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Defense Update Business Report - 02/2010

 

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France, U.K. Join Forces to Save on Fulfillment of Urgent Operational Requirements

The British and French Defense ministries have signed a Memorandum of Understanding (MoU) establishing closer co-operation on the procurement of urgent operational equipment required to support troops deployed with international coalition, primarily the operations in Afghanistan. The new agreement builds on the existing close relationship between the two countries, achieving greater savings and efficiency in the future procurement of UORs. "We often have the same urgent requirements for equipment, so it makes good sense to examine ways in which we could co-operate on procurement to mutual economic advantage." said Quentin Davies, British Minister for Defence Equipment and Support. The current agreement does not seek to deliver interoperable solutions; the aim is to share best practice and seek rapid solutions to common procurement requirements.

Urgent Operational Requirements (UOR) supplement the British MOD's long term planned equipment program procurement, to provide the fast equipment solutions that ever-changing operations demand. In recent years the U.K. has spent close to £4 billion supporting units in Iraq and Afghanistan, mostly on personal equipment and Force Protection. The French Directorate General of Armaments (DGA) has passed 36 new contracts in emergency operations in 2009, amounting to 260 million euros, with materials allocated primarily for forces in Afghanistan.

Russian Defense Exports in 2009 Amount to US$8.5 Billion

February 17, 2010: Russia sold weapons worth over $8.5 billion In 2009. Defense exports are planned to level at $9-$10 billion annually over the coming years, the country's state arms regulator Mikhail Dmitriyev said on Monday. Dmitriyev is the head of the state service that oversees military contacts. He said the country's current arms orders amount to a total of $34 billion. Russia's state arms exporter Rosobornexport accounted for including $7.4 billion of 2009 export, representing 10% increase over 2008. The agency expects sales to at least maintain the same level this year. The main export items were combat aircraft, accounting about half the annual export with air defense systems in second place, followed by naval weaponry and equipment. India, Algeria, China, Venezuela, Malaysia and Syria were the main customers in 2009 with Vietnam emerging as a key importer, buying an arms package including submarines, military aircraft and other systems.

EADS Expands Nordic Operations, Establishes a Subsidiary in Norway

February 17, 2010: EADS has established a new subsidiary and corporate office in Norway as part of the company's aim to increase its industrial presence in the Nordic region. EADS aims to expand industrial cooperation and commercial activities in Norway, considered to be a growing market for its defense and civil products. The new subsidiary, EADS Norway NUF, will be based at Aker Brygge in Oslo. Hans Lüken, Vice President and General Manager of EADS Norway NUF is heading the Norwegian operations for EADS.

Saab ans Satmel to Cooperate on a New Generation of HUD

February 17, 2010: Saab and Satmel Display Systems (SDS) have signed a Memorandum of Understanding to jointly develop, manufacture and market the RIGS Head-Up Display (HUD) in India. RIGS is a new-generation advanced lightweight HUD specifically designed for helicopters by Saab. The companies are considering there is a significant market for RIGS systems in India, both in the military and civil aviation sectors. SDS will be involved in the development of RIGS electronics and software and will also develop and manufacture parts for the HUD. The two companies have already embarked on a previous MOU, identifying SDS as an offset partner for Saab for the MMRCS program.

Sikorsky, Termna Team to Promote Danish MH-60R Prospects

In anticipation of potential order from Denmark for the MH-60R SeaHawk helicopter, Sikorsky Aircraft Corp. and Terma A/S have signed a Memorandum of Understanding to explore potential collaborations if the Danish government decides to procure Sikorsky MH-60R SeaHawk helicopters. Terma has already signed a similar MOU with Lockheed Martin, the mission system integrator of the MH-60R. In June 2009 Danish Government authorized the Ministry of defense to procure new ship-based helicopters to support Royal Danish Navy vessels operating in the North Atlantic and internationally. The Danes are evaluating alternatives to equip the Danish helicopter squadron, operating eight Super Lynx Mk.90B helicopters. The MH-60R is being offered by the U.S. government to several countries, inncluding Denmark and India, through the Foreign Military Sale (FMS) channel. 

Raytheon, Larsen & Toubro Team for Upgrade India's T-72M1 Tanks

Raytheon Company has teamed with Larsen & Toubro Limited (L&T) of India to upgrade Indian Army T-72M1 tanks. Under the proposal, Raytheon will provide infrared imaging sights and electronics to improve target accuracy and increase overall system lethality of T-72 tank battalions. The Indian company will perform the final integration of fire control system and sensors on the T-72 tanks."L&T is the only Indian company in the private sector that is leading a team for the T-72 upgrade program." said M. V. Kotwal, senior executive vice president and member of the L&T board of directors.

U.S. Army Reiterates 3 Billion FMTV Contract Award to Oshkosh

Feb 15, 2010: The U.S. Army completed the re-evaluation and reiterated the competitive production contract awarded in August 2009 to Oshkosh, for the manufacturing of Family of Medium Tactical Vehicles (FMTV). The Army has reiterated the validity of the contract, bringing an end to BAE System's hopes to divert some of the work it lost to Oshkosh. The Army review followed the Government Accountability Office’s (GAO) recommendations that followed protests by BAE Systems the original manufacturer of FMTV, Tactical Vehicles LP and Navistar, LLC. BAE has produced over 50,000 FMTV trucks since the early 1990s and will continue manufacturing the trucks through 2010 but, according to Bob Murphy, president of the company’s land and armaments division, absence of new orders "poses a significant threat" to the company's production line in Seely Texas. The plant was counting on continued orders worth $1 billion per year in 2011. The contract awarded to Oshkosh will buy 12,415 trucks and 10,926 trailers at a total estimated cost over $3 billion.

AgustaWestland, Tata Form Helicopter Production JV in India

The Italian based AgustaWestland and Tata Sons of India have signed a Shareholders’ Agreement for the formation of an Indian joint venture (JV) company, establishing a final assembly line for the AW119 helicopters. The JV will be responsible for AW119 final assembly, completion and delivery. The first aircraft is scheduled to be delivered from the new facility in 2011 with production forecast to rise to 30 aircraft per year to meet worldwide demand. The new is positioned to become a supplier for the Indian Army for the Reconnaissance and Surveillance Helicopter (RSH) program, if AgustaWestland wins the bid, for which the locally manufactured AW119 was proposed.

BAE Systems, Anjani Join Forces in Vehicle, Body Armor

BAE Systems and the Indian company Anjani have announced a new partnership offering vehicle and body armor and equipment in India. Anjani is currently bidding for India's Central Reserve Police Force's (CRPF) requirement for 59,000 bullet proof vests, based on BAE System's Tensylon technology (made from high performance polyethylene fibre). 

India's Defense Procurement Strategy

India intends to maintain its defense spending at about 2.5 per cent of the Gross Domestic Product (GDP) which means defense spending will continuously grow – since New Delhi projects continued economic growth through the next two decades, at an annual rate of 8-10%. India is expected to spend around US$50 billion in next 20 years for acquiring weapons for its armed forces. 

Harnessing this investment to promote the local industry, defense procurement are based on 'Buy and Make' policy, emphasizing a bigger role of local companies in the military procurement. The Indian Government is encouraging the local industry to form joint ventures with international companies; many such JVs were announced recently. Furthermore, cooperation between government-owned companies and privately owned businesses has been encouraged. In the past, only government owned corporations were allowed to manufacture weapons.

The Indian ministry of defense is expected to publish the 'technology perspective and capability roadmap' for the next 15 years, which will highlight the requirements of the armed forces in future and help the defense industry to prepare themselves as per the requirements. Industry is also awaiting New Delhi's ruling on increasing foreign ownership of local enterprises, which currently stands at 26 per cent.

The growing requirements for offsets have encouraged local companies to open up for business opportunities with foreign companies, particularly as outsourcing for global defense manufacturers. Under the offset law, large contractors are subject to share with the Indian industry a third of the total worth of the program.

 

 

Business report - January 2010

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