December 2/3, 2006: US Defense/aerospace

The weather outside is frightful. But the fire is so delightful.....

It is time again to check in with the military and see what is on tap. If some of the terms are not familiar, e-mail me and I will clarify them.

New aircraft orders for civilian planes are up, and will continue to modestly climb. Airlines want more fuel efficiency and passenger comforts. Boeing (BA) is first. Airbus is last. Precision Castparts and BE Aerospace are positioned nicely here.
Goodrich should excel, and is my top supplier pick. Other companies that supply parts to older planes may be vulnerable now.

Regarding defense, the Global War on Terror O&M and MILPER requirements have exploded, and may crowd out planned Procurement and RDT&E.

Army outlook: major focus on tactical trucks, communications and electronics and tracked armored vehicles.

Weapons Systems: Cost is TOTAL COST of the program to be spread over several years

USAF

Tanker 18b-28b BA vs. NOC (Boeing looks good)
TSAT 14B-18B LMT, BA or NOC
Long Range Strike 25.6b 2007 only (total cost unknown) NOC, BA,LMT
F-35 CTOL/Navy STOVL 245b LMT, NOC, BAE

at risk to budget cuts
Space radar LMT
B52 common core jammer not known
E-10A NOC

Navy

DGD-1000/DD 26.5b NOC, GD
MMA/P-8A 29.3b NOC
CVN-21/CVN-78 29.5b NOC
F/A18 E/F and EA-18G 13.6b BA NOC
V-22 26.1b BA TXT

at risk to budget cuts
BAMS 26.4b 2007 NOC LMT/General Atomics
EFV 10.1 GD

Army

FCS 152.0b BA SAIC
JTRS 31.6b GD/JTRS-HHR/ ITT/SINCGARS BA/JTRS-GMR
WIN-T 13.6b GD/LMT
JLTV no cost estimate no proposal

at risk
Joint Heavy Lift no cost estimate BA/TXT

General opinion is that with the winding down of operations in Iraq (see previous posts on this), the armed forces will still require much equipment for homeland security if the fight is to be taken to the enemy instead of suffering terror attacks with frequency here in the United States. Equipment will emphasize less risk of military casualties (drones, satellites, weapons systems operated at distance which will be more accurate, lethal and plentiful.

Token belligerents North Korea, Syria and to some extent Iran can be effectively defeated in a matter of hours using present weapon systems, if the United States has the will to not use the Viet Nam/Iraqi Freedom approach.

More sophisticated systems to eliminate terror cells and infrastructure are well on the way to common use.

China presents the largest threat. This country is continually testing, challenging and posturing new weapons, especially lasers and cyber warfare. China has a massive intelligence campaign to obtain western technology on the cheap and has shown active interest in ways to cripple economic systems, especially in the financial area.

Russia needs to stop poisoning every dissident that utters a nasty comment about Vlad. Putin. China is doing a much better job of challenging the West covertly, without the bad press.


Please consult previous posts for names to associate with company stock symbols noted above.