August 6 Defense Industry Weekly Roundup

Posted by Fred Wellman

Defense Armageddon Prediction Clashes with Profits, Optimism

Nik Taborek and Brendan McGarry, Bloomberg Businessweek. The predictions of doom from sequestration continue from the Aerospace Industries Association and major defense manufacturers. But the stories clash with the realities of continuing profits and rising revenue. The top five defense manufacturers reported higher than expected profits for the second quarter and analysts estimate that four of the five will see rising earnings next year. The danger continues that investors will flee if the industry continues to pound the drum of danger, and the public will sour if it looks like the fight is nothing more than an effort to protect profits. Coupled with the danger of scaring off top quality employees, the defense industry finds itself threading a needle to stop a precipitous cut in spending while maintaining a steady hand at the helm of their firms.

Obama Budget Chief Jeffrey Zients to Congress: Sequestration ‘Not the Responsible Way’ to Cut Debt

Rosalind S. Helderman and Ed O’Keefe, Washington Post 2Chambers Blog. The much anticipated showdown between the administration and House Republicans on the plans for the possible sequestration finally occurred last Wednesday with much political showmanship, plenty of finger pointing and no one taking the blame for the ridiculous situation. Acting Office of Management and Budget chief Zients was joined by Deputy Defense Secretary Ash Carter to tell Congress they don’t have a clear plan for the cuts because they are so outrageous and have concerns that planning for the cuts will lead to a sort of pre-emptive cutting back before the actual cuts go into effect.  Carter expressed it matter of factly saying “We don’t want to begin taking actions now to tear ourselves to pieces to prepare for something that’s really stupid.” Meanwhile Republicans are accusing the President of using sequestration as a tool to force tax increases. In the end…they still took the August recess with nothing accomplished.

Navy Teaches Robot Top Gun, X-47, To Fly From Aircraft Carriers

Sydney J. Freedberg Jr., AOL Defense. The Navy’s newest drone has made the move to Patuxent River to begin readying for trials to become the first unmanned jet aircraft to take off and land on an aircraft carrier. The X-47B Unmanned Combat Air System is built by Northrop Grumman and has been testing at Edwards Air Force Base but now enters the more challenging tests of simulated carrier operations and complex air traffic and electronics environment of the east coast. The X-47 is really just a test aircraft and predecessor to the Navy’s goal of a full carrier capable system for 2019-2020.

Defense Contractors’ IT Businesses Under Pressure

Marjorie Censer, Washington Post Capital Business. While four of the big five defense manufacturers saw increased revenue in the second quarter it wasn’t all good news as the Information Technology business units continue to be pressured. Already a fairly low margin business sector for the industry, many IT companies are seeing reduced revenue and tighter contracting opportunities as the government seeks lowest price deals over ‘best value’ contracts. It fits into the likely cuts we will continue to see in services contracts in the industry.

Pentagon Wants to Monitor Facebook, Twitter to Predict Terrorism

Nextgov on Mashable. The Defense Advanced Research Projects Agency has released a Request for Proposals for development of algorithms that will examine the chatter of millions of internet users with the goal to sense how online groups or movements evolve and to hopefully predict outbreaks of violence before they occur. DARPA will start taking proposals on August 27th and close on September 26th. We are sure this will cause people to freak out about the government monitoring their social networks cause that’s what always happens.

Vets’ Unemployment Rate Improves Again in July 

Patricia Kime, Army Times. The good news trend in veteran unemployment continued with the release of the July statistics from the Labor Department. Overall unemployment for the nations 21.8 million veterans fell to just 6.9 percent from 7.4 percent in June and well below the national average of 8.3 percent. Even more encouraging was the numbers for post-9/11 veterans with a fall to 8.9 percent down from 9.5 percent in June and all the way down from 12.4 last July. While the veterans numbers are always statistically difficult to trust due to the small number of vets surveyed, the trend is decidedly showing improvements in unemployment.

How Amazon Learned to Love Veterans

Adam Lashinsky, Fortune Tech/CNN Money. Perhaps the reason that the unemployment rate is falling for veterans is the discovery at companies like Amazon that military veterans are exceptional employees. Remarkably in 2011, 25% of all of new salaried employees at Amazon’s fulfillment centers were ex-military. They found many veterans are “leaders who can invent, think big, have a bias for action, and deliver results on behalf of our customers,” according to Amazon CEO Jeff Bezos. For a fast moving Fortune 500 company those are attributes they desire. The increasing number of young leaders with military background in the corporate world confirms the value veterans bring.

The week ahead:

Tradeshows and Conferences: 

AUVSI Unmanned Systems North America 2012, Las Vegas (Mon-Thurs, 6-9 Aug) The annual AUVSI show is the largest gathering of unmanned systems focused efforts in the world and is attended by well over 8,000 participants from 40 countries converging on over 500 exhibits. This year the show occurs as the debate over domestic use of drones has become a hot topic in the U.S. and the overseas use of armed systems for attacks on U.S. enemies is subject to constant debate. We will be attending the show with our partners from Edelman this week so watch for tweets and updates from the show from Fred Wellman.

Congress:   The full Congress is not in session this week with the August recess and will not return until September 10th.

Think tanks and other news events: 

Stimson Center: Coping with Defense in an Era of Tight Budgets, Featuring Andrew Nien-Dzu Yang, Vice Minister of National Defense for Policy, Taiwan, Washington, DC (2:30 PM, Tues 7 Aug) Description: Taiwan’s President Ma Ying-jeou has observed that cross-Strait reconciliation not only can bring peace and prosperity but also constitutes Taiwan’s first line of defense and security. At the same time, maintaining strong national defense is an essential pillar to deter external threats and to support peaceful engagement. This requires continuous modernization of weapons systems. Vice Minister Andrew Yang will address Taiwan’s efforts to square the circle between ensuring sufficient capability for meaningful self-defense and the maintenance of credible deterrence while coping with tight financial resources. RSVP online. Participants: Andrew Nien-Dzu Yang, Vice Minister of National Defense for Policy Location: 12th floor, 1111 19th Street NW, Washington, DC 20036

Center for Strategic and International Studies: Ushering in A New Era in State-Defense Cooperation, Washington, DC (10:30 AM, Wed 8 Aug) Description: The need to revamp interagency cooperation was one of the major national security lessons of the last decade. Please join us for an on-the-record session with Assistant Secretary of State for Political-Military Affairs Andrew J. Shapiro, who will discuss the significant advances and tangible progress being made to improve State-Defense collaboration to address today’s complex national security challenges. RSVP online. Participants: Andrew J. Shapiro, Assistant Secretary of State for Political-Military Affairs, John Hamre, President and CEO, CSIS, David Berteau, Senior Vice President and Director of International Security Program Location: B1 Conference Center, 1800 K Street, NW, Washington DC, 20006

Fred Wellman with General Petraeus in Iraq

Fred Wellman, President ScoutComms, brings us his weekly review of defense industry news via The Scout Report. Fred served over twenty years as an Army officer in both aviation and public affairs. You can follow Fred on Twitter @ScoutComms.

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This entry was posted on Monday, August 06, 2012 9:37 am

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