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America's post-9/11 wars boost Ct. maker Sikorsky as military leans on Black Hawk helicopters
HARTFORD, Conn. (AP) ' America's wars since the attacks of Sept. 11, 2001 have been a boon for the maker of Black Hawk helicopters, a workhorse the U.S. military has relied on heavily to strike targets and ferry troops in Iraq and Afghanistan.
Sales at Stratford, Conn.-based Sikorsky Aircraft Corp. have more than doubled to $6.7 billion since 2005, boosting the economy of a state that has historically had broad defense interests. George Washington nicknamed Connecticut the Provision State during the Revolutionary War for supplying food and cannons to his soldiers.
Since 2001, the Black Hawk's ability to handle several jobs ' such as ferrying soldiers and hunting down enemy troops ' has made it one of the military's primary tools in unfamiliar countries where it must cover large expanses of desert and rugged mountains. The two wars have marked the longest-ever campaigns for the helicopter, which has evolved with technological advances to keep sand out of the engine and keep pace with the military's demands.
With about 400 Black Hawk variants at work at any time, the helicopters are among the most heavily used fleet of aircraft in the U.S. Armed Forces, said Tim Healy, director of U.S. Air Force business development at Sikorsky.
"It's been in incredibly high demand for a very, very long time."
The Black Hawk, in the U.S. Army inventory since the late 1970s, saw its first combat in Grenada in 1983 and has been in continuous combat deployments since Operation Desert Storm in 1991. It is perhaps best known because of the book and movie "Black Hawk Down," about the 1993 battle in Somalia where two helicopters were shot down, killing 18 soldiers.
But nothing compares with the action it's seen since the U.S. invaded Afghanistan in October 2001 and Iraq 17 months later.
The Black Hawk is the only military helicopter with a dual role in fighting conventional battles and facing down shadowy enemies, said Richard Aboulafia, an aerospace analyst at Teal Group in Arlington, Va. It moves soldiers to and from battles or to medical care and finds and attacks enemy troops.
In comparison, Bell, a division of Textron Inc., and Boeing, which makes the Apache attack helicopter, have carved out smaller niches.
"Counter-insurgency, war-fighting and nation-building: Helicopters are at the center of the diagram," Aboulafia said.
The number of military helicopters manufactured by Sikorsky is outpacing production of helicopters used in oil exploration, fire-fighting, search-and-rescue and other civilian uses. Analyst Rick Whittington of the brokerage firm of Sturdivant and Co., said Sikorsky's profit stands out among aviation businesses of parent company United Technologies Corp.
"Sikorsky's margins, I don't remember them being this high," he said.
Sikorsky's profit margin was 10.7 percent last year, rising steadily each year, from 8 percent in 2004.
For example, during the worst of the recession in 2009, Sikorsky was the only United Technologies business to post higher profit over 2008 due to rising military demand.
With about 9,200 workers in Stratford and three neighboring towns, Sikorsky is the largest employer in southwestern Connecticut. Paul Timpanelli, president and chief executive of the Bridgeport Regional Business Council, said the company has helped the region ride out the weak economy.
"Every time they do well, our region does well. It's all about payroll and it's all about people employed," he said.
Sikorsky's unionized workers have done very well.
The local Teamsters union negotiated a contract with Sikorsky in 2009 that provides for pay raises of more than 18 percent over five years plus increases in pensions and other benefits. Sikorsky also hired 1,500 to 2,000 workers in the U.S. between 2008 and 2010 as employers elsewhere were laying off workers, said Rocco Calo, the union local's secretary-treasurer. Sikorsky employs about 9,500 workers in Connecticut.
"We bucked just about every trend out there, luckily," he said.
The union has not disclosed average pay for workers covered by the contract.
Demands placed on the Black Hawk have driven many technological changes. More lift was added to gain higher altitude, the engine was redesigned and digital controls in the cockpit were upgraded to provide real-time information about battle hazards. Infrared sensors to locate injured soldiers at night and in bad weather and significant upgrades to weapons systems have helped make it more effective in battle and reduce the time needed to transport wounded to a hospital, Healy said.
Hundreds of General Electric Co. engineers have redesigned the Black Hawk's engine, which was ingesting sand at takeoff s and landings as rotors whipped up mini-sand storms, said Ed Birtwell, manager of GE aircraft engines' turboshaft projects department. Sand drawn into extremely hot engines was turning into glass, reducing engine efficiency and power.
Changes have included improved engine technology such as a steel compressor that can withstand the corrosive impact of sand and a particle separator to remove sand, Birtwell said. The result is an engine that keeps higher power over longer periods of time in severe environments, he said.
Since 9/11, the country's annual defense budget has more than doubled, to $700 billion. Annual defense industry profits have nearly quadrupled, approaching $25 billion last year.
But Pentagon spending will fall as President Obama reduces the U.S. presence in Afghanistan and Iraq. Congress agreed last month to cut military spending by $350 billion over the next 10 years. The defense budget will automatically be cut by another $500 billion over that period if lawmakers fail to reach a deficit-cutting deal by November.
In Connecticut, defense spending between 2000 and 2009 was about $77 billion, according to the state Office of Military Affairs. Submarines, aircraft and jet engines are the state's leading industry segments of defense spending.
Defense spending in Connecticut will be down nearly 4 percent this year over 2010, to about $13 billion, the Office of Military Affairs said.
By 2015, when defense spending nationwide is projected to have dropped by more than 20 percent, cuts in Connecticut will be down by 10 percent, to $12.29 billion, the state said.
Communities that rely on military spending are bracing for cuts. For example, the Fort Worth area and Tarrant County, where half of all aircraft manufacturing companies in Texas do business, the two wars and the development of the multibillion-dollar joint strike fighter program have had a significant impact, said Bill Thornton, chief executive of the Fort Worth Chamber of Commerce.
"I wouldn't say there's nervousness but I would say we're obviously paying attention to the actions that are being contemplated," he said.
The two wars have combined to present a once-only opportunity for the Black Hawk.
"I think the U.S. has always been prepared for dealing with harsh environments but the scale of this conflict, the massive deployment in Afghanistan and Iraq, with a heavy reliance on helicopters, has been an extremely unusual event," Aboulafia said.