May 19, 2020 | International, Naval
By: Sebastian Sprenger
COLOGNE, Germany — An agreement by two German shipyards to merge has dislodged a major legal roadblock in the multibillion-dollar program to build the Navy's MKS 180 large frigate-type warships.
The Defence Ministry's confirmation on Friday that German Naval Yards Kiel had dropped its protest against Dutch shipbuilder Damen, who was announced as the winner of the contract in January, was the final building block in a turbulent week for the European naval industry.
Days prior, the German shipbuilder said it would merge with Bremen-based Lürssen, giving the latter company the lead in building surface combatants together. Lürssen, for its part, is already part of the MKS 180 team as a subcontractor to Damen, and the Dutch said they would lean heavily on their German partner in building four initial vessels under the program.
Earlier this year, German Naval Yards Kiel lamented an unfair evaluation of its MKS 180 bid by the Defence Ministry, announcing it was prepared for a potentially lengthy legal battle. But just as litigious as the company sounded in its public proclamations, industry insiders said there appeared to be a willingness early on by all companies to come to an agreement outside of duking it out in court.
Damen, meanwhile, is expected to rethink the distribution of its MKS 180 workshare plan now that the former competitor is also onboard, albeit only by extension. Considerations to that effect would be a “logical next step,” one company official said.
“We are pleased with the consolidation of the German shipping industry under the leadership of the Bremer Lürssen Group,” a Damen statement read. “We look forward to intensive cooperation in the future. As Damen, we see this consolidation as a positive development.”
The company also believes the merger would “increase the chance of equal cooperation between Northern European countries in the field of naval construction — a development that we can only applaud in an otherwise unevenly distributed European playing field.”
That leaves the question of what will happen with ThyssenKrupp Marine Systems, another losing bidder in the MKS 180 race. The company previously reported to be part of the German consolidation talks, leading to reports that a single, national shipbuilding “champion” was in the works.
For now, however, TKMS is still weighing its options, as Reuters reported this week. In one scenario, the shipbuilder could merge with Italy's Fincantieri, with talks ongoing to that effect, according to the news service. It is also possible TKMS could join the other two German yards at a later time.
Whatever happens next, it appears a broader move toward naval-industry consolidation may be gaining steam in the wake of the Lürssen-GNY Kiel deal, according to experts.
“The cards are reshuffled,” said Sebastian Bruns, a naval analyst with the University of Kiel in northern Germany. “The consolidation is a significant step forward — and potentially not the final evolution in the Central European warship sector yet.”
July 6, 2023 | International, C4ISR
The SMART L MM/F will contribute to maintaining Swedish airspace sovereignty and will provide superior situational awareness at all times.
April 6, 2020 | International, Aerospace, Naval, Land, C4ISR, Security
Sean Broderick The Coronavirus Aid, Relief, and Economic Security (CARES) Act sets up several new programs and adjusts some existing ones—each aimed at pumping much-needed cash into specific sized organizations or industry sectors. Large portions of the U.S. commercial aviation industry got specific carve-outs in the $2 trillion economic relief package enacted March 27. While these loans and grants will help air carriers and other key industry players offset some financial strife caused by the COVID-19 outbreak, most suppliers will be looking elsewhere for money. Thankfully, CARES gives even the smallest companies options. Topping the list is the Paycheck Protection Program (PPP), a $349 billion pot of money designed to enable the U.S. Small Business Administration (SBA) to provide “expeditious” relief to eligible businesses, an interim final rule published late April 2 said. PPP provides SBA-guaranteed loans equal to up to 2.5 times monthly payroll costs, with a $10 million cap, that businesses can use to keep the lights on for two months. Eligible expenses include payroll, health care benefits, rent and utility payments, as well as some interest expenses. The loans come with a 1% interest rate, maximum two-year terms, and require no collateral or personal guarantees. But they will be forgiven if 75% or more of the funds are used to cover payroll. Among the PPP's wrinkles: only the first $100,000 in an employee's salary can be counted when calculating payroll expenses. Contractors are eligible to apply for their own relief, so their costs can't be counted at all. Also ineligible for counting in the payroll expenses: salaries of employees that live outside the U.S. Businesses can only apply for one PPP loan, so the SBA advises applying for the maximum eligible amount. Determining eligibility is straightforward: a business must find its North American Industry Classification System (NAICS) code, check the maximum employee size for its business category, and compare it to its staff size. While the general small-business benchmark is 500 or fewer employees, aerospace has many exceptions. The threshold for aircraft engine and engine parts manufacturing/maintenance (NAICS code 336412) is 1,500 employees. For aeronautical instruments manufacturing (334511), it's 1,250. If your business falls into multiple codes, the one that generates the most work determines your NAICS code. SBA has an online tool that walks through the process at www.sba.gov/size-standards. The PPP application window opened on April 3. The program's sheer size—SBA's cornerstone 7(a) loan program issued about $20 billion in loans in all of 2019—and its first-come, first-served basis triggered a massive, front-loaded surge of applications. The interim final rule contained key guidance that banks needed to service the program, which meant not all lenders were ready to start processing applications right away. But the situation was improving hourly throughout the day April 3 as more lenders came onboard. Another SBA program that CARES leans on is the Economic Injury Disaster Loan (EIDL). Capped at $2 million with a 3.75% interest rate, EIDLs can be used for a wider variety of expenses than the PPP. Unlike the PPP, however, they are not eligible for forgiveness. CARES also gives the U.S. Treasury Department the authority to make special loan allowances for medium-sized businesses, generally those that are too large for an SBA program and have up to 10,000 employees. Among the caveats: maintaining or restoring 90% of its equivalent workforce as of Feb. 1, 2020 within four months of the official U.S. declaration that the COVID-19 public health emergency is over. Further guidance from Treasury, including basics such as how to apply, are in the works. Some suppliers are eligible to apply for shares of the aviation-specific funds set aside in CARES. FAA-certificated repair stations are mentioned as being eligible for some of the $29 billion in CARES loans, specifically from the $25 billion pot allocated for passenger airlines. But the law says they should exhaust other available CARES funding options first. There is another pot of $17 billion in loans set aside for companies critical to national security. Neither the law nor Treasury defines the term, however, so eligibility remains unclear. If Treasury looks to the U.S. Department of Homeland Security's Critical Infrastructure guidance, aircraft and engine supply-chains would qualify, as would repair stations. Payroll grants for suppliers are murkier. CARES language has a $3 billion set-aside for contractors that both work for airlines and are on-airport. Many maintenance providers would seem to fit here, though Treasury will have the final say. Industry trade associations and legal experts working the issue are learning more by the hour. Their one common piece of advice for businesses: consult with an attorney or tax expert, determine what your business qualifies for, and weigh your options. Many businesses will qualify for multiple programs that cannot be mixed, creating an either/or choice that comes down to the various strings attached to each. https://aviationweek.com/air-transport/aircraft-propulsion/daily-memo-emergency-funding-suppliers-aftermarket-providers
November 19, 2018 | International, Aerospace, Naval, Land, C4ISR, Security
The Council adopted an updated list of projects to be undertaken under PESCO. There will be 17 new projects in addition to the initial 17 projects agreed on 11 December 2017 and formally adopted on 6 March 2018. The projects cover areas such as training, capability development and operational readiness on land, at sea and in the air, as well as cyber-defence. Background On 11 December 2017, the Council adopted a decision establishing Permanent Structured Cooperation (PESCO). PESCO enables EU member states to work more closely together in the area of security and defence. This permanent framework for defence cooperation allows willing and able member states to develop jointly defence capabilities, invest in shared projects, and enhance the operational readiness and contribution of their armed forces. The 25 member states participating in PESCO are: Austria, Belgium, Bulgaria, Czech Republic, Croatia, Cyprus, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Ireland, Latvia, Lithuania, Luxembourg, the Netherlands, Poland, Portugal, Romania, Slovenia, Slovakia, Spain and Sweden. Updated overview of the collaborative PESCO projects (table) Permanent Structured Cooperation (PESCO) - Factsheet https://www.consilium.europa.eu/en/press/press-releases/2018/11/19/defence-cooperation-council-launches-17-new-pesco-projects/