US defense contractors are riding high these days, buoyed by rising Pentagon spending on the wars in Iraq and Afghanistan as well as the high cost of homeland security in the US-declared war on terror.
The fiscal 2006 defense budget is set to climb to US$441 billion, an increase of US$21 billion over this year. It envisions an additional US$50 billion for the wars in Iraq and Afghanistan.
The US Congress plans to approve US$79 billion for weapons systems procurement and about US$69 billion for military research and development.
Lockheed Martin, Boeing, Northrop Grumman, Raytheon, General Dynamics, Honeywell and United Technologies have all done well in the first half of this year and have a huge backlog of orders. With US President George W. Bush and Congress ready to spend, they can expect robust sales for years to come.
Lockheed Martin, the biggest US defense contractor and top seller of secure computer systems, saw net profit jump 41 percent to US$830 million in the first six months of this year.
Half-year sales rose to US$17.8 billion from US$17.1 billion in the same period last year, despite a drop in deliveries of F-16 fighter jets that cut into warplane sales.
Lockheed, which is also strong on missile defenses, integrated electronic combat systems and military space programs, projects sales for this year of up to US$38 billion and has orders worth another US$73 billion.
Boeing, the second-largest commercial aircraft maker behind Airbus, is also the second-largest US defense contractor. Sales in the first two quarters of the year were up 8 percent to US$27 billion. Earnings dropped 10 percent to US$1.1 billion due to one-time charges related to its commercial aircraft operations, but that didn't dampen the company's outlook.
Boeing's military division posted sales of US$15.3 billion in January-June, an increase of 5 percent. Operating profits rose 16 percent to US$1.7 billion.
Another big prize would be a US government contract for mid-air refueling tankers, where Boeing is competing with the European Aeronautic, Defence and Space Company (EADS).
Boeing also coordinates Future Combat Systems (FCS), an ambitious US$125 billion project aimed at making US soldiers more effective on the battlefield by integrating new weapons and communications systems. Almost all US defense contractors are participating. At the end of June, Boeing had military orders of USS$85.7 billion.
Northrop Grumman, which specializes in warships, warplanes, information technology and space, has US$57.1 billion on its order books. Half-year earnings rose from US$534 million to US$776 million last year on a decline in sales to US$13.4 billion from US$13.4 billion.
Raytheon, best-known for military electronics and weapons systems, saw sales rise 8 percent in the first half of the year to US$10.4 billion.
TYPHOON: The storm’s path indicates a high possibility of Krathon making landfall in Pingtung County, depending on when the storm turns north, the CWA said Typhoon Krathon is strengthening and is more likely to make landfall in Taiwan, the Central Weather Administration (CWA) said in a forecast released yesterday afternoon. As of 2pm yesterday, the CWA’s updated sea warning for Krathon showed that the storm was about 430km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point. It was moving in west-northwest at 9kph, with maximum sustained winds of 119kph and gusts of up to 155kph, CWA data showed. Krathon is expected to move further west before turning north tomorrow, CWA forecaster Wu Wan-hua (伍婉華) said. The CWA’s latest forecast and other countries’ projections of the storm’s path indicate a higher
SLOW-MOVING STORM: The typhoon has started moving north, but at a very slow pace, adding uncertainty to the extent of its impact on the nation Work and classes have been canceled across the nation today because of Typhoon Krathon, with residents in the south advised to brace for winds that could reach force 17 on the Beaufort scale as the Central Weather Administration (CWA) forecast that the storm would make landfall there. Force 17 wind with speeds of 56.1 to 61.2 meters per second, the highest number on the Beaufort scale, rarely occur and could cause serious damage. Krathon could be the second typhoon to land in southwestern Taiwan, following typhoon Elsie in 1996, CWA records showed. As of 8pm yesterday, the typhoon’s center was 180km
TYPHOON DAY: Taitung, Pingtung, Tainan, Chiayi, Hualien and Kaohsiung canceled work and classes today. The storm is to start moving north this afternoon The outer rim of Typhoon Krathon made landfall in Taitung County and the Hengchun Peninsula (恆春半島) at about noon yesterday, the Central Weather Administration (CWA) said, adding that the eye of the storm was expected to hit land tomorrow. The CWA at 2:30pm yesterday issued a land alert for Krathon after issuing a sea alert on Sunday. It also expanded the scope of the sea alert to include waters north of Taiwan Strait, in addition to its south, from the Bashi Channel to the Pratas Islands (Dongsha Islands, 東沙群島). As of 6pm yesterday, the typhoon’s center was 160km south of
STILL DANGEROUS: The typhoon was expected to weaken, but it would still maintain its structure, with high winds and heavy rain, the weather agency said One person had died amid heavy winds and rain brought by Typhoon Krathon, while 70 were injured and two people were unaccounted for, the Central Emergency Operation Center said yesterday, while work and classes have been canceled nationwide today for the second day. The Hualien County Fire Department said that a man in his 70s had fallen to his death at about 11am on Tuesday while trimming a tree at his home in Shoufeng Township (壽豐). Meanwhile, the Yunlin County Fire Department received a report of a person falling into the sea at about 1pm on Tuesday, but had to suspend search-and-rescue
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