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BAE's Electronic Systems Sees International, Commercial Growth

Aug. 13, 2013 - 03:45AM   |  
By PAUL McLEARY   |   Comments
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HUDSON, N.H. — Executives at BAE Systems’ US-based Electronic Systems segment are poised to push for international and commercial sales as they see the American defense market tighten, company officials said during a tour of their facilities here on Aug. 12.

The near-term goal is to grow sales of its commercial products from about 25 percent of its total electronics business to at least 50 percent, said Paul Markwardt, deputy general manager of the Electronic Systems division. “We believe that it’s possible to go beyond that,” he added.

Overall, he expects the electronic warfare (EW) market to expand by about 5 to 8 percent in coming years, even as other segments of the defense market struggle with declining orders.

The major reason for Markwardt’s confidence is that the company’s EW business has its hand in thousands of defense and commercial contracts for which it provides a multitude of components. The biggest is the company’s work on Lockheed Martin’s F-35 program, which accounts for about 6 percent of the segment’s annual revenues.

The company is also in the running for a potentially lucrative Army radio contract expected to be awarded this fall that could be worth about $2 billion over several years’ time.

The Mid-Tier Networking Vehicular Radio would connect soldiers in the field to higher headquarters by pushing voice, text and images back and forth. The Army plans to begin taking delivery of the radio in the spring.

But the real opportunities are on the commercial side, primarily in the airline industry. International customers are anxious to begin modernizing their fleets, especially customers in the Middle East who have shown interest in BAE’s “IntelliCabin” technology, which is designed to help conserve power and reduce the flying weight of commercial carriers.

When it comes to the defense market, the company sees some potential in Europe for sales of its hybrid propulsion system for ground vehicles. The company has already installed a version on its offering for the US Army’s Ground Combat Vehicle program, for which it is competing against General Dynamics Land Systems.

Earlier this month, the company’s British parent announced in London that it might offer upgrades to its CV90 armored vehicle that would include a hybrid-electric propulsion system to meet customer demands for fuel savings. The hybrid engine would also provide more power to the 30-ton vehicle, as customers are keen to add additional sophisticated electronic communications and jamming systems.

The hybrid system, installed on commercial buses in several American cities, faces a steeper climb in the defense market however.

“There is interest in it but [defense customers] probably don’t have the R&D funds available” to explore the possibility more thoroughly right now, Markwardt said.

While the defense market overall is being squeezed, he said, in his segment, “we see growth on the commercial side, we see growth in the EW part of the market.” As the company looks at the changing defense market, however, it is really trying to “focus our investment to follow the growth that we’re seeing.”

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