Defense Stocks Soaring on Gates News

Discussion in 'Stocks' started by Landis82, Apr 6, 2009.

  1. I really don't expect any reductions in the baseline investment account for either the 2010 or 2011 budget - - - quite simply because I don't see any anything more than a modest reduction in force structure.

    Moreover, the 2011 budget will be submitted in Feb. 2010, which is an election year - - - a time when I doubt there will be a strong appetite to reduce programs linked to jobs.

    If anything, the best opportunity to reduce the baseline budget won't likely come until the 2012 budget.

    I'm a buyer of this group.
    #21     Apr 7, 2009
  2. Defense budget plan tough sell on Capitol Hill

    $534 billion defense spending plan challenged as lawmakers try to save programs, jobs

    * Donna Borak, AP Business Writer
    * Tuesday April 7, 2009, 7:03 pm EDT

    WASHINGTON (AP) -- Defense Secretary Robert Gates' proposed budget, which axes some multibillion-dollar weapons projects, is encountering strong resistance from lawmakers whose districts stand to lose thousands of jobs during a recession.

    Members of Congress and military analysts said Tuesday that the potential loss of jobs is by far the biggest hurdle the administration's plan must overcome as it looks to build support on Capitol Hill, and they expect some concessions.

    Part of Gates' proposed $534 billion defense budget represents a shift away from outdated weapon systems conceived in the Cold War to futuristic programs aimed at unconventional foes. Analysts say his challenge is to build support in Congress on those larger issues instead of the parochial interests of individual lawmakers.

    Defense consultant Jim McAleese said Gates will face stiff resistance on his plan to end production of Lockheed Martin Corp.'s F-22 fighter jets over lawmakers' fears that union jobs with salaries between $60,000 and $80,000 will be lost.

    "That will be the job fight," said McAleese, who anticipates that Congress will add 16 more of the planes to the approved total of 187 into the war budget expected Thursday. Otherwise, the majority of Gates' recommendations should pass, he added.

    Aerospace analyst Richard Aboulafia of the Teal Group agreed, saying the Pentagon's move to add four more of the radar-evading supersonic planes before killing the F-22 program gives Congress extra time to find more cash for it.

    Recommendations Gates made Monday to cut weapons projects like Lockheed's F-22 jet and Boeing Co.'s military transport C-17 plane may mean a substantial loss of U.S. jobs at a time when the unemployment rate stands at 8.5 percent, highest in a quarter-century.

    Recognizing the sensitivity of more layoffs during an economic downturn, Gates said he hoped lawmakers would resist temptations to save outdated systems simply to keep jobs in their home districts. But some members of Congress said they will work to overturn Gates' proposals.

    "There are certain policy decisions Congress has a say so in, and we are going to have a say," Sen. Saxby Chambliss, R-Ga., a member of the Senate Armed Services Committee who wants to buy up to 60 more of the F-22 fighter jets, said Tuesday.

    In an interview aired on PBS Tuesday, Gates said he would stress to Congress the need to reform the Pentagon's weapon buying system, which includes making tough decisions on programs that aren't working.

    "When programs are out of control, when they're six years late, when they're twice the cost that they were originally forecast, something has to be done. Something has to give," Gates said.

    Lockheed has said almost 95,000 jobs -- mostly in California, Texas, Georgia and Connecticut -- could be at risk if the Pentagon didn't buy more F-22 jets. Boeing and its Capitol Hill supporters have said 4,000 jobs in St. Louis, plus thousands more could be at risk if the C-17 is cut.

    Still, the Pentagon's effort to ramp up production of Lockheed's Joint Strike Fighter, also known as the F-35, or protect its shipbuilding industrial base in Bath, Maine, and Pascagoula, Miss., could mean new jobs even as others are lost, analysts said.

    And Gates said Monday there could be as many as 82,000 direct jobs on the F-35 program by fiscal 2011, up from 38,000 in fiscal 2009.

    Still, congressional aides said it's a tricky trade-off for lawmakers to lose an existing job for the promise of one or more down the road.

    To further ease the sting of potential job losses, Gates' plan could accelerate the timetable for other programs, including Navy purchases of speedy combat ships made by Lockheed and General Dynamics Corp., congressional aides and analysts said.

    But even attempts to replace Gates' plan to scrap new presidential helicopters with proposals for a smaller, less expensive fleet will be an arduous battle on Capitol Hill, congressional aides said.

    The White House helicopter program has been plagued by cost overruns and delays due partly to aggressive plans by the Bush administration to incorporate anti-missile defenses, communications equipment, hardened hulls and other advanced capabilities on the helicopters following the 9/11 terrorist attacks.

    New York Democratic Reps. Maurice Hinchey and Michael Arcuri along with 11 other House members last month sent a letter to President Barack Obama urging him to avoid wasting the $3 billion already spent on the helicopter project. Up to 800 jobs could be at risk if the Pentagon cuts are approved in the upcoming budget, Hinchey spokesman Jeff Leiberson said Tuesday.

    Rep. John Murtha, D-Pa., chairman of the House Appropriations defense subcommittee, has urged the White House not to scrap the helicopter project, despite its $13 billion price tag and six-year delay.

    Murtha spokesman Matthew Mazonkey on Tuesday said only that Gates' recommendations are being reviewed.
    #22     Apr 8, 2009
  3. Have you heard any recent developments on the whole USA starting to sell weapons to India situation? Such as specifically which companies are involved? I've heard LMT's name thrown in the mix, which I am currently long, but wouldn't mind more exposure to that market if possible.

    Time frame?

    I don't think India can afford NOT to spend on military with all of the chaos going on in Pakistan.
    #23     Apr 9, 2009
  4. Defense sector outperforming the broader market today . . . LMT, LLL, GD, etc.

    LMT now 20 points off the lows.
    LLL now 16 points off the lows.
    GD now 13 points off the lows.

    And people thought this sector was left for dead. They've been sadly mistaken.

    #24     Apr 16, 2009