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  August 13, 2019 | International, Aerospace

  Could Textron Become Purer A&D Company, Or Be Sold?

  By Michael Bruno As a multi-industrial manufacturer, Textron sells many transportation vehicles, from military helicopters to UAVs and even snowmobiles and recreational four-wheelers. But a new corporate review may indicate the conglomerate could be looking to become an aerospace and defense (A&D)-focused company similar to other large rivals, according to analysts. Earlier this month, Textron announced it is reviewing strategic alternatives such as a sale or spin-off of its German Kautex business unit, which produces fuel systems and other functional components. Kautex operates more than 30 plants in 14 countries and generated more than $2.3 billion in revenue in 2018. “Kautex strategic review suggests Textron wants to become an A&D ‘pure-play,'” Cowen analysts Cai von Rumohr and his team said Aug. 9. “The thesis is that ‘new Textron' could command a higher [valuation] multiple closer to A&D pure-plays; and it would have optionality for merger and acquisition (M&A) or stock repurchasing to leverage its new product-driven growth.” The Cowen analysts said they think that if Kautex is disposed of, so could golf cart maker Textron Specialized Vehicles or other units in Textron's Industrial division. In turn, the company could use proceeds and money saved to bolt on smaller A&D businesses, or it could continue active share repurchases to lever benefits of expected growth from new products such as Longitude, Sky Courier, Denali and V-280. “A third possibility is that free of Industrial, Textron could be of interest to larger primes, who would bring more lobbying clout to V-280,” the analysts said. Buying candidates could be Boeing or General Dynamics, they added. Separately, a well-known adviser to the A&D industry recently told Aerospace DAILY that Textron would make a good acquisition target for other A&D players. “Over the years I've had my clients take a hard look at that one,” the consultant said. This person listed Boeing and Lockheed for possible top-level consolidation, although getting Pentagon and Trump administration approval could be more of a challenge than for other recent M&A deals. To be sure, Textron is already an aerospace-focused multi-industrial. According to Cowen, it is the leader in Class 1-5 business jets (which make up 24% of annual total revenue), with positions in helicopters via Bell (26%), defense systems (12%), and then industrial products (25%). Defense as an end-market accounts for 29%. But conglomerates are increasingly breaking up and those with A&D elements continue to focus on those businesses. United Technologies is working to spin off its elevators and air conditioning businesses while adding Raytheon. General Electric is divesting major units but favoring aviation. Honeywell International in recent years has spun off units to focus more on A&D and related businesses. One reason for the portfolio shaping is because of pressure from major investors who want companies to be more focused, in part so they can balance their own investment portfolios rather than relying on a company to try to play in various industries. Goldman Sachs is advising Textron on its review. Textron reiterated that no decision has been made and there are no assurances that the process will result in any transaction being announced or completed. The company has not set a definitive timetable for completion of its review of strategic alternatives and does not intend to make any further announcements related to its review unless and until its board of directors has approved a specific transaction or Textron otherwise determines that further disclosure is appropriate. https://aviationweek.com/business-aviation/could-textron-become-purer-ad-company-or-be-sold

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  February 16, 2018 | International, Aerospace, Naval, Land, C4ISR, Security

  Spain to double its military spending

  By Alejandro López 8 February 2018 Defence spending will double by 2024, Defence Minister María Dolores de Cospedal has told Spain's parliamentary Defence Committee. The defence budget will increase from 0.8 percent of GDP (€8.7 billion) to 1.53 percent (€18.47 billion). To limit popular opposition to war and anger against increased military expenditure, while austerity has decimated public services and made life more precarious for millions of workers and youth, Cospedal refused to publish the letter addressed to NATO outlining the increase, as she had initially promised. She claimed that part of the content was classified as secret. Secrecy also surrounds the real level of current military spending. According to the pacifist organisation Centre Delàs d'Estudis per la Pau, there is a whole swathe of military related expenditure that is excluded from the defence budget. If social security, pensions and insurance for the military, missions abroad, state aid for military research and development at private companies, the budget of the militarised Civil Guards and NATO fees were included, then the true figure would stand at around €18.8 billion. By 2024, it will really be “the implausible figure of €28 billion a year,” the Centre declared. Spain's increase in military expenditure is in response to the agreement made at last May's NATO summit, under intense pressure from the Trump administration, for all NATO members to increase defence spending by 2024 to 2 percent of GDP. Cospedal admitted that the increase to 1.53 percent fell short of NATO's objective, but insisted it would “facilitate the achievement of that horizon in future years” and was in line with targets set by other European countries. An idea of the scale of the upgrade and renewal of the military can be gathered from the list of new equipment that will be purchased. Included are 348 new Piranha 5 armoured infantry vehicles, which are designed for close combat situations, five F-110 frigates, four S-80 submarines, three Multi Role Tanker Transport refuelling aircraft, 23 NH-90 helicopters, a Reaper unmanned aerial vehicle (UAV) and a new training aircraft. In addition, the army will acquire a new Command and Control System and the renovation of its barracks, 17 Chinook helicopters will be modernized, and Spain will contribute funds towards the replacement for the F-18 fighter jet. Cospedal confirmed that the military spending in Spain's participation in 17 military missions around the globe last year was €835 million, 8.2 percent more than the previous year. Spain will participate in the European Union's (EU) Permanent Structured Cooperation (PESCO) on security and defence and will head the Command and Control System for EU Missions and Operations. PESCO was agreed last November by 23 of the EU's 28 member states “to jointly develop defence capabilities and make them available for EU military operations.” Spain's commitment to PESCO reflects the attempt by the ruling elite in Spain and in Europe to defend their economic and military positions vis-a-vis actual and potential competitors, in a situation threatened by Brexit and the Trump administration's “America First” policy. The Spanish government is attempting to straddle the contradictions of supporting both the German-led PESCO and the US-led NATO, two militarist projects that are incompatible in the long term. This was reflected in a resolution proposed by the government to be debated in an upcoming parliamentary session, which calls for improvements to EU-US relations in the sphere of defence, while concluding that “Europeans must assume more than ever before the responsibility of our own security.” The growth of Spanish militarism, as elsewhere globally, is the response of the ruling class to rising inequality, the deepening economic crisis and the growing conflicts between the major powers. Its aim, as recently expressed in the new US National Security Strategy, is the conquest of new spheres of influence, markets and raw materials—above all in conflict with Russia and China—and to deflect social tensions outwards. The main obstacle for the Spanish ruling class is the population's traditional hostility towards the military. This was recently revealed in the attempt to open a debate to re-impose conscription, following the example of France under President Emmanuel Macron. All the main dailies published articles and opinion pieces bemoaning the population's hostility to such a measure. The pro-militarist senior researcher for the Real Instituto Elcano, Félix Arteaga, complained to El Mundo, “Raising it [conscription] here would be political suicide, first because there is no military need to justify it, and second, because the concept of obligation is not liked by Spanish society. There is no mentality or culture of national identity and, of course, no one believes that you should lose your life for the defence of the country.” The ability of Spain's ruling elite to pursue its military ambitions is to a large extent due to the role of the pseudo-left Podemos, which has been virtually silent on these developments or has openly endorsed them. Last month Podemos covered up for increased Spanish intervention in Mali, where an EU “Training Mission” still continues five years after jihadist groups overran the north of the country in 2012, prompting a wave of refugees. Thousands attempted to cross the Mediterranean to Europe, and many drowned. On January 24, Cospedal appeared before the Defence Commission to get belated authorisation for approving Spain's taking over control of the mission and sending in more troops on January 9. She warned the commission that increased involvement in the EU intervention was “fundamental” and that North Africa was “a strategic place” for Spain. Juan Antonio Delgado, the Podemos spokesperson for military affairs, complained that Cospedal had “broken the law” by sending in the troops before parliamentary approval. He revealed, “I was in Mali three months ago and I learned that Spain would take over the operation,” before asking Cospedal, “In that time has there not been time to ask for authorization?” The obvious question is why Delgado himself did not pursue the issue... and when it came to the vote [on authorisation] at the commission he merely abstained. Even more explicit was Podemos General Secretary Pablo Iglesias, who attacked Cospedal from the right over the death of a pilot killed in a jet crash last October. He told her, “Patriotism is defending the rights of the professionals of our Armed Forces. It is shameful that in this country some who fill their mouths talking about our homeland do not respect the rights of workers who are here to protect us all and whose lives cannot be endangered.” Such statements prove Podemos is a pro-war party, offering itself as a reliable political platform for Spanish militarism. Since its foundation, Podemos has created branches in the army and made an explicit effort to articulate its main demands. Former Chief of the Defence Staff Julio Rodríguez Fernández has stood as a Podemos candidate in recent parliamentary elections and is the general secretary of Podemos in the municipality of Madrid, where he will be the party's main candidate in next year's elections. https://www.wsws.org/en/articles/2018/02/08/spai-f08.html

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  December 26, 2019 | International, Aerospace

  NATO declares space ‘operational domain,’ but more work remains

  By: Bradley Bowman and Andrew Gabel The North Atlantic Treaty Organization recently declared that space is an “operational domain” for the alliance. Though much work remains to actualize an integrated NATO space posture, the affirmation is an important benchmark as NATO scrambles to meet rapidly evolving space and counter-space threats. Today, space-based assets are an Achilles' heel of U.S. military operations, representing a vital enabling mechanism upon which success often depends. In addition, great power adversaries could target civilian space assets to wreak havoc on the homeland in ways that redound far beyond the military realm. America's enemies have taken notice. “Foreign governments are developing capabilities that threaten others' ability to use space,” according to a 2019 U.S. Defense Intelligence Agency assessment. “China and Russia, in particular, have taken steps to challenge the United States.” Russia has spent decades building up its counter-space arsenal, from cutting-edge electronic warfare capabilities to probable ground-launched anti-satellite weapons. Moscow believes that “achieving supremacy in space” can enable victory in future conflicts. China's People's Liberation Army apparently agrees. Beijing has also identified space superiority — and space denial — as essential planks in its modern “informatized” military strategy. Indeed, China “continues to improve its counterspace weapons capabilities and has enacted military reforms to better integrate cyberspace, space, and EW into joint military operations,” the DIA assessment read. These threats are already materializing. Russia is suspected to be behind nearly 10,000 GPS spoofing incidents — affecting over 1,300 civilian navigation systems — according to a report by C4ADS released last June. China has also targeted America's vulnerability in space, notoriously hacking U.S. weather systems and satellite networks in 2014, after testing an anti-satellite weapon in 2007, which generated a cloud of hazardous space debris. Fortunately, NATO is beginning to respond. In June 2019, NATO approved a new space policy, which NATO Secretary General Jens Stoltenberg has described as an acknowledgment of NATO's reliance upon satellites for a range of fundamental military functions. These include, for example, communications, tracking, early warning, surveillance and navigation. Though only a “framework” for now, it is an important start. Today the U.S. shares space situational awareness data with its NATO allies and vice versa. Yet, there is potential for deeper collaboration in additional areas such as hosted payloads on satellites and communications. And while there is disagreement within the alliance with respect to space weaponization, this tension should not prevent the alliance from forging ahead on a number of important initiatives. Examples include general space-asset resilience (including within the electromagnetic spectrum), space-reliant communication, synchronized threat warning, command and control, and surveillance and reconnaissance. A space sensor layer, for instance, will be critical to tracking and intercepting Russian hypersonic missiles, an emerging threat against which there is currently no adequate defense. NATO must take swift action to redress these areas of exposure. But how? To begin with, NATO could publish a publicly available strategy document analogous to the U.S.-produced National Defense Strategy. This would provide multiyear strategic signposts and, because of its public availability, outside accountability. As proposed by others, NATO could also run annual “Space Flag” exercises akin to the current “Red Flag” exercises, which today help hone large-scale, multinational joint air operations. “Space Flag” could likewise be used to systematically develop and refine space contingencies against red cell adversaries. In addition, NATO could explore co-developing NATO-specific space assets from inception, tailored for NATO's mission and permanently integrated into NATO's command structure. The United States and Europe's combined space experience and infrastructure is a comparative advantage vis-a-vis Russia and China. If put to proper use, it could give NATO's space dominance efforts a significant leg up. Finally, NATO could entertain the formation of a combined NATO-operated space assets pool, to which existing current member states could contribute existing capacity. A study conducted by the NATO-sponsored Joint Air Power Competence Centre found it “demonstrably feasible” to complete multination, multi-satellite constellations. The study suggested such an approach could emulate NATO partnerships related to the E-3A, C-17 and A-400M platforms but would be “potentially conducive to additional flexibility and innovation.” The same report cites the Disaster Monitoring Constellation, or DMC, program — an existing multinational satellite-monitoring program used for disaster relief — as an existing example of effectively marshaling space assets. DMC's shared capabilities “reduce cost, enable sharing, and can be upgraded and expanded to address emerging concerns.” So, too, might a NATO constellation. Officially recognizing space as an operational domain and establishing a framework for a unified space policy are laudable steps forward for NATO — necessary to counter both present and future threats. But waking up to the threat is not enough. Now is the time for tangible and urgent collective action to secure the ultimate high ground. Bradley Bowman is senior director for the Center on Military and Political Power with the Foundation for Defense of Democracies, where Andrew Gabel is a research analyst. https://www.defensenews.com/opinion/commentary/2019/12/16/nato-declares-space-operational-domain-but-more-work-remains