Future Army Vertical Lifting Competition Could Have Devastating Impact On Industrial Base

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Later this year, likely in September, the US military will select the winner of its largest rotorcraft program since the days of the Vietnam War.

As part of its Future Vertical Lift modernization program, the service will select the successor to its ubiquitous UH-60 Black Hawk.

The military calls the successor a “future long-range assault aircraft,” and there is no doubt that it will far exceed the performance of the venerable Black Hawk. The military expects to purchase 60 a year for decades to come.

Two teams are competing for the prize, one led by Bell/Textron and the other by Boeing.
BA
-The Sikorsky team. All companies contribute to my think tank.

This comment is not about who has the best deal, or how the new rotorcraft will transform the conduct of land warfare. This is the impact of the contract award on the rotorcraft industrial base.

Industrial base considerations are not part of the selection criteria that will determine who should win the program. The Army says it is aware of the potential industrial fallout, but the reality is that whichever team wins, it will be set up for decades of high-volume work, and whichever team loses, it will be seriously, perhaps fatally, damaged.

Black Hawk’s successor will not just replace 2,000 UH-60s in the Army’s fleet; its advanced technology and economies of scale will make it the prime candidate to replace aging utility helicopters in other military services and allied fleets.

In other words, it will likely overshadow its rivals’ sales prospects in the global military market. Just providing spare parts and support for the selected aircraft will earn the winning team a long-term franchise worth tens of billions of dollars.

Against this backdrop, it’s not hard to see which team has the most to lose. That would be the Boeing-Sikorsky team, which built 90% of the helicopters in the army’s current fleet.

The three dominant aircraft in the current fleet are the Boeing Apache
PAA
tank killer, built in Mesa, Arizona; its Chinook jumbo jet, built near Philadelphia; and Sikorsky’s Black Hawk, built in Stratford, Connecticut.

These three rotorcraft all have one thing in common: if the army has its way, they will cease production before the end of the decade.

The service currently purchases 812 Apache upgrades under a multi-year contract, but at nearly 100 deliveries per year, this program will not be funded beyond 2025. The Chinook was supposed to be upgraded. upgraded to a “Block II” configuration that would have kept the Boeing factory near Philadelphia running for 20 more years, but service has reversed and now seems uncertain about upgrades.

As for Black Hawk, it must cease production later in the decade to make room in the budget for a ramp-up of its successor.

There are a few other rotorcraft programs underway at the factories, but production of V-22 tiltrotor airframes for maritime services at the Philly factory is nearing completion, and production of a heavy-lift helicopter for the Marine Corps in Stratford will barely exceed 200 aircraft.

Thus, the “future long-range assault aircraft” will largely define the future of the domestic rotorcraft industry. The Army plans to award a smaller reconnaissance helicopter later in the decade, but these are small potatoes compared to the Black Hawk replacement.

It is no exaggeration to say that the three plants in question represent the bulk of rotorcraft production capacity in the United States. A defeat in September could therefore doom a large part of this capacity.

For Sikorsky, a unit of Lockheed Martin
LMT
the impact on Connecticut’s 8,000 workers, nearly two-thirds of its workforce, would be devastating, as would the impact on 242 state suppliers.

Sikorsky has operated the Stratford plant since 1929 and currently spends about $450 million annually in the state for parts and support; Lockheed has invested $1 billion in plant upgrades since acquiring Sikorsky in 2015.

Boeing’s Apache plant in Mesa plays a similar role in the regional economy, employing nearly 4,000 workers at a site it acquired from McDonnell Douglas in 1997.

As for Boeing’s Philadelphia site, where it plans to locate the headquarters of its program to build a successor to the Black Hawk, the consequences of not winning the prize would be profound; it is the largest remaining industrial site in the lower Delaware Valley, a place that has managed to survive even as other industries like electronics and petrochemicals have gradually deserted the area.

Two generations ago, the industrial corridor across the river south of the city was famous for its shipyards, refineries and railcar production; the Chinook is today produced in a building that originally manufactured Baldwin locomotives – once the largest such company in the world.

It’s all gone now except for the Boeing factory and a Kimberly-Clark
KMB
site near Chester. Boeing employs more than 4,000 people at its helicopter factory and relies on 473 suppliers in the Keystone State.

Of course, there would be ripple effects in other states if the Boeing-Sikorsky team lost, and these would to some extent be offset by new investments in Texas if Bell/Textron won (I’ll write on this possibility later).

But the Biden administration and Congress should have no illusions about what it will mean for workers in Arizona, Connecticut and Pennsylvania if the Boeing-Sikorsky team fails to prevail in the competition.

Several thousand jobs will be lost, not only at Boeing and Sikorsky, but also at hundreds of suppliers and, indirectly, at other local businesses.

First to go will be the engineers, who without a win will have little to do with their skills, and they will be followed by production workers who will have no product to assemble by the final years of the decade. .

The Biden White House talks a lot about industrial revitalization. This is an opportunity to reflect on the link between military spending and economic performance.

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