Defense firms score in budget deal, Trump approves $5B in arms exports, Huntington Ingalls earnings dip, and more.
Mark down an early, if modest win for the military services and defense firms. Fourteen months ago, the Obama administration’s 2017 budget request proposed to cut funding for buying new weapons by nearly 6 percent. Instead, Congress this week agreed a $593 billion defense-spending deal that will boost arms spending by 4 percent.
While Congress did not rubber-stamp all of the $15 billion for arms sought by the Trump administration in its own 2017 request in March, it did greenlight many of the items requested, including drones, helicopters, bombs, and missiles. All are in high demand in the war against Islamic State militants in Iraq and Syria.
Lawmakers also added billions of dollars for F-35s, ships, and helicopters that did not appear in either Trump’s March request or Obama’s original request.
Read on, here.
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From Defense One
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Huntington Ingalls Earnings Dip
The Trump administration plans a boost to shipbuilding, but it’s going to be some time before the funding arrives. In the meantime, Huntington Ingalls Industries — America’s largest military shipbuilder — reported quarterly earnings that fell short of analysts’ expectations — and lower than those of the first quarter last year. Still, as the Daily Press notes, the company is expected to hire 3,000 workers this year as shipbuilding work ramps up. Ingalls stock surged after Trump’s election, peaking at $220 per share on March 1, but has declined since Citi downgraded it from “buy” to “neutral.” On May 4, it was trading at just over $189.
Will a Foreign Firm Win a Navy Missile Contract?
Boeing’s Harpoon anti-ship missile will not vie to arm Navy littoral combat ships and frigates, my pal and former Defense News colleague Chris Cavas reports . That leaves the contest to Lockheed Martin’s Long-Range Anti-Ship Missile and the Kongsberg (-Raytheon) Naval Strike Missile. For Norway’s Kongsberg, which has been trying to break into the U.S. missile market for more than a decade, winning the contract would be a huge score. The firm has been pitching a modified version of the Naval Strike Missile — called the Joint Strike Missile — for the F-35 Joint Strike Fighter. Norway plans to use that missile on its F-35s. Selling the missile to the U.S. military would be an even larger win.
The U.S. Is Training More Foreign Soldiers
The U.S. trained 79,865 foreign soldiers in 2015, the most trained in a single year since 2006, according to a new Security Assistance Monitor report. To put the growth in perspective, the U.S. trained 56,346 foreign troops in 2014.
“The increase in U.S. foreign military trainees was driven by a major bump in U.S. military training aimed at improving African militaries’ effectiveness in peace operations and enhancing foreign security forces from around the world to better tackle the illicit drug trade and transnational organized crime groups,” Security Assistance Monitor wrote in a statement. “The countries with the highest number of U.S. military trainees in FY 2015 were Burundi, Rwanda, Colombia, Lebanon, and Uganda.”
The numbers trained in sub-Saharan African countries through the Peacekeeping Operations program: 33,871 in 2015, up from 15,981 in 2014.
The numbers are important, particularly right now, as the Trump administration is proposing massive cuts to foreign aid in 2018.
These figures do not include trainee numbers and the billions of dollars spent by the Pentagon to train training Afghan and Iraqi soldiers.
State Greenlights Nearly $5B in Arms Exports
Between March and May, the Trump administration approved nearly $5 billion in arms deals to U.S. allies, according to the Pentagon and State Department. Find the whole list, here.
More on that Underwater Drone Market
The Navy plans to invest $3 billion in underwater drones in the coming years and lots of companies are positioning themselves to get some of that money. You’re seeing the traditional large defense firms buy small, commercial companies with unique expertise in the area. Boeing announced it would buy Liquid Robotics last year and L3 Technologies scooped up OceanServer a few months ago. In a hot market, even a sub-7-figure contract draws attention — like the Navy’s purchase of a single drone from Aquabotix, an Australian-American company. “The sale illustrates the increased focus of the world’s militaries on the unmanned underwater domain, and the increased acceptance of Aquabotix as a leader in the industry, capable of delivering a cost-effective solution without further research and development, to a discerning marquee customer like the United States Navy,” the firm said, showing just how these niche companies are looking at the doors that can be opened by a military contact — regardless of size.
Thales to Acquire Silicon Valley Big Data Firm
The French defense firm is spending $215 million to buy Guavus, a Silicon Valley-based firm that is “a pioneer in real-time Big Data analytics,” Thales said. “The acquisition of Guavus follows several acquisitions in the fields of connectivity, mobility and cyber security, and strengthens Thales's positioning in one of the key technologies at the heart of digital transformation, the processing and predictive analysis of ‘big data,’ an increasingly critical factor in real-time decision-making.” The Pentagon has been looking for ways to use big data as part of its Third Offset, its quest to find ways to best enemies in the wars of the future.