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Defense Business Brief: Details on the labor shortage. Earnings Summary; Rheinmetall opens prototype plant in Michigan. more.

Now that the top six defense companies have reported their quarterly earnings, there is a unifying consensus that labor shortages and supply chain disruptions will continue for at least the rest of the year.

As pointed out earlier, shipyard welders and pipe fitters are among the most in-demand jobs in the defense sector. Shipbuilders such as Huntington Ingalls Industries and General Dynamics are particularly concerned about the shortage of skilled workers. The two companies have jointly built the U.S. Navy’s Virginia-class and Columbia-class submarines, both of which had ramped up production shortly after her pandemic hit in early 2020. The two companies were working to build a workforce and supply chain capable of building two Virginia-class submarines. every year.

“Given the nature of shipbuilding and its business, such a shock to the system could hit quickly, but it will take time to recover,” said Jason W. Aiken, CFO of General Dynamics. increase. “What we are seeing in the Virginia program is because the supply chain is struggling to keep up and is struggling to achieve the cadence it needs.”

Late last year, the Biden administration used the Defense Production Act to scale up Virginia-class production. But more can and should be done. Raytheon Technologies CEO Greg Hayes last week called on the government to provide more support for apprenticeship schools that train skilled workers.

At a roundtable with reporters on Wednesday, I told Douglas Bush, the Army’s acquisitions officer, that the service is doing something to help companies currently facing tough job market challenges. I asked if

“I think we’re watching them and indirectly helping them, but we want private industry to manage their workforce and get ahead of the curve when they see a problem. (The Army posted a transcript of the roundtable, so you can read his entire response here – and I misspelled my name).

Below is one of the interesting items from each earnings call.

  • Northrop Grumman has a $11.3 billion backlog of classified space work, CEO Kathy Warden said on the company’s conference call on Tuesday. “We continue to see the national security space sector as one of our strongest growth drivers,” she said.
  • Lockheed Martin has poached 50 employees from its “international operations” to accelerate the ramp-up of its F-16 production line in Greenville, South Carolina. CFO Jay Malave said on his July 19 conference call: Lockheed has a dedicated HR team in Greenville and currently builds F-16s for US allies.
  • Boeing’s defense and space businesses were hit with a $400 million claim. The company has to spend money on his MQ-25 refueling drones, the NASA commercial crew program, the T-7A pilot training jet, the KC-46 tanker, and the VC-25B Air Force One, which are in development for the Navy. I did.
  • Congress passed the CHIPS law this week, but it won’t solve the semiconductor shortage problem anytime soon, said Aiken, CFO of General Dynamics. His IT hardware business at the company “continues to struggle with a chip shortage that continues to plague its ability to deliver certain products,” he said.
  • Greg Hayes, CEO of Raytheon Technologies, said labor shortages (see above), especially at suppliers, have become a bigger problem than the sick workers that were prevalent early in the pandemic. increase. “The labor issues we continue to see haven’t abated … I think that is the problem and why we continue to struggle in the supply chain.”
  • L3Harris CEO Chris Kubasik said the company’s newly announced Agile Development Group is pursuing “multiple categorized opportunities.” L3 Harris, Lockheed and Northrop signed a contract with the Air Force in June to develop a new air-to-ground weapon, the Stand-In Attack Weapon. L3Harris’ Agile development group is leading the pursuit of that contract.

About 2,500 Boeing employees in St. Louis plan to strike Monday. Workers who build F-15 and F/A-18 fighter jets, MQ-25 refueling drones and T-7 pilot training jets rejected contract offers on Sunday.

Senate Budget on Thursday The defense budget for fiscal 2023 is $850.4 billion, which is 8.7% higher than this year’s budget and about 4.5% higher than the budget proposed by House Democrats, Roll Call reports.

And finally, the German defense company Rheinmetall announced the opening of a 46,669 square foot facility in Sterling Heights, Michigan for engineering and prototyping work. The company, which is competing to build an optional manned combat vehicle for the Army, also received a $1.5 million grant that will help create 125 to 150 jobs over the next three years. “The new location is a demonstration of our continued investment in the United States, bringing new technologies and highly skilled jobs to the region to support the U.S. military’s many modernization programs,” the company said. “This new facility will house state-of-the-art digital engineering, prototyping and system integration labs, allowing us to engage deeply with our customers at all stages of vehicle development,” it said in a statement.


from Defense One

A special cease and desist order from Air Combat Command does not cover all fighters in the Fleet, Overseas, or other branches of service.

The global economy and a shortage of factory workers are among the factors complicating efforts to bring chip manufacturing back to the United States.

The company’s mission systems division is feeling the shortage of semiconductors more than other divisions.

Passes the CHIPS Act // Jesse Salazar and Jonathan Panikoff

Two former defense and intelligence leaders are urging Congress to take action to help the US semiconductor industry.

Kathy Warden said the company’s B-21 stealth bomber is well positioned to compete with next-generation Air Dominance fighters.

Raytheon CEO says economic slowdown may be the only way to fill job openings.

The budgeting process has become rigid, with huge sums of money being spent on last year’s priorities.

Here’s what industry executives were concerned about at the Farnborough Air Show:

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