April 18, 2024 | International, C4ISR
Sage Geosystems geothermal initiative for US Army
Sage Geosystems, a US-based geopressured geothermal systems (GGS) developer, is set to commence a new geothermal initiative for the US Army.
May 21, 2020 | International, Aerospace, Naval, Land, C4ISR, Security
As Manufacturing Reshapes After COVID-19, Size Will Matter
Michael Bruno May 20, 2020
If you like the cadre of big aerospace and defense companies now, you are going to love them later. Among the major trends the novel coronavirus is expected to catalyze within aerospace and defense (A&D) manufacturing is that the big will get bigger by gobbling up others or taking back more work.
In the next few years, vertical integration should pick up momentum, according to several executives and consultants. After decades of OEMs, primes and top-tier companies outsourcing major work on their programs, many see the pendulum swinging back to bringing more of it in-house.
“We've already seen signs of more vertical integration coming through the industry and potentially where some of that could be accelerated as we work through the crisis,” says one advisor.
Boeing started this a few years ago as it insourced avionics and other niche segments. Major consolidation picked up last year with the mergers of Raytheon and United Technologies Corp. and L3 Technologies and Harris Corp. Now, whether it be protecting profits or securing supply, the reasons to own more of the work are burgeoning as industry is refashioned in the COVID-19 crisis.
For starters, aerospace suppliers are facing diminished economies of scale but a greater share of fixed-cost in production, with a likely loss in profitability and competitiveness, say Roland Berger advisors Robert Thomson and Manfred Hader. So-called organic top-line increases, through insourcing and acquisition of additional work packages, are possible but only to a limited degree. A fixed-cost reduction likewise is only feasible up to a certain level due to equipment and overhead structures. So consolidation is an important lever to consider.
Part and parcel to that will be the financial distress into which suppliers in Tier 2 and below fall—and the opportunity to roll them up.
Top CEOs are watching. Speaking May 13 to an investor conference, Honeywell International Chairman, CEO and President Darius Adamczyk cited an inflection point. “For a couple of years now, I've been talking about how it is a seller's market, not a buyer's market,” he told Goldman Sachs. “But that calculus may change in the second half of the year, and I think it could become a bit more of a buyer's market, and the valuations may be better and different. That's something that we want to partake in.”
Feeding the phenomenon could be a desire to bring supply closer to home, both for reliability and geopolitical reasons. Suppliers overseas once were revered for their low-cost footprint, but suddenly they are seen as vulnerable to pandemics, economic stress and global trade wars. In turn, consultants expect industry leaders to take another look at favoring local regions.
Even in the defense realm, which for now is considered safer during this downturn, there is talk of larger firms becoming even more powerful. “Large pure-plays should come through the pandemic relatively unscathed but may be looking at lower spending growth outlooks,” Capital Alpha Partners Managing Director Byron Callan noted May 13. “Mergers and acquisitions may thus be more important in delivering growth—even though it's not organic growth—in 2021-25.”
So where to look for vertical integration and consolidation from the top? Clues are already emerging, according to advisor presentations. First, look at niches where top suppliers already are prevalent—environmental and flight-control systems, landing gear, electrical power and interiors—and others where they are not there yet, including maintenance, repair and overhaul, logistics, aerostructures and engines.
Next, look at the supply base from the perspective of a top supplier. Who is distressed or drawing down credit lines? What revenue mix do certain potential targets have—e.g., commercial vs. defense, products vs. services or aging vs. next-generation platforms?
Finally, consider where the new nucleus of consolidation will be. Will more “super Tier 1s” such as Raytheon Technologies emerge, or will conglomeration occur among Tier 2 and 3 providers? The first would allow rationalization of capacity for detailed part production from Tier 1 to 3, for instance, with the super Tier 1s able to secure through-value-chain control and prevent subtier supplier failure, according to Roland Berger. The latter likely would be opportunistically driven rather than following any overarching industry logic.
For smaller suppliers, the questions are more concise, as one consultant says. Do you want to be a buyer, a seller or risk it as is? A simpler question, for sure, but no less difficult to answer.
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October 3, 2018 | International, Aerospace
Lockheed to provide Hellfire II missiles for the Netherlands, Japan
By Stephen Carlson Oct. 2 (UPI) -- Lockheed Martin has received a $631.8 million foreign military sales contract to sell the Netherlands and Japan Hellfire II missiles. Work on the contract, announced Monday by the Department of Defense, will be performed in Orlando, Fla., with an estimated completion date of September 2021. Army fiscal 2017 and 2018 foreign military sales and other procurement funds in the combined amount of $631.8 million were obligated at the time of award. The Hellfire II is the primary air-to-ground short-range precision guided missile for U.S. helicopters and unmanned aerial vehicles and is in service with many other nations. It has been produced in ground- and ship-launched models as well. The Hellfire uses a laser-guidance system that can either be directed by a laser targeting pod on the launching aircraft or a separate laser designator used by ground forces or other aircraft. A variant used by the AH-64 Apache Longbow uses a radar and inertial guidance system that utilizes a fire-and-forget capability which does not require continuous lock from the launching helicopter like the laser version does. The Hellfire was designed primarily as an air-launched anti-tank weapon and has been in service since 1984. It has seen widespread use in Iraq, Afghanistan and other theaters as a general precision strike weapon. It has also been the main weapon used by unmanned aerial vehicles in the Department of Defense and Central Intelligence Agency's targeted dronestrike program. Over 15,000 have been used in conventional and targeted attacks since 2001. https://www.upi.com/Defense-News/2018/10/02/Lockheed-to-provide-Hellfire-II-missiles-for-the-Netherlands-Japan/2961538484205/
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September 26, 2018 | International, Aerospace
US Air Force turns to data analytics to solve B-1, C-5 maintenance challenges
By: Valerie Insinna WASHINGTON — The U.S. Air Force is making changes to the way it sustains the B-1B Lancer bomber and C-5 Super Galaxy cargo plane, moving to a maintenance approach that will allow it to use data analytics to predict problems, the acting head of Air Force Materiel Command said. Both the B-1 and C-5 fleets transitioned to a conditions-based maintenance model last month, Lt. Gen. Robert McMurry, commander of the Air Force Life Cycle Management Center, told Defense News in a Sept. 18 interview. “Given the aging fleet situation that we have, we probably need to be using data better to take care of it — which is a drive toward what most everyone right now is saying is the right way to manage fleet sustainment, which is through condition-based maintenance and data analytics,” he said. “So we're trying to bring that on.” The approach — which involves using algorithms to predict the need for repairs rather than waiting for a part to break — is a standard practice in the commercial airline industry to help reduce maintenance-related delays or cancellations, but has been less common in the Air Force. AFMC determined it needed to make a greater push toward conditions-based maintenance as a result of servicewide reviews triggered by rising concerns about the number of aviation-related mishaps. The first review, directed by Air Force Chief of Staff Gen. Dave Goldfein, involved a one-day standdown that would give flying and maintenance units a chance to communicate potential safety concerns up the chain of command. Gen. Ellen Pawlikowski, then the head of AFMC, also directed the organizations under her command, like the Air Force Sustaiment Center, to evaluate its own data. The reviews have since concluded, with the Air Force finding “two systems ... where high risk was accepted,” said McMurry, noting that “operational security does not allow us to identify them.” “Our process is dealing with those responsibly,” he added. The B-1 and C-5 were chosen as pilot programs for the conditions-based maintenance approach because they are sustained by airmen and have older, relatively small inventories, making for a more manageable data set. But the planes have something else in common — a recent history of well-publicized mishaps. The C-5 has sustained a number of nose landing gear malfunctions that led to a standdown and maintenance assessment in 2017. But despite a fix being put in place, there have still been problems with the gear, such as a March 2018 event where one C-5 landed on its nose at Joint Base San Antonio-Lackland, Texas. Meanwhile, the B-1 fleet was temporarily grounded in June after a safety investigation board found problems with ejection seat components while investigating a May 1 emergency landingwhere the ejection seats did not deploy. Full article: https://www.defensenews.com/digital-show-dailies/air-force-association/2018/09/25/air-force-looks-to-data-analytics-to-help-solve-b-1-c-5-maintenance-challenges/