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  May 13, 2024 | International, Security

  Black Basta Ransomware Strikes 500+ Entities Across North America, Europe, and Australia

  Black Basta ransomware-as-a-service (RaaS) operation has targeted over 500 private industry and critical infrastructure entities in North America, Eur

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  June 29, 2020 | International, Aerospace

  Turkey’s ‘chronic engine problem’ is harming defense projects, warn officials

  By: Burak Ege Bekdil ANKARA, Turkey — Turkey's inability to produce a fully indigenous engine is harming some of the country's otherwise successful domestic defense programs, according to industry and government officials. “We had it 15 years ago, we had it 10 years ago and we are still having it,” said a former defense industry chief. “It's our chronic engine problem.” A government procurement official agreed, telling Defense News that “at best the problem causes major delays, and at worst it can be an existential threat [to programs].” The Altay, a multibillion-dollar program for the production of Turkey's first indigenous tank, has long been delayed due to difficulties surrounding the engine and transmission used to power the new-generation tank. BMC, a Turkish-Qatari joint venture that in 2018 won the serial production contract for the Altay, said in October 2020 that the tank would be fielded within 24 months. The original target was to have the Altay in the field this year 2020. Today, procurement officials and industry sources say even 2022 is an optimistic deadline. Western countries with power pack technology, particularly Germany, have been reluctant to share technology or sell to Turkey for political reasons. “Lack of a feasible power pack [engine and transmission] is depriving the program of any sensible progress,” noted an industry source. Turkey also needs an engine for the new-generation TF-X fighter jet as well as indigenous helicopter models in the making. At the center of these engine efforts is Tusas Engine Industries, a state-controlled engine maker. TEI announced June 19 that it successfully tested its locally made TJ300 miniature turbojet engine, which the company produced for medium-range anti-ship missiles. The engine features a thrust rating of 1.3 kilonewtons. Company officials say the TJ300 engine's more advanced, future versions could power larger anti-ship cruise missiles and land-attack cruise missiles. Turkey hopes to power its anti-ship and land-attack cruise missiles with locally developed engines. “The effort is about ending dependency on imported designs,” a TEI official said. Turkey currently imports miniature air-breathing engines from Microturbo — a unit of French company Safran — to power its domestically developed cruise missiles. Separately, Turkey's Kale Group is developing a larger, albeit miniature turbojet engine called the KTJ-3200. It has a 3.2-kilonewton thrust rating, and will power the Atmaca and SOM missile systems. On a much bigger scale, Kale Group has ambitions to develop an engine to power the TF-X. In 2017, Kale Group and British company Rolls-Royce launched a joint venture to develop aircraft engines for Turkey, initially targeting the TF-X. But the £100 million (U.S. $124 million) deal was effectively put on hold due to uncertainties over technology transfer. In December, Turkish Foreign Minister Mevlüt Çavusoğlu said the government is keen to revive talks with Rolls-Royce. When asked for an update on negotiations, a Rolls-Royce spokesperson told Defense News: “We submitted an engine co-development proposal to Turkey, but the customer has not elected to pursue this to date.” A year before the Kale Group-Rolls-Royce partnership, Turkish Aerospace Industries — a sister company of TEI — signed a $125 million heads of agreement with U.K.-based firm BAE Systems to collaborate on the first development phase of the TF-X. Turkey originally planned to fly the TF-X in 2023, but aerospace officials are now eyeing 2025 at the earliest. TEI is also developing the TS1400, a turboshaft engine it intends to power the T625 Gökbey, a utility and transport helicopter developed and built by TAI. The Gökbey currently flies with the CTS-800A turboshaft engine supplied by Light Helicopter Turbine Engine Company, a joint venture between American firm Honeywell and Rolls-Royce. The Gökbey made its maiden flight in September. TEI says it successfully tested the “core” of its TS1400 turboshaft engine and plans to deliver the prototype to TAI in late 2020. But analysts remain cautious. “These efforts may eventually fail to materialize without meaningful foreign know-how,” said a London-based Turkey specialist. “Or they may come at costs not viable for mass production.” Andrew Chuter in London contributed to this report. https://www.defensenews.com/industry/techwatch/2020/06/26/turkeys-chronic-engine-problem-is-harming-defense-projects-warn-officials/

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  March 16, 2020 | International, Aerospace

  Opinion: How New ‘Predators’ Are Reshaping Aerospace Landscape

  By Antoine Gelain Behind the big aerospace and defense (A&D) primes like Boeing and Airbus and the “Super Tier-1s” such as United Technologies (UTC) and GE, a very different type of company is shaping the global A&D industrial landscape in a way that may be even more impactful than high-profile UTC-Raytheon-type mergers. Companies such as Teledyne, TransDigm and Heico are the spearheads of a breed of A&D players dedicated to “components and subsystems,” with explicit and perfectly executed “horizontal” external growth strategies. Their track records are impressive: These three companies—with combined revenues of more than $10 billion—have collectively made close to 200 acquisitions and delivered more than 20% average annual growth rate in either profitability or share value over the last 20 years. Thanks to such returns and skyrocketing market valuations, they are able to outbid most other contenders when going after an acquisition target by leveraging the so-called “accretive effect.” This effect boosts the acquiring company's earnings per share, as long as the price paid for the target as a ratio of the enterprise value (EV) over its earnings before interest, taxes, depreciation and amortization (EBITDA) is lower than that of the acquiring firm. As it happens, the current EV/EBITDA ratio of the three above-mentioned companies stands at more than 18 (see graph). By comparison, most other A&D companies have an EV/EBITDA ratio in the 9-13 range. Such “buying power” is enhanced by operational synergies (for instance, in corporate overheads, sales and marketing), which immediately boost the profitability of the acquired company and can therefore be factored in the offer price. This gives them an additional edge against pure financial investors like private equity (PE) funds, which have historically been strong buyers of such component and subsystem businesses. Two recent deals in Europe (one still ongoing) illustrate this new balance of power. The first concerns Souriau-Sunbank, a $360 million-revenue specialist in interconnection technology for harsh environments. After being owned successively by two PE funds and bought by Esterline (now TransDigm) in 2011, it was again put up for sale last year. While expectations were that a PE fund would grab it, another industrial buyer, Eaton Corp., won the contest, paying the hefty price of $920 million (an EV/EBITDA multiple of 12). The second deal relates to a French company called Photonis, a world leader in night-vision technology for defense and space applications, for which Teledyne is apparently bidding—and offering a price 30% higher than the highest PE bid! These deals highlight the limits of the traditional private equity model (too short-term and too short-sighted) and why the “new predators”—all publicly listed companies—are in a much better position to continue to thrive. In fact, by combining “private equity-like growth in value with liquidity of a public market,” as TransDigm puts it, they are not only beating PE players at their own game, but they are also capturing a significant share of the A&D capital market by offering investors an attractive alternative to the traditional vertically integrated groups such as UTC, Thales or Safran. These groups are typically too busy focusing on large systems and equipment to realize that they would actually benefit from articulating a proper “component and subsystem” strategy. They would benefit not only because their portfolios are still full of such businesses, but also because their long-term competitiveness largely depends on their ability to nurture a strong network of strategic suppliers, in terms of both criticality for their own systems and national sovereignty. As it happens, Photonis seems to be such a strategic supplier, since the current French government just announced it would veto the Teledyne deal, hoping to give other French or European companies or investors time to make a competitive offer for the business. But because PE funds, at least in Europe, are somewhat faint-hearted when it comes to ambitious sector-specific “horizontal” portfolio strategies, and because Europe has no industrial player able to compete with the likes of Teledyne, the outcome of the process is still highly uncertain. In any case, Teledyne, Heico, Transdigm and similar companies are surreptitiously reshaping the A&D industrial landscape by buying technological nuggets and component businesses left and right, on both sides of the Atlantic. In the process, they are boosting their shareholders' returns and changing the balance of power with both traditional private equity investors and large vertically integrated A&D groups. As the saying goes: One man's meat is another man's poison. https://aviationweek.com/aerospace/manufacturing-supply-chain/opinion-how-new-predators-are-reshaping-aerospace-landscape