Growing Calls For The European Investment Bank To Invest In The Defense Industry

Bloomberg: Dutch Call on EIB and Pension Funds to Invest in Defense Sector 

(Bloomberg) -- The Netherlands’s defense minister, Kajsa Ollongren, called on the European Investment Bank to invest in the defense industry and said the Dutch government is already putting pressure on pension funds to fund the sector as the European Union struggles to supply Ukraine with sufficient artillery munitions. 

“We need to have a highly capable defense industry in the European Union and the Netherlands and for that you have to invest, you have to innovate and you need funding,” she said in an interview from her office in The Hague. “If it’s not coming from big pension funds or banks then there is a real issue.” 

EU member states are trying to reach an agreement over joint procurement of artillery ammunition to support Ukraine. Ukraine has said it will need 1 million rounds of ammunition this year, and Estonia has estimated that would cost around €4 billion ($4.3 billion).  

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WNU Editor: The European Investment Bank (EIB) is the European Union's development bank and is owned by the EU Member States. It is also one of the largest supranational lenders in the world with about $250 billion in assets.

Business Is Booming For French Defense Giant Thales

Patrice Caine, Chairman and CEO of Thales Group, Ukrainian Defence Minister Oleksii Reznikov, French Defence Minister Sebastien Lecornu, Mayor of Limours Chantal Thiriet, and officials pose before a visit at the Thales radar factory in Limours, France, on February 1, 2023. (Reuters)  

Reuters: French Defence Group Thales to Recruit 12,000 Staff as Orders Boom 

PARIS (Reuters) - French defence and technology group Thales plans to hire 12,000 new staff this year as there is strong demand across its product range, CEO Patrice Caine said in an interview with French weekly Le Journal du Dimanche. 

He said that over the past eight years Thales, which has total staff of 80,000 of which 40,000 in France, had recruited 5,000 to 8,000 people per year and that last year already it had hired 11,500 new staff. 

Caine said that all the firm's activities - defence and security, aeronautics and space, identity and digital security, were growing strongly. 

"The company is a reflection of its markets, which are all seeing dynamic growth, with needs growing in all our fields of activity," he said. 

 Caine, who recently met with Ukraine's defence minister, said that France would deliver its Ground Master 200 radar air defence system to Ukraine in May.

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Update: France's Thales Plans to Hire 12000 As Defense Orders Surge (Bloomberg).  

WN Editor: Here is an easy prediction. For everyone in the defense industry, business is going to be booming for years.

A Look At How Defense Contractors And Foreign Nations Lobby For Arms Sales

Military.com: This Is How the Biggest Arms Manufacturers Steer Millions to Influence US Policy 

Five of the nation's biggest defense contractors -- Lockheed Martin, Boeing, Northrop Grumman, Raytheon Technologies and General Dynamics -- spent a combined $60 million in 2020 to influence policy, according to a new report from the Center for Responsive Politics. 

The paper, "Capitalizing on conflict: How defense contractors and foreign nations lobby for arms sales," details how a network of lobbyists and donors steered $285 million in campaign contributions and $2.5 billion in lobbying spending over the last two decades, as well as hiring more than 200 lobbyists who previously worked in government. 

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WNU Editor: It is always about the money. The report is here .... Capitalizing on conflict: How defense contractors and foreign nations lobby for arms sales (Center for Responsive Politics). 

The U.S. Defense-Industry Is Eager To Embrace The Incoming Biden Administration

Peter Schweizer and Jacob McLeod, NYPost: The defense-industry swamp is eager to engulf the Biden administration 

Just days after the presidential election, a new investment firm called Pine Island Acquisition Corporation quietly began trading on the New York Stock Exchange, with the prospect of becoming a notable player in the $2 trillion defense and aerospace industry. The company’s greatest asset was not its relatively modest bankroll goal of $200 million, but its connections — deep ties to policy establishment figures shaping the incoming Biden administration. 

 In describing itself to potential investors, Pine Island’s prospectus boasted a leadership team with “extensive access, insight, expertise and management skill” in the defense sector. 

In the dawning Biden era, that might be an understatement. 

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WNU Editor: It is amazing how the Washington swamp always survives.

These Are The 25 Largest Arms Manufacturers In The World

Lieutenant Colonel Jeannie Leavitt, 333rd Fighter Squadron commander, flies her F-15 fighter aircraft over the Grand Canyon en route to Nellis Air Force Base in Nevada in this February 7, 2008 U.S. Air Force handout photo. Reuters/U.S. Air Force/Staff Sgt. Darin Moulton/Handout

Business Insider: From Lockheed Martin to Airbus: These are the 25 largest arms manufacturers in the world

* These companies are in the business of making weapons. Not just pistols and rifles, but also tanks, jets, and rockets.
* As wars continue and more people are feeling insecure around the world, business is flourishing.
* The Stockholm International Peace Research Institute (Sipri) looked into which arms companies were making the most money.
* These are the top 25 arms manufacturers around the world, according to 2017 data.

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WNU Editor: The top three companies are American.

Business Is Good For America's Defense Industry

The F-35 Lightning II production line at Lockheed Martin’s facility in Fort Worth, Texas. Lockheed Martin

CNBC: There’s no business like the arms business: Here’s how the top US defense companies did in Q2 earnings

* Here’s how America’s top five defense firms — Boeing, Lockheed Martin, General Dynamics, Northrop Grumman and Raytheon — did during second-quarter earnings.
* Next week, the Senate will vote on a $1.3 trillion budget deal that includes $738 billion for defense spending.

WASHINGTON — Nobody spends money on arms like the United States, and it shows in the bottom lines of the biggest defense contractors.

The Trump administration’s 2019 defense-friendly spending bill increased the Pentagon’s spending power to a grand total of $717 billion. Next week, the Senate will vote on a $1.3 trillion budget deal for fiscal year 2020 that includes $738 billion for defense.

This week, America’s top five defense firms — Lockheed Martin, Boeing, General Dynamics, Northrop Grumman and Raytheon — posted their second-quarter earnings. While the companies’ quarterly performances remained strong, collectively their stocks were largely unchanged. The iShares U.S. Aerospace and Defense ETF was slightly higher for this week after the companies reported. So far this year the benchmark ETF is up nearly 26%.

Here’s how America’s defense industry giants did.

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WNU Editor: Here is an easy prediction. Business is going to get even better. Especially with the rise of China and the growing arms race in Asia.

Raytheon And United Technologies Agree To Merge Forming One Of The World's Largest Aerospace And Defense Companies

Zero Hedge: Military-Industrial Blockbuster: United Technologies To Buy Raytheon, Creating One Of World's Largest Defense Firms

United Technologies has agreed to buy Raytheon in an all stock deal, forming one of the world's largest aerospace and defense companies with more than $74 billion in revenue and $13.5 billion in EBITDA, through one of the industry’s biggest deals ever.

In a statement release on Sunday afternoon, the new entity will be called Raytheon Technologies Corp., the companies said. The combination, which is being presented as a merger of equals, will take place in the first half of 2020 after United Technologies’ planned spinoff of its Otis elevator and Carrier air-conditioner businesses.

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More News On Raytheon And United Technologies Agreeing To Merge

United Technologies nears deal to merge aerospace unit with Raytheon -source -- Reuters
United Technologies and Raytheon agree to merge -- USA Today
Raytheon and United Technologies agree to all-stock merger that would create aerospace behemoth -- CNBC
Raytheon, United Technologies agree to blockbuster defense deal -- The Boston Globe

Are America’s Companies Ready To Fight Russia & China?

Defense One: Are America’s Companies Ready to Fight Russia & China? New Study Aims to Find Out

Reagan Institute panel sets out to identify the ‘National Security Innovation Base’ from workforce skills to technologies, labs, companies and academia.

What does the U.S. military need to confront Russia and China? A broad-ranging study of the required technologies and workforce that has been commissioned by the Ronald Reagan Institute, host of the annual Reagan National Defense Forum, hopes to identify just that.

The effort is expected to look beyond large defense companies and their suppliers into the commercial technology sector — including companies whose employees have resisted executives’ push to seek more business with the military.

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WNU Editor: With many Silicon Valley workers voicing their displeasure on working with the Pentagon, coupled with concerns that the infrastructure required to maintain America's defense industry is declining, this is a study that is long overdue. The big worry for me is China. China does have the manufacturing base to develop, maintain, and grow their military. And I can easily see China 10, 20, or 30 years from now having a industrial/military base that will match or (maybe) surpass America's industrial/military base.

U.S. Defense Firms Sold $192.3 Billions In Weapons In The Past Year

Image: Royal Saudi Land Forces

Defense News: The US brought in $192.3 billion from weapon sales last year, up 13 percent

WASHINGTON — Combined weapon sales from American companies for fiscal 2018 were up 13 percent over fiscal 2017 figures, netting American firms $192.3 billion, according to new numbers released Thursday by the State Department.

The department previously announced that FY18 brought in $55.66 billion in foreign military sales, an uptick of 33 percent over FY17’s $41.93 billion. Through the Foreign Military Sales process, the U.S. government serves as a go-between for foreign partners and American industry.

What had not been released until now is the total direct commercial sales, the process through which foreign customers can directly buy systems from industry. Those figures topped $136.6 billion for FY18, a 6.6 percent increase from FY17’s $128.1 billion.

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WNU Editor: Jaw dropping. And the trajectory is for even more sales.

U.S. Defense Stocks Are Soaring On The Spectre Of War With North Korea

CNBC: Defense stocks soar on the spectre of war with North Korea

* Year-to-date, the S&P 500 Aerospace and Defense Industry sub-sector index is up 30 percent, compared to 12.9 percent for the S&P 500.
* The promise of increased military spending is boosting the U.S. defense sector, say analysts.
* President Donald Trump said in February he wanted to up military spending by $54 billion.

On Oct. 1, President Donald Trump once again took to Twitter to attack Kim Jong-un, saying that negotiating with the North Korean chairman is a waste of time. While social media mudslinging may not be the best way to deal with a hostile leader, there's at least one group who may not mind Trump's Twitter threats: defense industry investors.

Year-to-date, the S&P 500 Aerospace and Defense Industry subsector index is up 30 percent, compared to 12.9 percent for the S&P 500. Since July 3, when North Korea fired its first intercontinental ballistic missile and Trump said in a tweet, "Does this guy have anything better to do with his life?" the index has climbed by 14.3 percent.

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WNU Editor: It makes one wonder .... what do people with money know that we do not know.

Is The U.S. Miltiary Industrial Complex Dying?

War Zone/The Drive: This Video About The Navy's Decaying Shipyards Makes Its 355 Ship Goal Seem Laughable

The Navy has continued to prioritize procurement over the ability to maintain the fleet it already has.

We have often talked about the Pentagon's chronic disinterest in taking care of and making ready for combat the weapons it already has before buying new and even more costly ones. This culture of prioritization of procurement of new hardware over the readiness and maintenance of hardware has improved somewhat under Defense Secretary Mattis, but it still remains a looming issue as the services say they don't have enough money to be ready for the wars of today and arm themselves for the wars of tomorrow.

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WNU Editor: The above article focuses on the US Navy, this article focuses on the entire U.S. military .... Industrial Base Too ‘Brittle’ For Big War: Dunford (Sydney J. Freedberg Jr., Defense One).

U.S. Defense Firms Are Seeing A Bright Future

DoD Buzz: Northrop Sees Good Times Ahead for Big Defense Firms

Northrop Grumman Corp., which won the contract last year to build the new B-21 “Raider” bomber for the Air Force, reported solid sales and profits in its latest quarterly earnings report and predicted more growth opportunities in its defense forecast as the Pentagon rebuilds.

In a report last week and in a conference call with analysts, Northrop CEO and President Wes Bush said the firm would be a major player in the current competition with Boeing Co. and Lockheed Martin Corp. to build what the Air Force is now calling the Ground Based Strategic Deterrent to replace the Minuteman III Intercontinental Ballistic Missiles.

In the third-quarter, Northrop reported sales of $6.2 billion, a 3-percent increase over third quarter 2015, while earnings rose to $602 million from $516 million, Reuters reported. “Our third quarter results demonstrate that we continue to build a strong foundation for profitable growth over the long term,” Bush said.

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WNU Editor: Lockheed Martin also see a bright future .... Aging equipment, global threats lift Lockheed outlook (CNBC).

Chinese Raw Materials Found On U.S. B-1 Bomber, F-16 Jets

Four U.S. Air Force B-1B Lancer bombers from the 405th Air Expeditionary Wing taxi down the runway prior to taking off on a combat mission, January 3, 2002 during Operation Enduring Freedom. Credit: Reuters/USAF-Shane Cuomo

Exclusive: Chinese Raw Materials Also Found On U.S. B-1 Bomber, F-16 Jets -- Reuters

(Reuters) - After discovering China-made components in the F-35 fighter jet, a Pentagon investigation has uncovered Chinese materials in other major U.S. weaponry, including Boeing Co's B-1B bomber and certain Lockheed Martin Corp F-16 fighters, the U.S. Defense Department said.

Titanium mined in China may also have been used to build part of a new Standard Missile-3 IIA being developed jointly by Raytheon Co and Japan, said a senior U.S. defense official, who said the incidents raised fresh concerns about lax controls by U.S. contractors.

U.S. law bans weapons makers from using raw materials from China and a number of other countries, amid concerns that reliance on foreign suppliers could leave the U.S. military vulnerable in some future conflict.

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My Comment: There is no longer an industrial base in America .... just subcontractors.

America's Defense Industry Leaves The Country

U.S. Defense Industry Flees The Country -- Gordon Adams, Foreign Policy

In search of greener pastures, Lockheed and friends venture abroad. But competition is stiff.

The defense drawdown is now well underway, and the defense industry is starting to pack up, if one is to believe what is being said this week at the Paris Air Show.

Defense budgets peaked in FY 2010, including war funding, and have been down about 10 percent in constant dollars. Factor in the budget sequester for this year, which looks like it will hang on through the rest of the fiscal year (and maybe make a repeat appearance next January), and the defense budget will have fallen 24 percent in constant dollars from their height.

The future does not look different. If the sequester remains, one can expect another roughly $500 billion to disappear from projected defense budgets over the next nine years.

Oddly, defense contractors seem to be doing OK, so far. Sales had declined a bit even before sequestration set in, but profit margins are holding strong for the big guys -- Lockheed Martin, General Dynamics, Raytheon, Boeing, Northrop Grumman, L3.

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My Comment: Bottom line .... the U.S. is running out of money to fund it's defense budgets.

Hard Times For Western Defense Companies

(Click on Image to Enlarge)

Western Defense Companies Face Grim Future -- Zachary Keck, The Diplomat

Global defense spending shrank last year for the first time since 1998, according to a new report by the UK-based advisory firm, AlixPartners. This is consistent with other recent reports by organizations like Stockholm International Peace Research Institute’s (SIPRI).

In its 2013 Aerospace & Defense Industry Outlook, AlixPartners estimates that the aerospace and defense (A&D) industry as a whole grew by 6.8 percent in 2012, a sizeable increase from the 5.5 percent growth rate the industry experienced in 2011.

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My Comment: Tough times now .... maybe. But if there is one thing that I have learned about covering conflicts and defense spending over the years it is the following .... quiet times are always followed by a major war somewhere.

The U.S. Defense Industry Has Few Friends In Congress

Defense Industry Finds Few Old Friends On Hill -- Politico

The defense industry is in the fight of its life, but many of its longtime champions on Capitol Hill are retired, dead or in jail.

Of the 30 largest House recipients of defense industry campaign donations since the 1990 election cycle, only 11 are still serving in Congress, according to a POLITICO analysis of federal data compiled by the Center for Responsive Politics. It’s the same story in the Senate, where 14 of the top 30 recipients over the same time period still serve.

And many observers admit that the remaining industry defenders aren’t the defense giants who once walked the halls of Congress.

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My Comment: Because they do not have the seniority, new House members who are sympathetic to the defense industry will not have the chairmanships (and the power) that goes with it. Hmmmm .... my advice to the defense industry .... now is the time to find new friends.

Is The Defense Industry Ignoring The Looming Defense Budget Cuts?

Defense Biz Ignores Pending Cuts—A Case Of Denial? -- David Francis, The Fiscal Times

Wall Street and the rest of the country woke up yesterday to the surprising news that the U.S. Gross Domestic Product had contracted in the fourth quarter of 2012, falling by 0.1 percent. The news was especially disappointing in light of analysts’ expectations of 1.1 percent growth. It was also the first time GDP growth was negative since 2009.

The drop was attributed to a 22 percent drop in defense spending in the fourth quarter, shaving 1.28 percentage points from GDP. What’s alarming about this decrease is that it happened before the more than $50 billion in sequestration cuts, set to take effect in March.

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My Comment: They and everyone else are in denial on what will be the inevitable impact of high deficits and unsustainable debt on their businesses and personal lives.

How The World's Biggest Defense Merger Was Quashed By Angela Merkel

How Angela Merkel Quashed A Mega-Merger -- Aviation Week

On a sunny weekend in the south of Germany last August, the new chief of EADS, Tom Enders, had a rare opportunity to relax and take some time for his hobbies, such as paragliding. And although many consider it a dangerous pastime, Enders had never been seriously injured. So why should this time be different?

As it turned out, Enders should not have jumped that day. The CEO hurt himself seriously enough during a landing that he had to cancel what might have been the most important business trip of his career and an historic meeting for the giant aerospace company he leads.

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My Comment: If intriguing business stories are your thing .... this is a fascinating read.

To Survive U.S. Defense Companies Are Diversifying And Finding New Markets

Defense Firms Seek Alternatives as U.S. Cuts Military Spending -- Wall Street Journal

Dawne Hickton has seen the future—and it is old people.

After building a business largely on selling titanium to the U.S. defense industry, Ms. Hickton is turning her sights to health care.

RTI International Metals Inc., RTI +0.07% of which Ms. Hickton is chief executive, last year paid $182 million to buy a medical-device business, gaining access to the market for spinal implants and other products for the nation's growing numbers of senior citizens. "That's a future for us—the elderly population," Ms. Hickton says. "That's a growing market. We don't know what the defense market is going to do."

Over the past three years, she says, Pittsburgh-based RTI's defense work has been cut in half, falling to 20% of the company's revenue from 40%.

Faced with more defense cuts on the horizon, RTI is part of a broader shift by defense companies, large and small, looking for ways to contend with lost business. Some of them are diversifying. Others are shedding unprofitable segments, closing plants or laying off workers. Many are looking to increase sales on the international market.

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My Comment: Bottom line .... to survive and grow America's defense companies must find markets overseas and diversify .... if not .... expect to become a smaller company (and that is if you survive).

U.S. Defense Budget Cuts Will Hammer Industry

2013 Outlook: Budget Cuts Will Hammer Industry -- Natinoal Defense

The Defense Department and its contractors are still hopeful for an 11th hour deal that will shield the Pentagon from a 10 percent budget cut in 2013. But even if Defense is spared from the sequester, the business climate for Pentagon contractors will be bleaker in 2013, analysts predict.

Whereas the defense budget top line peaked in 2010 and has only dipped slightly, projected spending on new equipment already has declined by one-third since 2008 and is on a path to go down another 10 to 15 percent, says Erich Fischer, a partner at the consulting firm Booz & Company.

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My Comment: The good old days of increasing defense budgets are coming to an end.