Financial Mines

The Pentagon reported that Defense Sec. Leon Panetta and Joint Chiefs of Staff Chairman U.S. Army Gen. Martin E. Dempsey have warned Congress that if a $500 billion sequestration provision of the 2011 Budget Control Act hits, it could leave the military without a “workable strategy to counter global threats.”

The Pentagon is supporting a $614 billion spending plan for the fiscal year 2013. This budget starts to incorporate the $487 billion of cuts over the next year called for under the Budget Control Act. But the two Pentagon officials said further cuts are untenable.

There have already been layoffs at Connecticut defense contractors and further spending cuts could increase those numbers.

Panetta, himself, told Congress the $500 billion sequestration threat casts “a huge shadow of doubt” over defense industries, their workers and the military, according to the Pentagon.

Sikorsky Aircraft, participating in the Heli-Expo 2012 in Dallas and the Singapore Airshow, (yes, in Singapore), has been peppering the digital world with announcements of activity.

Sikorsky said it sold four S-76D helicopters to the Japanese Coast Guard for search and rescue missions. Sikorsky retired its S-76C++, early according to some, because the D wasn’t ready. So sales of the 76D are important to getting this family of aircraft back on track.

The company said Air Engiadina, of Switzerland, has also ordered a 76D.

Also, the Stratford helicopter maker, reported the Koreans are buying an S-92 for its coast guard.

The two shows come on the heals of President Obama’s new budget proposal, which appears to be putting into action what analysts have been expecting for more than a year, namely longer lead times on contracts and reductions in orders. But sides are already being drawn up on the budget reductions, and Congress, ultimately has to pass the budget.

Of course, the president ultimately, enforces it and how Obama will do that if he doesn’t get the budget he wants in a vital election year, could be, to say it nicely, interesting to watch.

Under President Obama’s proposed budget, the military would cut about $4.1 billion in aircraft acquisitions during the next fiscal year, but in the news and defense twitterverse, experts are casting doubts that Congress will go along with these cuts in an election year.

Expect the argument to be couched from the right as Obama surrendering America’s military advantages to save a buck, while the White House will say a total defense budget of $613.9 billion for fiscal 2013 ought to be enough to ensure the nation’s security.

In the meantime, Sikorsky Aircraft is presenting at the HeliExpo 2012 and making a slew of announcements regarding new contracts and agreements its landed recently.

Gen. Martin E. Dempsey, chairman Joint Chiefs of Staff, released what many would call a mission statement for the military of the future.

In it, Dempsey declares the priority will be to focus on completing the mission in Afghanistan and then looking ahead to creating a leaner, faster and less costly force for 2020.

He also pinpoints major Pentagon concerns for conflicts of the future:

“Additionally, I anticipate a new valuation of risk. Today’s troubled political economy is elevating the relevance of cost and reality of financial risk. Discontinuous change, such as the Arab Spring, and systemic competition over nonrenewable resources are upending conventional geo-political wisdom. Expected economic trends and unexpected global events invite us to re-think the military’s role in
mitigating the risk to our Nation.”

Dempsey and the Pentagon are continuing to push forward with plans to decrease the size of the U.S. military and to cut costs, which will put pressure on the nation’s and state’s defense contractors going forward, even those, like Sikorsky, that analysts have said are expected to fully participate in a new military.

Here’s the report:

http://1.usa.gov/AlciOp

Bloomfield-based Kaman Corp. said it has won a contract modification in the amount of $24.2 million for the procurement of joint programmable fuzes. The award is a follow-on order raising the total under Option 8 of Kaman’s contract with the U.S. Air Force  to $76.8 million.

The additional order increases Kaman’s backlog to $149,2 million and should provide work through 2013.

Kaman is the sole provider of  joint programmable fuzes to the USAF and twenty-three other nations. JPS’s allow the settings of a weapon to be programmed on wing in flight and is the current bomb fuze of choice of the USAF. The JPF is used with a number of weapons including general purpose bombs, and guided bombs that use JDAM or Paveway kits, on U.S. aircraft such as F-15, F-16, F-22, A-10, B-1, B-2, B-52 and the MQ-9 UAV as well as on international aircraft such as Mirage 3 and Gripen.

Stratford-based Sikorsky Aircraft saw its commercial shipments fall to 12 in the fourth quarter compared to 16 in the same period a year ago, while its sister UTC company Pratt & Whitney experienced an increase from commercial aviation, shipping 154 engines in the fourth quarter of 2011, up from 110 the previous year.

UTC reported earnings for the fourth quarter and year on Wednesday with Sikorsky’s operating profit dipping to $207 million from $239 million. However, Sikorsky took $37 million in restructuring related charges in the quarter. The layoffs, announced last year, are expected to be finalized this quarter and some employees have said they expect to hear this week who will be laid off.

Aerospace companies are hoping commercial aviation, which was dramatically affected by the global economic crash of 2008, is ready to soar in 2012 and 2013, which could help them replace the drop off in revenues from defense, which is expected to hit in the next couple of years.

While Pratt’s numbers show an increase in demand from the commercial markets, Sikorsky showed it is still very much a struggle for helicopters.

However, Sikorsky continued to ship a high number of military aircraft, delivering 61 helicopters in the last quarter of 2011, compared to 60 in the same period in 2010. Overall, Sikorsky shipped 235 military aircraft in 2011 compared to 219 in 2010. Pratt’s military shipments declined for the year to 161 from 180.

Shares in UTC were down 5 cents to $77.73 in New York trading Wednesday before noon.

Sikorsky Aircraft’s aftermarket division signed an agreement with Danish Aerotech A/S to discuss the establishment of a support facility and service should Sikorsky win a Roayl Danish Navy contract.

The Danes are expected to announce their decision on the contest this year and Sikorsky Aerospace Services would work with Danish Aerotech to supply replacement parts for the new helicopters.

Sikorsky is a subsidiary of Hartford-based United Technologies Corp. Shares of UTC were up 48 cents to $77.34 in Tuesday trading, just a day before UTC reports fourth space and full-year earnings for 2011.

Sikorsky Aircraft announced the official partners in the S-97 Raider program it is launching to try to capture a major military contract in coming years.

The U.S. Army is seeking a replacement for the Kiowa Warrior and Sikorsky wants to offer the S-97, a hybrid helicopter. Some competitors are pushing to have the contest next spring, which could make it difficult for Sikorsky to enter the Raider, which is expected to be demonstrating its capabilities in 2014.

Sikorsky will be funding 75 percent of the program while its partners will fund the remaining 25 percent. Shares of Sikorsky’s parent company, United Technologies Corp. was up 61 cents to $77.31 in afternoon trading.

The S-97 is based on Sikorsky’s X-2 experimental helicopter, which reached speeds of 250 knots during testing in 2010.

The majority of the Raider team members are U.S.-based companies from 20 states, Sikorsky said in a press release and here there are and what they will be doing:

Structures: Aurora (Va., Miss.); Cytec (Calif., N.Y.); East/West Industries (N.Y.); Fischer (Germany); Hexcel (Conn., Utah); PPG (Calif.); Triumph Group (Wash.).

Avionics: Avionics Instruments (N.J.); BAE Systems (N.Y.); Eaton (Miss.); Esterline Control Systems (Calif., Ill., Wash.); Garmin (Kan.); Goodrich (Fla., Minn.); Hamilton Sundstrand (Conn.); Honeywell (Ariz.); Lockheed Martin (N.Y.); Northrop Grumman (Calif.).

Propulsion: Ametek (N.Y.); Ducommun (N.Y.); Eaton (Mich.); General Electric (Mass.); Honeywell (Ariz.); Liquid Measurement Systems (Vt.); Meggitt-USA (Ga., Calif.); Spectrum (Conn.); TIGHITCO (Conn.).

Rotors and transmission: Emerson-McGill (Ind.); Fatigue Technology (Wash.); FAG Canada; Goodrich (N.Y.); Hamilton Sundstrand (Conn., Ill.); Kamatics (Conn.); LORD Corp. (Pa.); Pankl Aerospace (Calif.); Parker Aerospace (Calif., Ga.); Schultz (Calif.); SIFCO (Ohio); Triumph Group (Utah, Mich.).

Blades: Cytec (Calif., N.Y.); Eagle Aviation Technologies (Va.); Hexcel (Conn., Utah); Rotating Composites (Conn.).