la première livraison est intervenue il y a quelques semaines. Ces jumelles de vision nocturnes sont destinées à remplacer progressivement les jumelles Lucie qui équipaient jusqu'ici l'Armée de terre et qui étaient déjà fabriquées par Thales Saint-Héand (ex Thales Angénieux avant la réorganisation des sites Thales) dans la Loire. "Nous sommes partis d'un équipement dont nous disposions pour codévelopper avec la DGA et les utilisateurs. Nous sommes parvenus à des jumelles plus ergonomiques, plus légères (340 grammes NDLR) et plus performantes que celles qui équipent déjà les Forces Françaises", signale Delphine Cabaton, responsable commerciale du projet O-nyx. Plus de 3.500 paires ont d'ores et déjà été commandées. 15 000 unités sur 7 ans Le marché court sur 7 ans et devrait s'accompagner de 1 000 à 2 000 commandes par an, soit au total entre 10 000 et 15 000 équipements O-nyx fabriqués par le site ligérien du groupe Thales. Secret défense oblige, impossible de connaitre le montant du marché. En revanche, Bertrand Boismoreau, directeur d'établissement, souligne l'importance de cet accord : "Nous avons coutume de dire que lorsque l'Armée française investit un euro chez nous, la France gagne deux euros à l'export. L'Armée française a une réputation d'exigence absolue. Si elle commande chez nous, c'est un signal fort pour les armées du monde entier". Pour renforcer ses positions auprès de ce client de premier ordre, Thales Saint-Héand travaille d'ailleurs actuellement sur un appel d'offres de la DGA concernant de nouveaux équipements binoculaires. Elle avait déjà fourni depuis deux ans, 1 000 autres jumelles de vision nocturne aux forces spéciales et avait contribué depuis 10 ans au marché Félin (12.000 équipements de jumelles connectées). Des marchés conséquents à chaque fois et qui ont un impact sur le tissu économique régional puisque le site sous-traite 80% de la valeur de ses équipements. "La jumelle O-Nyx nécessite une douzaine de techniques de fabrication comme la plasturgie ou l'usinage mécanique. Nous nous basons pour cela sur l'expertise des PME locales", explique Benjamin Fournel, responsable d'industrialisation. Il cite par exemple Sagne, Modertech, HEF etc. A l'occasion du marché O-nyx, l'usine de Saint-Héand a décidé par ailleurs d'entrer plus fermement dans l'ère de l'industrie 4.0. Elle a ainsi développé des bancs de test, permettant notamment de caractériser la qualité optique de la jumelle. "Jusqu'ici, les opérateurs devaient vérifier la qualité de nos jumelles à l'oeil. C'est un travail fatigant et sujet à des variations de performance. Ces bancs de test automatisés permettent de simplifier le travail de nos collaborateurs et de fiabiliser la qualité de nos produits", se réjouit Benjamin Fournel. Le montant de l'investissement n'est pas communiqué. Croissance Thales ne communique pas non plus précisément sur les volumes d'activité de chacun de ses sites, mais Saint-Héand générerait un chiffre d'affaires de l'ordre de 100 millions d'euros, avec 350 salariés. C'est 20% et 50 personnes de plus qu'il y a deux ans. Le marché O-nyx contribue évidemment à cette progression mais Thales Angénieux se déploie par ailleurs sur d'autres sujets. Notamment sur les optiques cinéma, production historique pour laquelle elle est mondialement connue. Celle-ci représente aujourd'hui 20 à 25% de son activité. Plusieurs millions d'euros sont en train d'être investis par l'entreprise pour développer une nouvelle gamme d'optiques à focale fixe, marché sur lequel elle n'était pas, ou peu, présente jusqu'ici, privilégiant les zooms. "Les tournages de film nécessitent souvent des zooms et des focales fixes. D'autres acteurs étaient bien positionnés sur les focales fixes mais les nouveaux formats nous remettent sur la même ligne de départ. L'idée est de proposer aux cinéastes de pouvoir tourner l'intégralité de leurs films avec des produits Angénieux, avec en plus des fonctionnalités très différenciantes : nos appareils sont plus compacts, plus légers, avec des possibilités de personnalisation de filtres", expose le directeur d'établissement, Bertrand Boismoreau. Une gamme de 12 focales est en cours de préparation, sachant que "plusieurs millions d'euros d'investissement" sont nécessaires au développement de chacune des focales. Un investissement colossal donc mais qui devrait permettre à Thales Angénieux, sous 10 ans, de viser un marché complémentaire de 100 millions d'euros. Nouvelle ligne de production Enfin, le site ligérien va être encore renforcé dans les prochains mois. Le groupe Thales lui confie en effet la production de nouvelles caméras infrarouge pour le secteur de la Défense. Elles ont été codéveloppées avec un site parisien du groupe. Une nouvelle ligne de production est en cours d'installation. Elle sera inaugurée début avril. "Les investissements sont très lourds", signale Bertrand Boismoreau, sans pouvoir, là-encore, donner d'indication trop précise. A terme, "plusieurs dizaines de personnes" pourraient être recrutées pour assurer la production de ces nouvelles caméras, "en fonction de leur succès commercial". https://acteursdeleconomie.latribune.fr/strategie/2020-02-26/industrie-lourds-investissements-chez-thales-a-saint-heand-840652.html

  • Key Upgrades Mark 2021 As Turnaround Year For KC-46A

    January 19, 2021 | International, Aerospace

    Key Upgrades Mark 2021 As Turnaround Year For KC-46A

    Guy Norris As progress accelerates on a key visual system redesign, a wing refueling pod certification and the hopes for more international sales, Boeing believes its troubled KC-46A tanker program has finally turned a corner. Marking a shift away from more than three years of delays, challenges and frustration for the U.S. Air Force, the program's brighter outlook builds on two agreements announced between Boeing and the service last April. The first covered the redesign and retrofit of a fully compliant boom operator remote vision system (RVS), at no cost to the government, while the second released $882 million of withheld payments to Boeing for previous noncompliance in 33 KC-46A deliveries. “That was a real turning point, and it's been extremely collaborative since then,” says Boeing KC-46A Vice President and General Manager Jamie Burgess. “That's really been cultivated by the agreement that we reached on the new RVS system,” he says, acknowledging the change to the relationship with the Air Force. “For a while, we were at a bit of an impasse in terms of what needed to be done to address the Air Force's concerns. There's a lot of hard work left to go, but it's been a really long relationship now,” he adds. Boeing is working on a two-phase approach to correct the well-documented RVS deficiencies that were revealed during flight tests. These defects mostly center on the oversensitivity of the aft-looking camera system to direct sunlight, which led to image issues in the hybrid 2D-3D video feed to the boom operator. “The first phase is really just intended to address that distortion piece of it, and that's primarily a software change that's being implemented now,” Burgess says. The fix, dubbed the enhanced RVS, “digitally addresses the distortion around the edges of the picture,” he adds. The fix will also make viewing the system “more comfortable for the operator when looking through the 3D glasses,” says Sean Martin, KC-46A global sales and marketing leader, referring to the stereoscopic eyewear required for the system. “It makes the image more like what they are used to seeing in real life.” The second phase, and the subject of the Air Force agreement, is RVS 2.0. Described by Burgess as “a full technological refresh of the system,” the revised package will include new cameras, new displays, a light-detection and ranging (lidar) system and all new supporting computing infrastructure. The redesigned aerial-refueling operator station will feature much larger 40-in. displays compared with the current 24-in. screens, giving the position “much more of a kind of home theater feel to it,” Burgess says. The image will remain in 3D but will be presented in color and 4K resolution. The Air Force has also opted for a collimated mirror projection method over an LCD option, “so we are working with them to mature that design,” the manufacturer adds. In collaboration with the Air Force, Boeing completed the RVS 2.0 system readiness review in December and remains on track to hold the preliminary design review in the second quarter. The system is due to be fielded around late 2023 or early 2024. The redesign will also be provisioned for semi-autonomous or autonomous aerial refueling (AAR), satisfying a long-term capability vision of both the Air Force and Boeing. “The computing-system upgrade will be able to handle the processing for future automation,” Burgess says. “In parallel, we're working toward developing all of the computing algorithms that will be required to track the receiver [aircraft] using machine-learning-type software. We will feed that into our boom control laws, so that it can go find the receptacle on that receiver,” he adds, referring to the KC-46A's fly-by-wire controlled boom. The algorithm development work builds on the company's long-running collaboration with the Air Force Research Laboratory on autonomous refueling as well as other related efforts, such as the unmanned MQ-25 tanker for the U.S. Navy. “We have a lab now where we're developing those algorithms that we can move into KC-46 when the Air Force has a requirement for it,” Martin says. “We want to bring the capability to them, but we haven't received a requirement from them that says they need that. But we're working on it, and we're committed to it.” Boeing says the end is also in sight for another issue that has overshadowed the tanker development: the long-delayed certification of the Cobham-developed wing air-refueling pods (WARP). The wing-mounted pods, along with a centerline station, form part of the tanker's hose-and-drogue system, which can deliver up to 400 gal. of fuel per minute, compared with 1,200 gal. per minute for the boom. All KC-46As are provisioned at delivery to carry the pods, but in line with Boeing's initial decision to pursue both military and civil certification for the tanker and its systems, the aircraft cannot be operationally equipped with the system until the FAA approves the WARPs. The pods performed well during flight testing, but “the FAA has required a tremendous amount of testing in order to certify them,” Burgess says. “Similar pods have flown for years on other military aircraft, but they have never been FAA-certified.” Although Cobham seriously underestimated how much work would be required for FAA certification, Burgess says: “We're at the very end of that testing and are just about done.” FAA approval is expected for the pod by the end of the first quarter. Previously, all certification work related to pods was concerned with ensuring that carriage of such systems was safe and would not affect the control and safe landing of the aircraft. “Now we had to look at certifying it to operate, so all the components—such as the ram air turbine on the front of the pod—had to be cleared for safe use,” Martin adds. “That's been the challenge for them, and they've done a great job stepping up to it.” Another ongoing area of modification is revising a valve for the boom actuation system to correct a refueling issue specific to the Fairchild Republic A-10 attack aircraft. “The boom flies down and telescopes out to connect with the receiver aircraft, which pushes the boom up into a nominal refueling position,” Burgess says. At altitude, the A-10 with wing stores was only able to generate a force of about 650-lb. thrust resistance compared with the international standard of 1,400 lb. to which the boom was designed. “We're changing the actuation system to make it just require less force to push it up,” Burgess says. “That's currently going through the critical design review with the Air Force.” He adds that the first qualification units are now being assembled. “We're also building up for a big full-scale lab test, and so that's well underway.” Boeing is also preparing to design, develop and test a secure communications system, dubbed the Pegasus Combat Capability Block 1 upgrade, and expects to receive a contract for the enhancement package this year. The Air Force is studying which elements to include in the upgrade, and that puts the KC-46A on a path to play a potentially wider role as a battlespace communications node. But Boeing adds that a wing-mounted, podded, radio-frequency countermeasures system is not currently in the Block 1 suite. With 42 tankers delivered by the end of 2020 and the firm orderbook bolstered by a $1.6 billion contract for the sixth production lot covering an additional 12 aircraft, Boeing is focused on maintaining a smooth assembly flow despite the disruption from the COVID-19 pandemic. The process includes rigorous new quality controls introduced after a series of discoveries of foreign object contamination caused the Air Force to temporarily suspend accepting the aircraft in April 2019. “It's no secret that we realized that we had an issue as far as foreign object debris [FOD] on airplanes,” Burgess says. “We stopped the production line, and we stopped deliveries for a while and put in place a number of controls. There's a whole lot of work that goes on in the factory around what we call ‘clean as you go.' At the end of the shift, there is a cleanup to make sure that the airplanes that roll out of the factory are perfectly clean.” The decontamination focus continues when airframes are rolled from the factory into the nearby Everett Modification Center, where all the military equipment is installed. “We do a complete FOD sweep of the airplane when it enters and again when it leaves to go to the delivery center,” Burgess says. “The aircraft delivering today are very clean. It's been a big cultural shift for the program.” Production is currently split roughly evenly between commercial 767-300F freighters and KC-46A variants—a divide that sustains the line at about three airframes per month. With the latest order, confirmed on Jan. 12, Boeing is now on contract for 79 tankers out of an intended total of 179. The firm orderbook is expected to grow again to 94 when the Air Force awards the next contract for a further 15 aircraft under production Lot 7, which legislators approved in December. Although program delays held up initial deliveries to the Air Force until January 2019, Burgess says the subsequent flow of operational aircraft to four bases marks an unprecedented pace for any recent modern weapons system. “I'm not aware of any other major military program that's done this,” he adds. “We delivered 28 in 2019. We'll do 14 this year.” Boeing maintains the flexibility to introduce slots into the production skyline for international sales, the first of which is to Japan. The aircraft, the first of four that the Japan Self-Defense Force has ordered, is due to make its first flight sometime this quarter. The U.S. Congress has also approved the sale of eight aircraft to Israel, and Boeing is pursuing other prospects in Southwest Asia and the Middle East, particularly in Qatar. https://aviationweek.com/defense-space/aircraft-propulsion/key-upgrades-mark-2021-turnaround-year-kc-46a

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