Retour aux nouvelles

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

When the challenge of coronavirus becomes a catalyst to change

By:

One way to understand how the United States' largest defense companies are responding to the coronavirus pandemic is to listen to what their leaders said on the most recent round of earnings calls.

Consider this anecdote from General Dynamics.

Phebe Novakovic, the company's chief executive, told analysts in late July that when COVID-19 struck, “our classified customers closed their sites to all but mission-essential employees. This impacted revenue and earnings and will continue to do so. Some of IT services' highest-margin programs have come to a hard stop because of COVID-19.”

Novakovic described the pandemic as a time of “significant uncertainty.”

That story was not unusual.

David Calhoun, Boeing's CEO, described this as “a historically dynamic and challenging time.” Greg Hayes, Raytheon Technologies' top executive, opened his second-quarter call by stating: “As everyone knows, these last several months have been incredibly challenging.” And Bill Brown, the CEO of L3Harris, said: “The pandemic has challenged us all to find new ways of working effectively.”

To be clear, defense contractors have lost roughly 20 percent of their value in the last six months, by tracking exchange-traded funds. That's the worst run for publicly traded companies in at least a decade.

So what to make of this?

James Taiclet, Lockheed Martin's new leader, said his philosophy is that there may be “an opportunity for us if there is a downturn, we're going to look at the silver linings that may be there.” He was talking about mergers and acquisitions.

But defense companies of all sizes should look for another opportunity: a reason to operate differently, not an excuse to get back to basics. Leaders should reexamine how to embrace new talent, how to effectively telework, and how to add new equipment or partnerships with unexpected sources.

Military leaders for years have said they value agility. Now they will get to watch firsthand who changes, who is prepared for the long term, who adapts and who merely talks about adapting. These “challenges” can give acquisition officials a reason to reward agility.

But back to the earnings calls. Officials hinted about what may happen next, before we — fingers crossed — enter a post-pandemic world. Lockheed's Kenneth Possenriede, the company's chief financial officer, said that while solicitations may be slower getting out the door, final deadlines have not changed.

Brown at L3Harris said: “We believe that the heightened threat environment will drive the trajectory of U.S military spending regardless of the election.”

Novakovic seconded that notion. “There's a general consensus that the threat has not dissipated,” she said. “In fact, arguably some of our potential adversaries have raised additional questions. ... We'll see going forward, but [I'm] not hearing a lot at the grassroots level on ... any pending defense cuts.”

The threat may not have changed. Nor may the business of defense. Yet.

But it's impossible to ignore that almost everything else has.

https://www.defensenews.com/opinion/2020/08/17/when-the-challenge-of-coronavirus-becomes-a-catalyst-to-change/

Sur le même sujet

  • Will $95B for R&D make its way to the final defense appropriations bill?

    27 juin 2018 | International, Aérospatial, Naval, Terrestre, C4ISR

    Will $95B for R&D make its way to the final defense appropriations bill?

    By: Joe Gould   WASHINGTON — Senate defense appropriators have advanced a proposed $675 billion Pentagon spending measure for 2019, touting its heavy investment in innovation and research to maintain America's military edge. Hewing to the bipartisan, two-year budget deal, the spending bill includes $607.1 billion in base budget funding and $67.9 billion in the war budget. It is $20.4 billion higher than the fiscal 2018-enacted level. The bill contains $95 billion for research and development, the largest R&D budget in the Pentagon's history, adjusted for inflation, according to Senate Appropriations Committee ranking member Dick Durbin, D-Ill. The bill also includes $2.8 billion in added basic research funding the president's budget did not request. The bill also seems to surpass the Senate-passed policy bill's emphasis on future warfare, with $929 million for hypersonics, $564 million to develop advanced offensive and defensive space capabilities, $317 million to develop a directed-energy weapon, and $308 million for artificial intelligence, according to a summary released Tuesday. “This bill sustains U.S. force structure and improves military readiness. It also recommends investments in future technologies needed to defend our nation in an increasingly complex and competitive national security environment,” said Senate Appropriations Committee Chairman Richard Shelby, R-Ala., who also leads the sub-panel. “Our military must maintain its technological superiority. I am pleased that our subcommittee has identified the resources needed to make that happen ― investing in basic research, hypersonics, directed energy, missile defense, cybersecurity, and our test and evaluation infrastructure,” he said. Aviation programs would get $42 billion, to include $1.2 billion for eight F-35 carrier variants and four short takeoff and vertical landing Joint Strike Fighters, and it includes $375 million for the Air Force's Advanced Battle Management System — as well as sustainment of the legacy fleet of JSTARS aircraft. The bill allocates $24 billion toward shipbuilding, which includes two Virginia-class summaries, three DDG-51 destroyers and two littoral combat ships. There's $250 in advance procurement funding for one more DDG-51 in 2020 and $250 million for submarine industrial-base expansion. Munitions would get $18.5 billion, with $125 million to expand procurement for the anti-ship cruise missile LRASM for the Navy, and the JASSM long-range, conventional, air-to-ground, precision-standoff missile for the Air Force and Navy, as well as $57 million for Army industrial facilities. For personnel, the bill supports a military pay raise of 2.6 percent and includes $974 million for defense medical research. The bill's end-strength boost of 6,961 falls below the president's request for 25,900 more troops. The spending bill is several steps from becoming law. The House is due to take up its version of the legislation this week, and the Senate must pass its version of the bill before the two versions are reconciled. The full Senate Appropriations Committee is set to hold its markup on Thursday. The Senate this week passed a “minibus,” which merged funding for energy and water programs, the legislative branch, military construction, and Veterans Affairs. The strategy is meant to ensure passage for domestic spending priorities that Democrats have demanded in recent years. Democrats seem to favor merging the proposed defense spending bill with the coming spending bill for labor, health and human services, education, and related agencies. Durbin said as much Tuesday: “We have a confident path to conclusion for both.” “I believe in this bill, I think its a good bill and I could easily support it, defend it,” Durbin said of the defense spending bill, calling a merger helpful to “the best ending for the appropriations process.” https://www.defensenews.com/congress/2018/06/26/pentagon-money-bill-with-heavy-rampd-accent-passes-senate-subpanel/

  • Navy creating unmanned, AI operations hub within US Southern Command

    4 avril 2023 | International, Naval, C4ISR

    Navy creating unmanned, AI operations hub within US Southern Command

    The service said that, following the success of Task Force 59 in the Middle East, it would bring unmanned and AI operations to Central and South America.

  • F-35 delivery delays frustrate European air force upgrade plans

    21 mars 2024 | International, Aérospatial

    F-35 delivery delays frustrate European air force upgrade plans

    Client governments early in the acquisition sequence could be the first to feel the ripple effects of a snag related to technology upgrades.

Toutes les nouvelles