Defense Companies

The Software Productivity Joint Venture Study Group, composed of 13 large defense contractors, unanimously named Fairfax County, Va., as the recommended location for a joint software research and development facility, according to TRW, one of the participants. The recommendation will be submitted to each company at the same time that a formal proposal for the venture is made. After reviewing the information, the companies will decide whether to proceed with the idea.

At the height of the wars in the Middle East, AeroVironment Inc. - a drone maker based in Monrovia - soared into the public limelight. In the last decade, AeroVironment became the Pentagon's top supplier of small drones. Its financial balance sheet prospered, its drones delivered results and its technology landed on the cover of Time magazine as one of the year's best inventions in 2011. But these days, not so much. Over the last month the company's shares have plummeted more than 18% as federal spending begins to dry up and the wars in Iraq and Afghanistan come to an end. It lowered its revenue guidance by nearly one-third, to $230 million to $250 million from $348 million to $370 million.

Secretary of Defense nominee John G. Tower disclosed Thursday that he has received $763,777 in consulting and lobbying fees since 1986 from six defense contractors but said that he has severed all ties to the firms and that his decisions as defense secretary will not be swayed by past affiliations. "There will always be people who will suspect anyone who has been formerly associated with the defense industry," Tower acknowledged at the second day of his confirmation hearings.

Two European defense giants said they were in merger talks to create the world's largest aerospace company. At a time when defense spending is falling worldwide, Airbus parent company European Aeronautic Defence & Space Co. and BAE Systems said a deal makes financial sense because of their synergy and collaboration on a wide range of projects. Together, British-owned BAE and EADS, owned in part by the French, German and Spanish governments, would have annual sales totaling more than $94 billion, dwarfing current industry leader Boeing Co.'s $68.7 billion.

Raising ethical questions on the job is never easy, but it sure is the right thing to do when it involves the potential safety of our armed forces. Or so thought a conscientious Los Angeles jury, which has put the entire defense industry on notice that companies must allow their employees to raise product-safety questions without fear of losing their jobs. The Calabasas-based Lockheed Corp. apparently didn't.

At the height of the wars in the Middle East, AeroVironment Inc. - a drone maker based in Monrovia - soared into the public limelight. In the last decade, AeroVironment became the Pentagon's top supplier of small drones. Its financial balance sheet prospered, its drones delivered results and its technology landed on the cover of Time magazine as one of the year's best inventions in 2011. But these days, not so much. Over the last month the company's shares have plummeted more than 18% as federal spending begins to dry up and the wars in Iraq and Afghanistan come to an end. It lowered its revenue guidance by nearly one-third, to $230 million to $250 million from $348 million to $370 million.

The idea that lower defense budgets require the merging of large defense companies is at odds with the global change underway in management. This change has shown that a team of separate (smaller) companies can produce a better product at less cost in shorter time. Commercial companies are dedicated to this process for leadership in world markets. It is well known that engineers are most inventive when pressed into a corner, and so are engi- neering-based defense companies. Size reduction of companies, like government, is healthy--an opportunity for reinvention to serve the customer better.

The recent announcement of Lockheed's departure from Calabasas is not so surprising to some of us. You must first understand that this company is one of the last holdovers from a dwindling industry--determined in the face of all reason to defy a changing world. I worked for Lockheed for 13 years, and when I recognized this futile determination, I jumped ship. I had been sent by Lockheed to award a developmental defense contract to a company in West Germany (two weeks after the wall came down)

Hughes Cancels Plans to Participate in Air Show: Hughes Aircraft Co. suspended plans to display its wares at the Paris Air Show in June, after the defense company and other U.S. firms were told by the Central Intelligence Agency that they appear to have been targeted by the French for industrial espionage. The Wall Street Journal reported that Hughes Chairman C. Michael Armstrong said in an interview that he was briefed 10 days ago by the agency.

Two European defense giants said they were in merger talks to create the world's largest aerospace company. At a time when defense spending is falling worldwide, Airbus parent company European Aeronautic Defence & Space Co. and BAE Systems said a deal makes financial sense because of their synergy and collaboration on a wide range of projects. Together, British-owned BAE and EADS, owned in part by the French, German and Spanish governments, would have annual sales totaling more than $94 billion, dwarfing current industry leader Boeing Co.'s $68.7 billion.

The U.S. ambassador to India announced his resignation Thursday, citing a desire to spend more time with his family. Timothy J. Roemer's statement coincided with news that India had excluded two U.S. defense companies from a much-anticipated $11-billion deal for at least 126 fighter aircraft, fueling speculation in defense circles that the two were linked. Others, however, said the former six-term congressman from Indiana, a Democratic party stalwart, may have felt he was being sidelined in India and wanted to raise his profile back in Washington before President Obama's 2012 reelection bid. "I hear he wanted to get back to active politics," said Harinder Sekhon, a senior fellow in the U.S. studies program with New Delhi's Observer Research Foundation, a think tank.

Hundreds of Southern California defense contractors may have to cut jobs or go out of business if Congress approves a moratorium on federal earmarks, industry executives warned. More than $3 billion in earmarks ? or money directed to specific projects ? flowed into California this year for defense work, much of it funneled to Southland aerospace companies. But with the federal government staring at a staggering $1.4-trillion deficit, the so-called pork-barrel spending has drawn fire from critics who see earmarks as a symbol of pay-to-play politics and wasteful government spending.

Forty years after the crew of Apollo 11 landed on the moon, the business of space has yet to experience the renaissance many once thought possible. "It's 2009, and we thought we'd be going to the moon on PanAm by now," said John Pike, an analyst who follows the industry at think tank GlobalSecurity.org. "We thought the number of rockets that would be launched each year would be more and more and it would get cheaper and cheaper, but it didn't happen that way."

Much like Northrop Grumman Corp.'s stealthy B-2 bomber, the company's chief executive has flown under the radar for most of his career overseeing the development of many of the nation's top-secret weapons. Unassuming and devoid of the cigar-chomping flamboyance that distinguished aerospace executives in the past, Ronald Sugar -- a former whiz kid from South Los Angeles -- often shuns the limelight. Yet few in aerospace are as influential to the nation's defense and security.

Dozens of military vehicles plucked from the battlefields of Iraq stand idle and partly dismantled outside a rural Pennsylvania plant, awaiting mechanics, welders and painters who will prepare them for another tour of duty.

With glitzy exhibits displaying model fighter jets, mock cockpits and flashy videos of missiles obliterating targets, major defense contractors came prepared to hawk their multimillion-dollar weapon systems. But attendance on the exhibition floor at the annual Air Force Assn. conference last week was sparse. Air Force officials, the defense industry's biggest customers, were packed into adjacent conference rooms instead, listening to ominous warnings of an impending slowdown in spending.

The drive to cut defense spending is turning into a politician's free-for-all, and President Bush is expected to join the crowd in his State of the Union message by lopping $10 billion or so from defense budget requests. But don't look for a quick boost to the economy. Bush's $10-billion cut would be from budget estimates for fiscal 1993, which begins in October.

Northrop Grumman Corp. said Thursday that second-quarter earnings rose 17%, as operating profit at its systems and information technology units overcame a decline at the company's ships division. Despite a slight decrease in sales during the quarter, operating margins increased because of the company's cost controls and earnings per share benefited from a share repurchase program. Net income climbed to $430 million, or $1.23 a share, from $367 million, or $1, a year earlier.

Northrop Grumman Corp. is teaming up with Europe's largest defense contractor to compete for a $2-billion Pentagon contract to build the Air Force's next-generation search-and-rescue helicopter. It marks the latest move by European firms to penetrate the lucrative U.S. defense market. For decades, the Pentagon has been reluctant to give foreign companies much more than token contracts for parts and supplies, but European firms now are hoping for a bigger share of the pie.