Expected increases in retirement eligibility rates of existing workers, and documented increases in voluntary attrition rates of younger workers, combined with weak demand for future contracts (work) has Aerospace and Defense companies facing the most challenging business environment in recent history, according to a new workforce survey by Aviation Week and sponsored by Hitachi.

Not since the historical drop-off in defense spending after the Cold War has the industry experienced this kind of workforce uncertainty, according to Aviation Week Business Editor Madhu Unnikrishnan, in an article detailing responses from A&D companies employing more than half a million employees – approximately 82 percent of the industry’s workforce. According to the 2009 Workforce Study, and data from the Aerospace Industries Association (AIA), findings suggest that “United States A&D companies had cut about 30,000 jobs as of June 1, or just 4.5 percent of the total workforce,” according to Unnikrishnan. “The layoffs will almost certainly continue into 2010, [but] total job losses during this downturn might be limited to 10 percent of the A&D workforce — far below the 40 percent eliminated in 1990-96 as the end of the Cold War … The industry is being much more strategic in reducing the workforce.”

The right strategies are needed at this time to smartly adjust the industry’s workforce for the future, according to Lee Palmer, Hitachi Consulting Aerospace and Defense. “There isn’t much that can be done to keep an aging workforce on the job when it’s ready to move on to retirement, but there’s plenty that companies need to be doing to transition institutional knowledge to the up-and-coming generations, who by the way have got to believe the industry will provide opportunities for them, along with stability and an engaging work environment.”

Some of the industry’s workforce woes, such as a shortage of U.S.-born science, technology, engineering and math (STEM) college graduates, Palmer said, have been evolving over many years, and although efforts to bolster the ranks of students with these skills have been successful, more work is needed.

“We’ve seen amazing successes from STEM programs, but we need a larger commitment to math, engineering and science education, a commitment that includes more federal and state support of goals and standards to give schools and education systems something to work toward,” said Palmer, who has been involved in STEM education efforts in North Texas and nationally for more than 20 years.

International Business Wales announced today that Wales, U.K., manufacturers have secured U.S. defense contracts on the heels of the country’s largest-ever international trade mission to America in June 2009.  Another trade mission is coming to the Association of the United States Army annual meeting in October in Washington, D.C., three companies that were on the June mission.

Contract announcements include:

• Aircraft maintenance manufacturer CAVE Systems Logistic Containers has won an order for phase one of a contract with a potential value of $5 million. The initial $500,000 order from the Pennsylvania National Guard is for aircraft maintenance equipment required by troops in Iraq.
• Teddington Engineered Solutions, based in Llanelli, Wales, has secured a contract worth over $800,000 from the U.S. Navy for bellows designed to allow rescued submariners to pass from a rescue vessel into a compression chamber on-board a ship – regardless of weather conditions.

Over 80 Welsh companies from the technology, aerospace, defense, life sciences, security and engineering industries visited the U.S. in June to foster international corporate partnerships and promote international trade.

“We’re thrilled that we’re already seeing excellent results from our trade mission this summer, and we expect the good news to continue, given the strong interest from the American companies and organizations we met,” said Geraint Jones, CEO, Americas for International Business Wales, the economic development and trade arm of the Welsh Assembly Government.

Cave Systems, Faun Municipal Vehicles Ltd., AB Connectors/TTElectronics, were all part of the June trade mission, and will attend the AUSA meeting. The other companies on the new mission will be Digital Surface Research, Dytecna Systems Engineering, Spectrum Technologies and Concrete Canvas.

Alion Science and Technology has been awarded a task order from the U.S. Navy valued at $48.5 million to research, design, develop, prototype, integrate and test a new torpedo detection system in conjunction with the Navy’s new anti-torpedo countermeasure technology, demonstrating the improved performance and integration of the technologies in Navy fleet systems.

The task order, awarded under the Naval Undersea Warfare Center Division Newport SeaPort-e contract, supports the Naval Sea Systems (NAVSEA) Undersea Defensive Warfare Systems Program Office with Anti-Torpedo Torpedo Defensive System (ATTDS) Torpedo Detection, Classification and Localization (TDCL) technology.

This work follows the successful demonstration of new TDCL technology developed by Alion and its team members over the past four years, which has been proven to outperform existing sonar systems on Navy ships. Alion will evaluate the TDCL system both in the laboratory and at sea.

“As other countries increase their submarine forces, the threat of torpedoes to Navy vessels also increases,” explained Rear Adm. John J. (JJ) Waickwicz (USN, Ret.), Alion Senior Vice President and Manager of the Engineering Technology Center Group. “Continued at-sea testing is intended to demonstrate that ATTDS will reliably detect and counter incoming torpedo threats, protecting Navy ships and the lives of personnel aboard,” Waickwicz added.

ITSI announced today that the company has been awarded a $350 million, firm-fixed price, Indefinite Delivery/Indefinite Quantity (ID/IQ), Multiple Award Construction Contract (MACC) supporting assessment, repair and construction for petroleum, oil, and lubricant (POL) fuel system services at various locations worldwide. ITSI was selected from a pool of competitors for this MACC ID/IQ to provide work in support of sustainment, restoration, and modernization requirements worldwide, managed by the Naval Facilities Engineering Services Center (NFESC), at Port Hueneme, CA. The prime contractors will share awards totaling $350 million for work executed at the Department of Defense facilities. ITSI will provide services involving design-build, engineering, inspection, testing, and construction of POL fuel systems and their numerous components.

The Navy has been an important client of ITSI for over 10 years. As a prime contractor for the Navy, ITSI has successfully executed work in the areas of environmental consulting, remediation, and civil construction services. Currently, ITSI holds four additional Navy contracts, including a Performance-Based Multiple Award Contract for Environmental Remediation Services (PERMAC), Remedial Action Contract (RAC), and two ID/IQ contracts at Naval Air Station Lemoore and at Hunters Point Shipyard.

Dr. Shukla, President of ITSI, commented that he is, “Pleased that the Navy has selected ITSI for this important contract. The Navy is one of our most valued clients and we look forward to a continued partnership with them worldwide. Our company will continue to uphold high quality performance, dedication to our work, and successful execution of projects for all of our clients.”

ITT has been awarded $43 million in follow-on orders from the U.S. Army’s Research, Development and Engineering Command Acquisition Center for the Enhanced Night Vision Goggle (ENVG), and associated spare parts.

“Our unmatched capability, technology and customer support are at the heart of these most recent awards,” said Mike Hayman, president of ITT’s Night Vision business. “By continuing to deliver the industry’s most advanced night vision goggle, we are providing our warfighters with unrivalled capabilities required for current and future battlefield operations.”

ENVG optically combines an image intensification image, and proven thermal infrared technology, allowing for improved mobility and situational awareness—through clear target detection and improved target recognition. The ENVG combines the strengths of both technologies into one helmet-mounted unit, allowing warfighters to complete their missions more effectively, even when confronted by low-light or obscured conditions.

Digimarc announced that it was officially awarded a contract by Battelle Energy Alliance, in the amount of $920,700, to help create a system to ensure the security and safety of strategic weapons facilities.

The Department of Defense’s Enhanced Security Weapons/Nuclear Weapons program will use Digimarc technology in a covert sensory system to provide long-range surveillance and intelligence of potential threat targets.

“We are pleased to be awarded this long-anticipated project and have our technology included as a key part of this innovative new program,” stated Bruce Davis, chairman and CEO of Digimarc. “The secure, persistent and imperceptible characteristics of digital watermarking, and its demonstrated value in government surveillance applications, make it ideal for this project.”

The program will meet the DoD requirements established by DoD S5210.41M which was signed in November 2004. Delivery of the project is anticipated by February 28, 2010.

Delivering on promises is key to success, and in this post I want to feature one of UIAGC‘s clients, Lockheed Martin.

A Lockheed Martin’s Joint Strike Fighter executive said this past week that the Lockheed Martin F-35 Lightning II is living up to the originally conceived ideal of a tri-service combat aircraft that leverages stealth technology, introduces multi-service interoperability, achieves economies of scale to drive down costs and strengthens important international alliances.  See below for a video of the F-35 Lightning II:

The F-35 is a supersonic, multi-role, 5^th generation stealth fighter. Three F-35 variants derive from a common design. Developed together, they use the same sustainment infrastructure worldwide. The fighter will replace at least 13 types of aircraft for 11 nations initially, making the Lightning II the most cost-effective fighter program in history.  Two F-35s have entered flight test, two are in ground test and 17 are in various stages of assembly, including the first two production-model jets scheduled for delivery to the U.S. Air Force in 2010.

Tom Burbage, executive vice president of Lockheed Martin Aeronautics Company and general manager of  F-35 Joint Strike Fighter (JSF) Program Integration, reviewed the F-35 operational requirement and provided his thoughts on the game-changing technologies that are ensuring the delivery of dramatic improvements in fighter capability envisioned when the program was conceived more than a decade ago.

“The F-35 is designed to satisfy a very challenging operational requirement — to go deep into enemy territory against the most lethal surface-to-air missile threats. The aircraft is also designed to destroy targets through any weather while outnumbered by the most advanced current-generation fighters equipped with highly sophisticated air-to-air missiles,” Burbage said. “The F-35 can perform that mission from any base and at a lower cost than legacy programs. It’s a daunting expectation but we are on the way to fulfilling it.”

The intent of the program was to leverage recent major national investments in technology, introduce true service interoperability and achieve economies of commonality and scale as legacy combat aircraft fleets were replaced, according to Burbage.

In addition to its strategic military importance, the F-35’s integrated global production structure will promote worldwide allied collaboration and significant maturation of the global industrial base.

“The ongoing National Security strategy to require coalition based operations had also exposed significant capability gaps between U.S. and allied forces equipment,” said Burbage. “To address these gaps, a decision was made to allow participation by selected nations in the development and procurement of the JSF. The sharing of the technology capability with allied nations implies that future coalition combat operations will be more synergistic and much less expensive from a logistics standpoint.”

So keep up the great work Lockheed Martin, this is an exciting project and we will all be closely following its continued progress.

In the highly competitive landscape of large-scale defense contracts, one of the keys to continued innovation and technology growth are healthy bidding wars.  However, once a bidding battle has been completed, it should not have to be performed once again due to one company’s dissatisfaction with their loss.  Although it appears to be the what is occurring in the current Pentagon Tanker Competition.

Photo Courtesy of WSJ

The Wall Street Journal reported that the bidding war, for the pentagon’s highly sought after $40 billion dollar tanker contract, has been temporarily called off due to the political entanglements involved in the situation.  This is despite the fact that Northrop Grumman Corp. had already been declared the winner over Boeing this past February.  Boeing’s domestic domination has caused a slowdown in the competitive marketplace and it is clear that the next US Presidential regime will not be forced to make the decision between the two companies.

So does this decision give Boeing a legitimate chance at winning back this contract?  Most likely not.  And there are two main reasons:

1. Boeing currently does not have a plane large enough to fulfill the Air Force’s request.  And with the current Boeing labor dispute (coverage), the company will certainly be meeting with delays for all new projects, especially its new 787.  Conversely, Northrop Grumman has already satisfied the Pentagon’s demand due to the fact that they won the original contract at the end of this past Winter.
2. If the new President is Sen. John McCain, Boeing will find itself on an uphill slope considering that McCain has previously blocked contracts from the aerospace firm that he believed were won ‘too easily’.

Austin Cole from the WSJ says this about the situation,

“Although the decision gives Boeing a chance at a fresh start, the company will face the prospect that one of its key critics, Sen. John McCain, could potentially be the next president when the matter is decided. Five years ago, the Republican senator helped scuttle an original plan to lease a fleet of tankers from Boeing because the contract was not competitively bid. His office played a key role in opening up the competition to Northrop Grumman and its partner, European Aeronautic Defence & Space Co.”

So despite the fact that Boeing has been given a second chance to win this contract, Northrop Grumman still appears to be the most likely company to win this bidding war, and rightfully so.