24 mars 2020 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité
By: Jill Aitoro
WASHINGTON — Defense companies with substantial exposure to commercial markets are taking dramatic measures to limit overhead and preserve cash, with one chief executive calling the new coronavirus pandemic “worse than anything we've seen.”
Among the companies that announced cost-cutting measures tied to losses or potential losses from the COVID-10 crisis, CAE pointed to temporary layoffs — starting first with almost 500 unionized employees, but with more inevitably to follow, CEO Marc Parent said during a webcast hosted by RBC Capital Markets.
Parent and his executive team are taking salary cuts of 50 percent, with vice presidents taking cuts of 30 percent, managers and directors 20 percent, and all others 10 percent. The company is also taking capital expenditures as well as research and development investment to the bare minimum.
“We're not Pollyanna here,” Parent said during the webcast. “We're assuming a tough period, and we're taking immediate steps to preserve cash.”
In terms of business disruption, “this is worse than anything we've seen,” including 9/11, he added.
GE Aviation, which already announced a hiring freeze, the cancellation of salaried merit increases and a reduction of nonessential spending, will cut about 10 percent of its U.S. workforce. CEO David Joyce will give up half of his salary starting April 1. The division also pointed to temporary lack of work impacting about 50 percent of its U.S. maintenance, repair and overhaul employees for 90 days.
Meanwhile, Airbus is looking to investor incentives to gain some cash, canceling one planned dividend payment and another proposed 2019 dividend payment of 1.80 euros (U.S. $1.90) per share to save the company 1.4 billion euros ($1.5 billion). It's also lining up 15 billion euros in new credit to provide more cash to weather the crisis.
All three companies are big players in commercial aviation. Airbus ranked No. 9 on the Defense News Top 100 list of defense companies, but with only 17 percent of its 2018 revenue coming from the defense and security business. GE ranked No. 29, with 13 percent of business coming from defense, and CAE ranked No. 70, with 40 percent coming from defense.
The defense portions of the businesses are also feeling the impact, though less substantial because of the structure of contracts that often extend to multiple years. For CAE, programs fall under long-term contracts, versus “per sip” agreements more typical of commercial customers where revenue is driven by utilization. The company's CEO, Parent, also pointed to a $4 billion backlog in defense.
Still, base access restrictions and the natural limitations on movement of people has made both training and order fulfillment more difficult for the defense business.
“And the general preoccupation of the crisis has impact on the speed of procurement processes,” Parent said. “We don't see obvious structural impact, but we can anticipate short-term friction.”
Publicly traded companies with mixed commercial-defense business have also seen deeper losses to stock price, generally speaking, compared to more pure-play defense companies. While Lockheed and Northrop Grumman stock prices have dropped about 34 percent and 24 percent in the last month, respectively, CAE and GE have dropped 66 percent and 48 percent, respectively.
Boeing, with 66 percent of revenue coming from commercial and other nondefense markets, has seen a whopping 67 percent drop during that period.
Raytheon, despite being almost entirely focused on defense, saw a bigger drop than most pure-play companies of about 47 percent during the last month, likely due to the increased exposure to commercial that will come with its United Technologies merger.
But stock price can be a rather deceiving picture of impact on industry, particularly long term, warned Byron Callan of Capital Alpha Partners.
“A lot of these stocks are part of the S&P 500, where price movements have no relation to underlying fundamentals,” he said. “On the flip side, you could see rotation out of defense and into [those companies] that people think will recover. In other words, folks may be hiding out in defense stocks, but reallocate to markets that they figure are bound to recover eventually” — such as travel and leisure.
Looking at defense companies, “Raytheon has been the worst performing stock because they got tied into commercial aerospace through the merger," Callan said, “but going forward that may be the most interesting [stock] of all because there will be a degree of balance.”
In other words, what's true now on Wall Street could change considerably months from now. The same could be said about the long-term position of these companies, regardless of how grave the circumstances are today.
“The world will return to normal. All crises will come to an end,” Parent said, pointing to the advantage of supporting a highly regulated industry. “We have staying power and stamina to weather the storm, but we're not taking anything for granted. ... We want to be ready when we come out of this.”
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Today
7 février 2019 | International, Sécurité, Autre défense
Blast injuries, burns, and other wounds experienced by warfighters often catastrophically damage their bones, skin, and nerves, resulting in months to years of recovery for the most severe injuries and often returning imperfect results. This long and limited healing process means prolonged pain and hardship for the patient, and a drop in readiness for the military. However, DARPA believes that recent advances in biosensors, actuators, and artificial intelligence could be extended and integrated to dramatically improve tissue regeneration. To achieve this, the new Bioelectronics for Tissue Regeneration (BETR) program asks researchers to develop bioelectronics that closely track the progress of the wound and then stimulate healing processes in real time to optimize tissue repair and regeneration. Paul Sheehan, the BETR program manager, described his vision for the technology as “not just personalized medicine, but dynamic, adaptive, and precise human therapies” that adjust to the wound state moment by moment to provide greater resilience to wounded warfighters. “Wounds are living environments and the conditions change quickly as cells and tissues communicate and attempt to repair,” Sheehan said. “An ideal treatment would sense, process, and respond to these changes in the wound state and intervene to correct and speed recovery. For example, we anticipate interventions that modulate immune response, recruit necessary cell types to the wound, or direct how stem cells differentiate to expedite healing.” The envisioned BETR technology would represent a sharp break from traditional wound treatments, and even from other emerging technologies to facilitate recovery, most of which are passive in nature. Under current medical practice, physicians provide the conditions and time for the body to either heal itself when tissues have regenerative capacity or to accept and heal around direct transplants. Most people are familiar with interventions that include casts to stabilize broken bones or transplants of healthy ligaments or organs from donors to replace tissues that do not regenerate. Passive approaches often result in slow healing, incomplete healing with scarring, or, in some unfortunate cases, no healing at all. Blast injuries in particular seem to scramble the healing processes; 23 percent of them will not fully close. Moreover, research shows that in nearly two thirds of military trauma cases — a rate far higher than with civilian trauma injuries — these patients suffer abnormal bone growth in their soft tissue due to a condition known as heterotopic ossification, a painful experience that can greatly limit future mobility. Although recent experimental treatments offer some hope for expedited recovery, many of these new approaches remain static in nature. For instance, some “smart” bandages emit a continuous weak electric field or locally deliver drugs. Alternatively, hydrogel scaffolds laced with a drug can recruit stem cells, while decellularized tissue re-seeded with donor cells from the patient help avoid rejection by the host's immune system. These newer approaches may indeed encourage growth of otherwise non-regenerative tissue, but because they do not adapt to the changing state of a wound, their impact is limited. “To understand the importance of adaptive treatments that respond to the wound state, consider the case of antibiotic ointments,” Sheehan explained. “People use antibiotics to treat simple cuts, and they help if the wound is infected. However, completely wiping out the natural microbiota can impair healing. Thus, without feedback, antibiotics can become counterproductive.” Recent technologies have begun to close the loop between sensing and intervention, looking for signs of infection such as changes in pH level or temperature to trigger treatment. To date, however, these systems have been limited to monitoring changes induced by bacteria. For BETR, DARPA intends to use any available signal, be it optical, biochemical, bioelectronic, or mechanical, to directly monitor the body's physiological processes and then to stimulate them to bring them under control, thereby speeding healing or avoiding scarring or other forms of abnormal healing. By the conclusion of the four-year BETR program, DARPA expects researchers to demonstrate a closed-loop, adaptive system that includes sensors to assess wound state and track the body's complex responses to interventions; biological actuators that transmit appropriate biochemical and biophysical signals precisely over space and time to influence healing; and adaptive learning approaches to process data, build models, and determine interventions. To succeed, the BETR system must yield faster healing of recalcitrant wounds, superior scar-free healing, and/or the ability to redirect abnormally healing wounds toward a more salutary pathway. DARPA anticipates that successful teams will include expertise in bioelectronics, artificial intelligence, biosensors, tissue engineering, and cellular regeneration. Further, DARPA encourages proposals that address healing following osseointegration surgery, which is often necessary to support the use of advanced prosthetics by wounded warfighters. DARPA will host a Proposers Day on March 1, 2019 in Arlington, Virginia, to provide more information to researchers interested in submitting a proposal for funding. Additional information is available at https://go.usa.gov/xENCQ. A forthcoming Broad Agency Announcement, to be posted to the Federal Business Opportunities website, will include full details of the program. https://www.darpa.mil/news-events/2019-02-06a