Howlett: Navy, Air Force need to sell Canadians on their desperate need for new equipment

Sur le même sujet

• 

  9 juillet 2020 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité

  Top Defense Execs Ask For Help in Next COVID Stimulus Package

  The biggest defense manufacturers in the world warned the Pentagon and OMB of "significant job losses in pivotal states" if Congress doesn't come up with stimulus money to cover unforeseen expenses. By PAUL MCLEARYon July 08, 2020 at 4:16 PM WASHINGTON: A group of CEOs leading the world's top defense firms sent letters to Pentagon acquisition chief Ellen Lord and and Office of Management and Budget director Russell Vought on Wednesday, citing “significant job losses in pivotal states” if the federal government doesn't step in to assist with COVID-related costs. Electoral maps have traditionally acted as a tried and tested tool defense contractors use when making pitches to both the Pentagon and Congress, as a way of showing where the jobs sit in different congressional districts. The letter to Lord was signed by the leaders of Lockheed Martin, General Dynamics, Boeing, Raytheon, and BAE Systems, which represent five of the top seven defense companies in the world. Huntington Ingalls, Textron Inc., and L3Harris Technologies also signed onto the letter, which was obtained by Breaking Defense, requesting the Pentagon's help in pressing for stimulus money in the Senate's next rescue package. The Senate is slated to debate in the coming days. Lord has previously estimated the Pentagon would have to pay more than “lower double digit billions” to offset costs borne by defense manufacturers in lost work hours, buying PPE equipment and propping up smaller suppliers. Speaking to reporters at the Pentagon last month, Lord said she's seeing a “three-month slowdown to all programs due to COVID-19,” after the virus shut down defense manufacturing facilities and production lines across the globe. The vast majority of defense firms have operated at reduced capacity over the past several months, and Lord said the Pentagon continues to see the biggest impacts in the aviation and shipbuilding supply chains. The CEOs write that US-based supply chains “are simply not able to absorb these significant costs. Without additional funding in the next stimulus package, the resolution of [reimbursement] claims will need to be funded from existing DoD budget topline resources for FY20-22.” That would cause “significant reductions” in research and procurement budgets, they said, before pivoting to warning about Defense Secretary Mark Esper's top priority: modernizing weapons systems to keep abreast of China and Russia. Placing the burden on the companies to use their own case to meet unplanned emergency costs risks “thwarting the Department's ability to meet the challenges and threats associated with great power competition” they add. In order to keep the smaller suppliers afloat, companies have pushed contracts forward to give the smaller supplier more work, and in turn, DoD has sped up planned payments to the defense industry, hitting the $2 billion mark in recent weeks. Speaking at a Brookings Institution event this morning, Lord didn't mention the letter, but talked about moving more production of defense equipment to the United States from overseas. Part of that effort stems from President Trump's “American First” push to build up the domestic manufacturing sector, but Chinese influence in electronic supply chains is also a big concern. During a visit to the Fincantieri Marinette Marine shipyard in Wisconsin late last month, Trump said “we'll always live by two simple rules: Buy American and hire American.” Lord phrased the idea differently, saying she prefers to have two sources for equipment, and “we would like one of those, if possible, to be domestic.” That issue has been highlighted in the global pandemic shutdown which wreaked havoc on global supply chains. “We just found that particularly with microelectronics, we have gotten ourselves into a potentially compromised position,” Lord said. “Where we have US intellectual property going offshore for fabrication and packaging leaves us with some vulnerability there. That is unacceptable moving forward.” During his Wisconsin visit, Trump suggested that one of the considerations for awarding a $795 million contract to the US home of the Italian shipbuilder was its location in a competitive state in the 2020 presidential election. “You notice that's not a supply chain going through China and going through other countries,” he said, adding, “I hear the maneuverability is one of the big factors that you were chosen for the contract. The other is your location in Wisconsin, if you want to know the truth.” https://breakingdefense.com/2020/07/top-defense-execs-ask-for-help-in-next-covid-stimulus-package

• 

  19 août 2020 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité

  Market exposure in the Top 100: Defense, commercial aviation and much more

  By: Doug Berenson and Chris Higgins This year's Defense News Top 100 list of global defense companies coincides with a steep economic downturn created by COVID-19. Although the defense sector has faced pandemic-related business disruptions, it remains a safe haven, with most defense-oriented firms reporting only modest impact on revenues and profits. Seeing how diversified players rely on their defense units is of particular interest at a time when the commercial aviation market has all but collapsed. While many defense firms are bracing for stagnation in defense-spending growth, other markets could experience an extended downturn. Avascent drew on the Top 100 list to examine the broader mix of market exposure among firms comprising the global defense industrial base. We segmented company revenues across more than two dozen defense and commercial end markets. This analysis provides insight into how companies with defense business leverage exposure to other markets, either as a complement or as a hedge to their defense activities. One can think of defense companies in three categories: Defense/government pure-plays: Companies that focus overwhelmingly on military markets generate about 23 percent of the defense-oriented revenue on this year's list. To the extent these companies have revenue outside defense, it comes from close adjacencies in intelligence, civil space or others. Indeed, the top ranks of the Defense News Top 100 list includes numerous firms for whom defense and government comprise 85 percent or more of total revenue. Lockheed Martin, Northrop Grumman, BAE Systems, LIG Nex1, and Huntington Ingalls Industries and many others fall in this category. BAE Systems and L3Harris maintain significant positions in the commercial aviation supply chain, but these activities represent a small portion of their total revenues. The unique demands of military and government markets — complex acquisition processes, challenging sales channels, burdensome regulatory compliance — has led many leading defense players to maximize their position across the defense product range. These frustratingly unique features of government customers have deterred many commercial technology firms from pursuing this space, a fact that the U.S. Department of Defense is struggling to reverse. Firms in this category have optimized their financial management, business development and other processes to the particular demands of government customers. Within government markets, the different economics that characterize the sale of products and services has increasingly led to the separation between these two distinct segments. Many of the market leaders in U.S. government services, including Leidos, Booz Allen Hamilton, CACI International, SAIC and others, feature a near-exclusive focus on government customers. A range of firms providing such services continue to find business with both the government and commercial clients, to be sure, including Bechtel, Jacobs, Babcock International and KBR, to list just a few on this year's Top 100 list. But companies with a significant focus on mission-oriented requirements have increasingly focused solely on government customers. Commercial and defense sectors: Nearly 60 percent of the defense revenue tracked in the Top 100 list comes from firms that compete in sectors that cross the defense-commercial divide. These include shipbuilders and automotive manufacturers, but the vast majority of firms serving both defense and commercial customers are focused on commercial aerospace. A range of firms recognize the unique complementarity between military and commercial aerospace technology in their business mix. Airframe primes like Boeing and Airbus are chief among these, sitting atop vast aerospace supply chains. But many other household names have sought opportunity in commercial aviation, either as airframe primes (General Dynamics via Gulfstream, Textron via Cessna) or as suppliers of avionics, structures, and other content. Because it calculates 2019 revenue, this year's Defense News list does not count Raytheon Technologies, which was created with the merger of Raytheon Company and United Technologies Corp. in April 2020. The new “RTX” would have pro forma 2019 revenue of about $43.4 billion in defense and $33.7 billion in commercial markets; this excludes Otis (elevators) and Carrier (air conditioners), which were spun off concomitant with the Raytheon-UTC merger. Many firms with heavy commercial market exposure now face unprecedented economic headwinds. Between March 1 and Aug. 1, 2020, stock prices for firms spanning defense and commercial aerospace declined by 33 percent, as global air travel nearly ground to a halt amid the coronavirus pandemic. By contrast, an index representing defense/government pure-plays has dropped by just 5 percent over the same period. Conglomerates were in the middle, declining about 16 percent. The silver lining, however, may be the ability of some companies to draw on defense-related cash flows to sustain commercial aerospace investment in preparation for an eventual upturn. Industrial conglomerates: Finally, there are firms with a foot squarely in defense but which also pursue markets far afield, in terms of customer types and market economics. About 18 percent of the defense revenue tracked in the Top 100 list is earned by firms with interests that have almost no technical or customer link with defense. Large Asian conglomerates — including China North Industries Group Corporation Limited, also known as NORINCO; Japan's Mitsubishi Heavy Industries; and South Korea's Hanwha — top this category in total revenue. But several Western firms also follow this approach to varying degrees: Textron, Ball Corporation, Diehl Group and others combine widely disparate product lines in a holding company structure. With defense versus commercial valuations relatively high, there may be competing instincts in the boardrooms of these giants. On one hand, these companies may decide to reorient their portfolio more toward defense activities by exiting underperforming industrial businesses. On the other hand, firms could elect to use defense cashflows to support the broader corporation and position the company for an economic rebound. Trends to monitor While defense budgets could face downward pressure in much of the world, many U.S. contractors have good predictability through 2021 because of DoD outlays already in process. It is the wider commercial economy where the real uncertainty lies. This makes it hard to predict how many firms active in defense markets will fare over the next year, given the variety of other markets they serve. Over half the revenue earned by the Defense News Top 100 is generated from commercial sectors. Commercial aviation markets are likely to languish at pre-2019 levels through 2022 or later. The outlook for other commercial markets is more heterogeneous, but challenges exist across areas like shipbuilding, automotive, industrial equipment and energy. To the extent that countries pursue infrastructure-led stimulus, some of the more diversified companies may find pockets of sunshine amid the gloom. Doug Berenson is a managing director at Avascent, where Chris Higgins is a principal. https://www.defensenews.com/opinion/commentary/2020/08/17/market-exposure-in-the-top-100-defense-commercial-aviation-and-much-more/

• 

  17 septembre 2018 | International, C4ISR

  SOCOM awards $47M for radio software

  By: Kelsey Atherton U.S. Special Operations Command awarded the Sierra Nevada Corporation Aug. 23 a contract worth $47 million to keep supplying and maintaining the software it uses in to ensure radios can communicate with one another across frequencies. Dubbed, TRAX, for “Tactical Radio Application eXtension,” the software “fills a [redacted] role in the Special Operations air-to-ground communication architecture," and it works on Android devices, too. The contract award is available online, and while the text omits several details, what can be seen is clear on why Sierra Nevada Corporation is the only contractor that can meet this need. Convenience is one factor. Sierra Nevada developed the software, so it makes sense to continue, and funding a new or redundant development to work in the same way and with the same interoperability would be added cost for no meaningful, tangible benefit. There is also the matter of specific intellectual property. Sierra Nevada owns the TRAX software. Keeping the TRAX program with the same provider avoids the legal battles and technical issues that could come with trying to replicate it elsewhere. While SOCOM solicited information about an alternative capability, the justification statement argues that whatever that redacted capability is, the decision was made to single track it. In the field, TRAX translates data protocols, allowing for communication across devices that otherwise couldn't speak to each other. While military machines from radios up through planes are designed with the knowledge that they will need to be used together, and often built around shared protocols to match, reality is messier than planning, so a reliable software medium is one way to retain a capability even if the equipment on hand isn't the equipment that was intended. Full article: https://www.c4isrnet.com/c2-comms/2018/09/14/socom-awards-47-million-for-radio-software