Defense Industry News
June 1, 2011
World Energy Solutions Helps General Dynamics Land Systems With Its Renewable Energy Commitment - World Energy Solutions, Inc. (NASDAQ: XWES), a leading energy management services firm, today announced that it helped General Dynamics Land Systems successfully procure power -- 50 percent from renewable sources -- for its division headquarters over the World Energy Exchange®. World Energy also helped procure electricity and green power procurement for its Scranton, Pennsylvania facility, which secured 25 percent renewable energy for the plant.
The contracts, which will commence January 1, 2012, deliver more than $150,000 in combined annual energy cost savings while significantly deepening General Dynamics Land Systems' commitment to renewable power. By investing aggressively in green energy, General Dynamics Land Systems will reduce its carbon dioxide emissions by more than 6,450 metric tons each year. This reduction is the equivalent of each of the following:
Annual greenhouse gas emissions from 1,265 passenger vehicles
CO2 emissions from 15,004 barrels of oil consumed
Greenhouse gas emissions avoided by recycling 2,248 tons of waste instead of sending it to the landfill
Carbon sequestered annually by 63.9 acres of forest preserved from deforestation
"Going green doesn't have to come at a big premium -- or any premium for that matter," said Phil Adams, President, World Energy Solutions. "We've run hundreds of auctions now for C&I, institutional and government customers, where suppliers are willing to provide renewable energy at reasonable rates in order to win a customer's electricity business. General Dynamics Land Systems is a great example of this, and we're pleased to continue to provide the company a strategic and cost-effective means to source their power."
General Dynamics Land Systems is a business unit of General Dynamics (NYSE: GD). (Source: pr-inside.com)
Defense Spending No Longer ‘Sacred Cow’ to Republicans Searching for Cuts - As the House Budget Committee worked on a Republican plan to cut more than $6 trillion of government spending over a decade, the panel’s senior Democrat proposed a symbolic amendment saying national security costs should be included in any responsible deficit-reduction effort.
Seventeen of 22 committee Republicans, including Chairman Paul Ryan of Wisconsin, joined all 16 Democrats in an April 6 vote backing Maryland Representative Chris Van Hollen’s measure.
For the party of Ronald Reagan, who made bountiful Pentagon budgets a cornerstone of his “peace through strength” foreign policy, it was a telling vote: As anti-tax, small-government Tea Party sympathizers gain influence, defense is no longer sacrosanct for Republicans.
“Historically, you’ve had a lot of Republicans who have refused even to consider the possibility of cuts in the area of defense,” said first-term Republican Senator Mike Lee of Utah. “I don’t think we have that luxury anymore.”
That makes the Pentagon budget -- more than half of federal discretionary spending -- a target for potential compromise as Congress and the White House seek a package of cuts before voting to raise the government’s $14.3 trillion debt limit. How much is cut hinges on how much freshly elected deficit-busters can win over earlier generations of defense hawks.
“A lot of the new members recognize that if we are going to be serious about deficit reduction, you can’t have any sacred cows and you have to take a hard look at defense,” said Van Hollen, a member of a bipartisan group negotiating a debt- reduction plan with Vice President Joe Biden. “The budget committee vote was a clear indication that there’s a lot of room for discussion.”
Budget Grows
Annual defense spending has grown every year since 1998, rising 155 percent to $690 billion in 2010 from $270 billion. That tops a 147 percent jump in annual Medicare outlays and an 86 percent increase in Social Security payments over the same period, according to data compiled by Bloomberg.
Defense Secretary Robert Gates in January proposed a five- year spending plan with $78 billion of net savings from canceling some programs, reducing troop numbers and cutting overhead. Republicans backed Gates’s goal in a budget plan that passed the House in April.
“We’re not just talking about cutting things that we don’t like, while not cutting things that we like,” said South Carolina Republican Mick Mulvaney, a budget committee member.
‘Aggressive Group’
First-term Republican Representative Joe Walsh of Illinois said he’s among lawmakers pushing Republican leaders to cut even deeper. “There’s a fairly aggressive group of us that wants us to take a close look at defense,” he said.
On April 13, President Barack Obama proposed an additional $400 billion in national security cuts over 12 years. Gates has ordered a Pentagon-wide spending review to identify potential savings.
After dropping on news of Obama’s plan, most defense contractor stocks have recovered ground. The 13-member Standard & Poor’s 500 Aerospace and Defense Index, which fell 1.2 percent in two days after the announcement, has since risen 3.1 percent. Raytheon Co. (RTN) slid 3.8 percent on April 13-14 and has since gained 3.7 percent; Northrop Grumman Corp. (NOC), after a 2.5 percent two-day fall, has rebounded 5.9 percent. Lockheed Martin Corp. (LMT), the biggest defense contractor, fell 3.3 percent over two days and has since gained 0.6 percent.
Investor Confidence
The cost of insuring bonds sold by Raytheon, Northrop Grumman, Lockheed Martin, General Dynamics Corp. (GD) and Boeing Co. (BA) has fallen, a sign of rising investor confidence in their creditworthiness. On average, the annual cost for five-year credit default swaps on those companies fell to 46.88 basis points, or about 47 cents per $100 of debt, on May 27 from 51.23 on April 14, according to CMA, which is owned by CME Group Inc. (CME) and compiles prices quoted by dealers in the privately negotiated market. One basis point is 0.01 percentage point.
Gates has said Boeing’s new Air Force refueling tanker, Lockheed Martin’s F-35 Joint Strike Fighter, plans to build more Navy ships and new ballistic missile submarines are among programs that should be funded.
Unless Congress slashes more deeply than Obama has talked about, weapons makers may not be hurt as much as investors initially feared, said Byron Callan, a defense analyst with Capital Alpha Partners LLC in Washington.
‘More Resilience’
“Those stocks could hold up with a little more resilience than people had expected,” Callan said.
The challenge of trimming weapons programs was illustrated in a 2012 defense authorization bill that the House approved on May 26, with Republicans voting 227-6 in favor. The bill includes $272 million more than the Pentagon requested for the General Dynamics Abrams battle tank and would keep alive -- ignoring Obama’s veto threat -- General Electric Co. (GE) and Rolls- Royce Group Plc’s work on a second engine the military says it doesn’t need for Lockheed’s F-35 fighter.
Republican leaders so far haven’t committed to cutting deeper than Gates’s initial $78 billion recommendation. “I would not be for that,” said Arizona’s Jon Kyl, the second- ranking Senate Republican and a participant in Biden’s negotiations.
That view could cost some Republican lawmakers, said former Republican House Majority Leader Dick Armey, who started the Washington-based group FreedomWorks, which backs Tea Party goals of low taxes and less government.
“If you think you can sit in office and be a zealot on cutting everything except your pet projects, it don’t work that way,” Armey said. “An awful lot of activists in the Tea Party movement are veterans who had hands on experience with wasteful and inefficient spending in the Defense Department.”
‘Light Cut’
Gates’s proposed reduction represents about 2.5 percent of Pentagon spending over five years and is little more than a “light cut,” said Todd Harrison, a defense analyst with the nonpartisan Center for Strategic and Budgetary Assessment research group in Washington.
Michael O’Hanlon, a senior fellow at the Washington-based Brookings Institution, said even national security hawks should be open to considering cuts “because our economic picture is so serious.” he said. Still, he said defense cuts “entail risk” and lawmakers should spread reductions to include entitlement programs such as Medicare.
As leaders from both parties say some areas are off limits in the debt talks, including higher taxes and Social Security changes, defense may emerge as a key to any deal. Lawmakers in the Biden negotiations have so far identified about $200 billion of savings they can agree on, Van Hollen said -- nowhere close to trillions of dollars Republicans say they want in exchange for raising the government debt limit.
Higher Up Tree
Advocates deep deficit cutting. “They need to climb higher up the tree.”
Oklahoma Republican Representative Tom Cole, whose district includes the Army’s Fort Sill and Tinker Air Force Base, said savings beyond the Gates plan aren’t popular in his party and, at the least, would require concessions by Democrats on domestic-spending cuts.
“To further reduce defense while you’re spending more in other areas, I think that would certainly be a tough sell to those Republicans who are security hawks, and that’s a big part of the Republican base,” Cole said. (Source: Bloomberg)
Defense Watch - Through Life Fleet Support. General Dynamics Land Systems-Australia (GDLS-A), receives a five year, $47.8 million Through Life Support contract from Australia. The work is to deliver enhanced fleet availability of the Army’s ASLAV wheeled armored fighting vehicles, M1A1 Abrams tanks, and M88A2 Heavy Recovery vehicles. Ongoing spare parts, repairs, maintenance and engineering tasks will be ordered as required through this integrated support contract. The contract is expected to change the mechanisms and business processes between the Commonwealth and General Dynamics in Australia to improve efficiency, reduce costs and promote value. The contract also includes implementing a performance management framework for the services, which contributes toward the Commonwealth Strategic Reform Program (SRP). This provides the basis for awarding up to 15, one-year contract extensions based on performance. (Source: Defense Daily)
Information Systems group leads General Dynamics growth - Unit continues to be revenue leader for defense contractor. General Dynamics Corp. had a respectable year in 2010. Revenues were up, albeit slightly, and contracts steadily rolled in.
The company, based in Falls Church, Va., brought in $32.5 billion in 2010, up 1.6 percent from $32 billion in 2009. Its net income was $2.6 billion, up 8.3 percent from $2.4 billion the year before. Those accomplishments earned it the No. 5 spot on the Top 100 list with $5.5 billion in prime contracts.
A major contributor to its success was the company’s Information Systems and Technology group, which earned the highest level of revenue in its history – about $11.5 billion – and retained top billing as GD’s revenue leader. It grew 7.5 percent from $10.8 billion in 2009.
One of the wins that contributed to its growth last year is a $228 million contract, awarded in March, to modernize the Federal Aviation Administration’s Voice Enterprise Services program, which involves moving the system to voice-over-IP and IP telephony technology. In June, NASA awarded General Dynamics C4 Systems, a part of IS&T, $642.2 million to modernize its Satellite System Ground Segment. That means GD will implement a new architecture to ensure global space-to-ground telecommunications and tracking coverage for the space network, which supports all NASA flight missions, including the Hubble Space Telescope and the International Space Station.
Gerard DeMuro, GD's executive vice president in charge of IS&T, attributes the division’s success to the sum of its parts.
“If I had to cite one thing, I think it’s a demonstration of the relevance of our portfolio, domain expertise that our teams have and understanding customer needs, and fashioning very cost-effective, high-value solutions for those customers,” he said.
GD’s progress on the military’s Joint Tactical Radio System and Warfighter Information Network-Tactical will also continue to be key contributors to the group’s success, DeMuro said, but the company is also looking to areas of growth potential. (Source: Washington Technology)
General Dynamics adds 100 Pittsfield, Mass. Jobs - General Dynamics Corp. has hired more than 100 employees to help work on a defense contract it was awarded by the Navy in December.
General Dynamics (GD - news - people ) Advanced Information Systems ultimately hopes to hire 500 workers over the next five years to build, test and deliver the electronics systems for the Littoral Combat Ships.
Officials from the Pittsfield-based unit said half of the new workers came from inside Berkshire County. The other half is split between other Massachusetts residents and those living outside Massachusetts
Gov. Deval Patrick joined workers and company officials on Tuesday to mark the job growth.
The Littoral Combat Ships are estimated to cost $500 million each to build. The Navy wants 55. (Source: Forbes.com)
EB honored for its healthy initiatives - The Electric Boat shipyard has again been honored by a national business group for promoting a healthy workplace and lifestyle among its employees.
The Groton-based company, owned by General Dynamics in Falls Church, Va., was named one of the "Best Employers for Healthy Lifestyles" by the National Business Group on Health.
This is the second consecutive year that Electric Boat has received "Gold" honors from the national organization.
The Washington, D.C-based National Business Group on Health honored a total of 48 large employers this year for their various programs that encourage healthy workplaces and healthy employees. The nonprofit organization represents large employers on various national health-care issues, focusing on health benefits, disability, productivity and other issues.
The organization (www.businessgrouphealth.org) says that its 326 members, including a majority of the nation's Fortune 100 companies, provide health-care coverage for more than 55 million workers, retirees and families in this country.
Electric Boat has instituted a health-and-wellness program that is integrated into all the company's various business units. Besides the company's health insurance offerings, the program includes "house calls" where the shipyard's medical/health/wellness teams visit employee workstations, along with biometric screening stations, health counseling and motivational interviewing.
This year's winners were honored in two categories, the health-care business group said: Platinum winners include employers with established workplace well-being programs that show measurable successes and outcomes, and Gold winners are honored for creating cultural and environmental changes for employees committed to long-term behavioral changes.
Among the Platinum winners were Hartford-based Aetna insurance company and CIGNA, which has extensive operations in the Hartford area. Other Gold category winners were American Express, General Mills, Sprint, Target Corp. and Unilever. (Source: The Day)
Army Targets Battle Damage And Orders More Armor-Kitted M-ATVs - The Army recently ordered 177 Mine Resistant Ambush Protected All-Terrain Vehicles with additional underbody armor kits from Oshkosh Defense to address the number of vehicles that have been damaged in the Afghan theater, according to the MRAP program office.
The $97 million order is in keeping with the Army's latest trend of buying additional underbody armor kits for the M-ATV, one of the service's newest vehicles. This latest order, though, will have the kits already integrated on the vehicles as they roll off the line, rather than have them installed in theater.
Oshkosh Defense was awarded a $100 million contract to provide the Army with more than 2,000 underbody armor kits for the M-ATV in February. An $80 million award was also made in January for 800 kits. Both orders were in response to a Joint Urgent Operational Needs Statement from Afghanistan.
Barb Hamby, spokeswoman for the MRAP program office, wrote in a May 27 email that the "purpose of putting the 177 M-ATVs on contract was to augment battle damage losses."
Work on the 177 M-ATVs will be performed in McConnelsburg, PA, Milwaukee, WI, and Oshkosh, WI, with an estimated completion date of Jan. 31, 2011, according to the Defense Department. (Source: Inside the Army)
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