US Aerospace and Defense Manufacturers Could See Healthier Demand Under New Bill

By Woodrow Bellamy III  | December 13, 2016
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[Avionics Magazine 12-13-2016] A healthier environment for demand of military aircraft avionics components, hardware and software appears on the horizon for U.S.-based military avionics suppliers according to proposals for new acquisitions and aircraft restoration included in the 2017 National Defense Authorization Act (NDAA). As U.S. lawmakers have sent the new defense-spending bill to the White House for approval, here are some of the latest updates. 
F/A-18F Super Hornet fighter jet. Photo: Boeing.
The 2017 National Defense Authorization Act calls for a $3.2 billion increase in overall U.S. defense spending. Elements of the bill should lead to a healthier and more consistent demand for forward and retrofit avionics on U.S.-operated military aircraft. 
NDAA includes the restoration of a Carrier Air Wing and the purchase of 11 additional F-35s, 14 F-18s, three C-130Js, four C-40s, and two V-22 aircraft along with 36 UH-60 Blackhawks and five Apaches. It also includes funding for the modernization of 172 legacy C-130H tactical airlifts operated by the Air National Guard and Air Force Reserve. The bill also supports procurement of 15 KC46A tankers to replace aging KC-135 and KC-10s. 
Procurement of more new aircraft and restoration of existing fleets means more demand for Electrical Wiring Interconnect System (EWIS) components, advanced sensors, processors, mission computers and displays among other components.
The military avionics division of Harris Corporation, which provides tactical communications, geospatial systems and air traffic management solutions among other technologies, is also seeing a more stable environment for some of its defense-related avionics technologies. Brad Truesdell, senior director of aviation systems at Harris, told Avionics Magazine that the acquisition community has helped in mitigating the challenges the industry has endured as a result of sequestration in recent years. 
“Sequestration, the ongoing uncertainty that industry has had to deal with because of the budgeting process in the recent past, has been problematic,” said Truesdell. “The acquisition community is doing a very good job to mitigate those challenges for us. They’ve done a great job working with some of those challenges — like the budgeting some foreign countries have had to deal with as well. What we see right now in my position of the supply chain is a relatively stable demand for aircraft,” said Truesdell. 
Truesdell’s division at Harris primarily provides advanced processors and onboard computing, processing and networking and storage capabilities for military airframes such as the F-18, F-22 and F-35. In fiscal 2017, Harris, which has annual revenues of approximately $7.5 billion, expects to spend about 4 percent of it on research and development. 
“I think from our perspective, we certainly exercise ourselves and want to understand what the challenges are in the budget process but we’re making capital commitments for hiring people because of the consistent messages we’re getting from primes as well as from the acquisition community, and the services,” said Truesdell.
Avionics makers could also take away positives from last week’s annual Aerospace Industries Association (AIA) year-end review and forecast luncheon. During a speech about a recent meeting with incoming President-elect Donald Trump, AIA President and CEO David Melcher expressed optimism for the industry under the new administration. Melcher believes the new administration will put an end to the sequestration policy that has significantly reduced U.S. defense spending in recent years, although he admits putting an actual halt to the sequester will be a major challenge. 

“What I can tell you, based on that meeting, is that the president-elect listened carefully to our views on the need to beef up investments in defense capabilities and to spur high tech innovation. When Mr. Trump later strongly came out for ending the defense spending sequester, I was not surprised. This position along with his desire to make infrastructure investment and tax reform an early priority is, from our industry’s perspective, quite promising. But we also have no illusions that getting positive action on our entire industry agenda will be easy. No doubt we’re going to have significant challenges with the new administration and Congress on issues such as trade,” said Melcher. 

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