Military electro-optics business appears steady

Posted by John McHale

Earlier this month at the SPIE Defense Security and Sensing conference and exhibition in Orlando, Fla., when I asked attendees and exhibitors there about the military market I got the same answers I received form those at military electronics and military avionics events -- business is steady or improving.

This event followed on the Obama administration's announcement that they plan to kill the U.S. Air Force F-22 and Airborne Laser programs -- both of which contain significant electro-optics investment.

One gentleman from L-3 Communications told me "Even if they cancel one weapons system there are others that will get more funding to pick up the slack."

Folks at Physical Optics Corp. and Sarnoff say business has never been better. Dilas officials from Tucson, Aria., say their military laser business continues to grow at strong rate.

It should be noted that many of the exhibitors there say their business is still mostly custom as opposed to off-the-shelf. The custom designs are typically more of a long-term investment from the customer as opposed to products ordered off-the-shelf out of a catalog.

Let's hope this steady growth for military avionics, electronics, and electro-optics technology continues to be isolated from the rest of the economy.

The technology investment is needed -- world events prove that every day.  ¶ 4/28/2009 04:40:00 PM 0 Comments

  Aerospace and defense technology market gets a vote of confidence Posted by John Keller

Let's face it, a lot of us in mixed company lately have been giving air reflecting false bravado about the U.S. defense budget from fiscal year 2010 onward. On the surface, we're all supremely confident that military spending and the aerospace and defense industry will be just fine amid the economic ruin of banking, real estate, automotive, and other industries.

Inside, through, we're as nervous as cats. President Obama already has said he wants to kill the Lockheed Martin F-22 jet fighter, as well as manned vehicles in the U.S. Army's Future Combat Systems (FCS) program. Although confidence on the surface, many of us are wondering, what's next?

Truthfully there's very little to go on, save Defense Secretary Robert Gates's recent proclamation about the Obama Administration's attempt to discontinue not only the F-22 and FCS manned vehicles but also the Transformational Communications Satellite (TSAT) program and the military laser system called the Air Force Boeing Airborne Laser (ABL), which is designed to shoot down enemy ballistic missiles in their boost phase.

Today, though, let's all breathe a sigh of relief -- short-lived, though it may be -- because defense industry profits seem to be in good shape, at least for the time being.

Northrop Grumman Corp. this week reported a 47 percent increase in the company's first-quarter profits, as well as higher sales, all based on growth the defense contractor's technology business.

Northrop Grumman's first-quarter net went up to $389 million, compared with $264 million the year before. Revenue rose 7.7 percent to $8.32 billion.

Whew!

Keep an eye out, though. Our industry may be dodging a bullet now, but the rest of the story is up in the air. Details of the Pentagon's 2010 budget request will not be made public and go to Congress for consideration until at least early May -- and perhaps even later. Let's review: where does the Devil live, again? It's in the details, and we don't know what they are, yet.

Something else to consider: military systems integrators and electronics component suppliers may be doing well now, but some content this phenomenon simply indicates that the Pentagon is spending its congressionally appropriated money while it has it. Future years may tell a different story.

Still, there's good news today. With all the bad news out there, I'll take it.

Follow me on Twitter  ¶ 4/24/2009 07:16:00 AM 1 Comments

  Win some, lose some Posted by Courtney E. Howard

In life, you win some and you lose some. Sitting in McCarran International Airport in Las Vegas, slot machines silent all about me, I am reminded of this fact. It rings true in life in general, in sales, in the court system, when it comes to gambling, and it even extends to one's occupation. It is a powerful phrase, and the subject of many a song. It helps the general populace better accept events that could be considered mistakes, losses, or failures. I have trouble accepting "losing some," however, when it comes to the Transportation Security Administration (TSA) in the United States Department of Homeland Security.

I was arriving at McCarran when I first heard the news. "Corporal Justin Reed, 22, is under arrest in Boston after authorities found the bomb-making materials, a handgun and ammunition in luggage that passed a security inspection at McCarran Airport in Las Vegas," Fox 5 News in Las Vegas reported. "The Transportation Security Administration said Monday that materials found in a U.S. Marine's luggage, including a hand grenade fuse and three model rocket engines 'did not pose an imminent threat to aviation.'"

Heh?! Perhaps I did not hear that right.

I will check Boston.com to see what those reporters are saying: "During a layover at Logan International Airport Sunday morning, federal baggage screeners going through his military-style backpack found a semiautomatic handgun, a fully loaded gun magazine, a grenade fuse and detonator, and model rocket engines containing explosive mixtures. The bag had been checked without incident at McCarran International Airport in Las Vegas."

No incident. Not an imminent threat. Not buying it.

Here is the deal: I love the TSA, and what it stands for (as described at tsa.gov): We are your neighbors, friends and relatives. We are 50,000 security officers, inspectors, directors, air marshals and managers who protect the nation's transportation systems so you and your family can travel safely. We look for bombs at checkpoints in airports, we inspect rail cars, we patrol subways with our law enforcement partners, and we work to make all modes of transportation safe." The site further carries the headline, "Your Safety Is Our Priority."

I am not sure I could bring myself to fly were it not for TSA officials checking for riff-raff. I trust in them. Now, though, I would say that trust is dashed. Mistakes happen. They are only human. You win some... None of these turns of phrase are helping put me, and millions of others, at ease.

We do our part -- lots of us with a smile and a thank you. We show up two hours early. We limit our liquids. We remove our shoes, jackets, and all things metal. We pull out our computers and baggie of liquids. We even, at one time, surrendered our expensive mascara and lipstick because we did not realize that they were considered "creams." We make awkward jokes when we get patted down, follow direction when being scanned with a wand, and blush when a stranger rifles through our skivvies.

A majority of us are very grateful someone is looking out for us and doing their part to protect us from harm. TSA, please consider that this event, that baggage, and even a U.S. Marine could have posed a very real and imminent threat to public safety. Thank you to all those Transportation Security Officers who take their job seriously, stay alert and diligent on the job, are dedicated to public safety, and practice their craft with patience, politeness, courtesy, and understanding.  ¶ 4/22/2009 08:30:00 PM 2 Comments

  Hacking into the Joint Strike Fighter program
Posted by John McHale

The lead story in today's Wall Street Journal caught my attention. It details how spies have hacked into the U.S. Air Force's Joint Strike Fighter program and stolen key data on sensitive technology.

According to the article they hacked into computers at some of the Joint Strike Fighter (JSF) prime contractors that were connected to the Internet. Sources in the Journal article say the real classified technology such as sensor data is protected in computers unconnected to the Internet.

This isn't the first time either. Security of suppliers is a major issue within the Department of Defense (DOD) and not just regarding their Internet firewalls. I've attended conferences and spoke to many folks who are involved with the Department of Defense Trusted Sources of Supply efforts, aimed at ensuring the reliability of military components as technology development continues to be moved off U.S. shores.

Growing challenges include identifying counterfeit parts and keeping them out of the supply chain. Many parts are available on the web though sites such as the Chinese IC Mart and others claiming to have part numbers issued by trusted reliable defense suppliers -- without their reliability testing and at dirt cheap prices. If one of these parts found its way into a weapons systems or aircraft mission computer it could cost lives.

DOD and industry are also working to deliver anti-tamper capability to components earlier in the design cycle to prevent enemy elements from tampering with technology before it makes its way into mission-critical programs.

The threat of information attack is much more complicated than just breaching firewalls and hacking into systems at the DOD or the primes. Companies supplying software or hardware to the military need to ensure their computers and production processes are secure.

The threat will only grow as China and other rogue nations gain expertise in cyber warfare as the Journal article points out.  ¶ 4/21/2009 04:29:00 PM 0 Comments

  VME embedded computer industry buries the hatchet over VITA 46 VPX standard ... for now Posted by John Keller

Cooler heads apparently have prevailed in the VME embedded computer industry in a dispute over how to ensure interoperability of VME bus technology pertaining to the VITA 46 VPX industry standard for high-speed serial interconnects in high-performance military, aerospace, and commercial embedded computing.

I had openly been fretting over a rift in the VPX standard groups that had threatened to tear the VME bus community apart. Apparently this VPX dispute has been settled, and it's none too soon. I'm frankly relieved to see tensions subside; I've been following the VMEbus industry for a long time -- 20 years, in fact -- and I have a lot of friends and acquaintances here for whom I have respect and affection. I just didn't want to see things get ugly, and I think we were headed down that road.

The fight erupted last January when several VME card providers founded the OpenVPX Industry Working Groupto formulate interoperability standards for VPX-based systems. Their intentions -- on the surface, at least -- were sound because these companies wanted to hurry the standards process along to build momentum in the market, especially with prime defense contractors who are eager to use the technology, but are frustrated by the lack of interoperability standards.

There were two problems with how the OpenVPX group got started, however. First, the group was operating outside of the VITA industry trade association, which caught many in this industry by surprise, because VITA is the traditional place for creating VME-related standards. Second -- and much more damaging -- was the OpenVPX group's failure to invite some influential VPX providers.

By getting started on the wrong foot this way, the OpenVPX group initially hurt feelings and caused suspicion. Make no mistake; there's bad blood in this industry, and the way the OpenVPX group got started -- noble though its goals may have been -- just made things a lot worse.

Some companies thought the rightful place to formulate VPX interoperability standards should have been VITA. The OpenVPX members thought VITA was too slow, too engineering-centric, and was not well structured to deal with business and time-to-market issues that they believed were core components of VPX interoperability problems.

Here's how members of the VME embedded computer industry set aside their differences: they created one industry organization that is masquerading as two organizations.

Within VITA, industry members created the VITA 65 working group. Meanwhile, the OpenVPX group invited everyone in the industry to join. The two organizations' goals and objectives are the same -- to come up with meaningful interoperability standards for VPX systems -- and all members have equal influence and voting privileges.

Next October, the OpenVPX group will dissolve, and all of its work transferred to the VITA 65 group, which will take it to the entire VITA membership for adoption. This sounds great, and I trust the goals will be achieved.

We have to remember something else, though. The old rivals in this industry are watching each other, perhaps more closely than they ever have. In the open, these companies are embracing with their right hands, but their left hands are clutching concealed daggers.  ¶ 4/21/2009 09:35:00 AM 0 Comments

  Rest in peace Harry Kalas
Posted by John McHale

If you don't mind I'd like to take a break from blogging about the U.S. military budget cuts or President Obama's economic stimulus package to remember my favorite baseball announcer, Harry Kalas, long-time play-by-play man for the current World Champion Philadelphia Phillies.

Mr. Kalas passed away yesterday after suffering a heart attack in the broadcast booth at a Phillies game.

He'd been calling games for the Phillies since 1971, pretty much my whole life. I grew up listening to Harry and his partner in the booth Ritchie "Whitey" Ashburn in the 1970s and 80s on television and radio. When the Phillies were on national television I would turn down the volume and put Harry on the radio.

I'm sure it's the same for Tiger fans who grew up with Ernie Harwell or for generations of Cubs fans who listened to Harry Carey. There's something so familiar about hearing their voice call a game, bringing you back to when you were a kid and all that mattered was baseball, comic books, etc.

I've been far away from the Philadelphia for more than a decade, but recently during the National League Championship Series I heard Harry do the intro on Fox for Game 1 and it brought me right back...

Whenever a Phillie would hit a homerun, Harry would say .. "that ball is outta here!!! Home Run," The Bull Greg Luzinski or Bake McBride, or Ryan Howard. Etc.

My favorite one was when home run king and Phillie third baseman Mike Schmidt hit his 500th home run. If I remember correctly it was in the 9th inning of a game against the Pirates in Pittsburgh and it turned out to be the game winner that night. Harry got emotional and his voice cracked when he yelled "Number 500!!!! Michael Jack Schmidt!!!"

He really loved the Phillies. I saw a report on ESPN last night that before the last game he called he threw out the first pitch and in the last post-season game he called, the Phillies won the World Series.

Quite fitting

So long Harry Kalas and thanks for decades of memories.  ¶ 4/14/2009 10:36:00 PM 0 Comments

  When you're considered an 'industry expert' Posted by John Keller

I'm quoted today in The Telegraph, the daily newspaper of Nashua, N.H., as an alleged industry expert on military technology matters where the Lockheed Martin F-22 Raptor advanced tactical fighter jet is concerned. The paper wanted my opinion on how the Pentagon's plan to scale back purchases of F-22 jet fighters in the latest defense budget proposal will affect the BAE Systems Electronics and Integrated Solutions segment in Nashua, N.H.

The story, entitled Halting jet's production may hurt BAE, is based on an assumption that BAE Systems might lose money or cut jobs if the Pentagon can halt production of the F-22 at slightly less than 200 fighter jets. BAE Systems is involved in much of the aircraft avionics technology for the F-22. I pointed out that BAE Systems is well positioned not to be hurt significantly by stopping one big defense program. BAE is about technology, not platforms, I said.

Really, I'd like to make two points where the proposed U.S. Defense Department budget is concerned.

First, the DOD budget most likely will be rich in aerospace electronics, with military electronics technology money perhaps flowing toward soldier systems rather than big aircraft, ship, and combat vehicle programs. The money for electronics and electro-optics technology is likely to stay in the budget, so aerospace and defense technology companies should not take substantial hits overall. I seriously doubt if we'll see the kinds of defense budget cuts in the Obama Administration that we did during the Clinton Administration.

Second, this budget fight is far from over -- in fact it's hardly begun. Congress will have the last word on how much money the Pentagon will get next year and where it will be spent. In this Democrat-dominated Congress, jobs and the economy are the first priority. Lawmakers will be reluctant to kill defense programs perceived to employ a lot of people. I think it's no a foregone conclusion that production will stop on the F-22. DOD tried for years to kill the V-22 Osprey tiltrotor aircraft, and Congress never let them do it. It could be the same with the F-22.

Something else to think about: Somali pirates hijacked a U.S.-flagged vessel today for the first time in the latest Indian Ocean wave of piracy. Congress is watching this, and knowing that their constituents will expect a strong U.S. response. Being perceived as cutting the defense budget right now won't be considered a good way to get votes.

I know it can be fun to trumpet doom and gloom based on comments from the secretary of defense. But keep your chin up. The Congress has not weighed in yet on the proposed DOD budget restructuring, and I think it could be interesting what Congress comes up with.

Stay tuned ...  ¶ 4/08/2009 11:46:00 AM 0 Comments

  Bye bye F-22
Posted by John McHale

Well, after months of speculation in the media, Defense Secretary Robert Gates announced his plans for restructuring of the Department of Defense (DOD) including cutting the U.S. Air Force F-22 Raptor program.

The decision not to produce any more F-22s hits many in the defense electronics industry in the gut especially at F-22 prime contractor Lockheed Martin. Reportedly Lockheed claims canceling this program would result in the loss of about 90,000 jobs.

I remember speaking to people from Lockheed in Ft. Worth, Texas, back when they won the F-35 Joint Strike Fighter (JSF) program and was told that people were crying with joy because the win would guarantee work for 30 to 40 years and mean they could send their children and grandchildren to college.

It hits every area of the community.

It won't just be Lockheed jobs that disappear, but many from the second and third tier suppliers that design hardware and software for the F-22's advanced systems.

The loss of the F-22 will affect the companies that supply the mission computers, cockpit displays, real-time operating systems all the way down to the optical connectors.

These suppliers will still support the aircraft that have already been bought, but the loss of future orders will change their one, two, and five year outlooks drastically.

However, there will still be opportunities for designers of defense electronics. Gates says that the DOD will still support the JSF and increase funding for Special Forces operations to go after insurgents.

They are trying to restructure the military to better fight the War on Terror. Many in the current administration feel that the F-22 was designed to fight a more conventional type of war.

Therefore the DOD will still need electronics for intelligence, surveillance, and reconnaissance more than ever before to help track down terrorists worldwide. This will come in the form of better communications and electro-optics capability for Special Forces, video and satellite surveillance technology, electronics for unmanned systems, etc.

Despite these opportunities, the loss of the F-22 will hurt, but we won't see how much for at least a year or two.

Some leaders in Congress reportedly protested the cut of the program claiming that cutting funding to help the warfighter is a mistake and only being done because the Obama administration wants to spend money anywhere else such as bailing out a failing General Motors.

I keep thinking of what Ronald Reagan said once during a debate with Jimmy Carter --that "a recession is when your neighbor loses his job, a depression is when you lose yours and recovery is when Jimmy Carter loses his."

Something tells me some folks at Lockheed might want to swap out Jimmy Carter for someone else right now...

You be the judge.  ¶ 4/07/2009 02:10:00 PM 0 Comments