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