Company executives from Rolls-Royce’s U.S. sector say they are not worried about the $487 billion in defense spending cuts planned over the next decade nor the threat of an additional $500 billion in mandatory cuts — yet.
Rolls-Royce, which globally has 18,000 operational engines military aircraft such as Lockheed Martin C-130Js, legacy C-130s and Bell-Boeing V-22 Ospreys, said its existing service contracts and “solid production order book” could “take us through any bathtubs in defense spending,” said Tom Hartmann, senior vice president of U.S. government programs.
The next decade “looks challenging, but we believe we have a solid portfolio of products,” Hartmann said at a June 27 briefing in Washington.
The mood among Rolls-Royce executives during the briefing was more upbeat than the gloom-and-doom picture being painted by other defense executives who have warned of mass layoffs should the additional $500 billion in cuts, known as sequestration, go into effect on Jan 2.
“We don’t see any of those aircraft stopping flying in the short term, so we see the need for support,” Hartmann said. “We have long-term contracts … that keep our factory running for the foreseeable future.”
Asked about layoffs, Hartmann said, “It’s too early to tell.”
About half of Rolls-Royce’s business resides in the civil aerospace sector, with 20 percent in defense aerospace.
“I would hate to say there’s no possibility of us having to take action, but right now we are continuing to work programs and support our customers and look toward the Defense Department as they do their future planning,” he said.
The company is working on two U.S. Air Force engine development projects: the Highly Efficient Embedded Turbine Engine and Adaptive Versatile Engine Technology.
“We’ve positioned ourselves very well in the technology realm,” Mark Wilson, chief operating officer of Rolls-Royce North American Technologies, said during the briefing. “Obviously, where those go and the products they lead to are to be determined, but we’re really positioning ourselves to be ready for the next set of need for the U.S. Department of Defense.”