BAE SYSTEMS
From The Matrix
BAE SYSTEMS is a multinational defense products manufacturer.
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[edit] History
It was formed on November 30, 1999 with the merger of British Aerospace and Marconi Electronic Systems, which was made up of several divisions of GEC-Marconi in the UK and overseas.
It was widely anticipated that British Aerospace would merge with Germany’s DASA to form a pan-European aerospace giant, however BAe chose instead to merge with Marconi’s defense electronics business. This move, to create what could be described as a British company compared to what would have been an Anglo-German firm, made the possibility of penetration of the US defence market more likely. Since the creation of BAE SYSTEMS the company has steadily increased its investment in and its revenues from the United States, while continental European company's have made limited moves into that massive market. Major European companies such as Thales and EADS are unlikely to ever be awarded, for example, a position relative to BAE's involvement in the F-35.
While the US competition autorities did not block the merger, they imposed various conditions of their approval due to the integration of BAe and Marconi in various US defence projects. These conditions were primarily in the internal organisation of the new company.
Following that decision DASA instead merged with Aerospatiale to create the European Aeronautic Defence and Space Company EADS. This group was joined by Spain’s CASA following an agreement in December 1999.
With almost total consolidation on the European continent BAe turned its attention to America, for example acquiring Lockheed Martin Control Systems, (LCMS) which produces controls for the B-2 bomber, the C-17 Globemaster strategic transport, the F/A-18, the Boeing 757 and Boeing 767 commercial jets.
Of all the company's activites the most profitable is the Al Yamamah contracts to supply and support the Royal Saudi Air Force. This deal produces nearly half of the company's profits, £411m ($700m) out of £980m in 2003.
In June 2003, rumors started to circulate about a possible merger with either Boeing (who acquired BAE SYSTEMS's partner McDonnell Douglas in 1997) or Lockheed Martin. Later that year the Boeing's Chief Executive denied any possibility of a North American merger on the grounds of "conflict of interest" pertaining to the affiliation with the Airbus consortium. However if that were the only stumbling block it seems likely that BAE would gladly sell its minority share in Airbus to gain a greater share in North American aerospace projects.
[edit] Management
It remains to be seen how the arrival of a new Chairman will affect this position. The appeal of a link with an American company is irresistible as the U.S. defense market is by far the largest in the world. The company already has $9Bn worth of sales to the Pentagon and any further move into the American market would yield yet more. This is particularly the case if BAE can win prime-contractor status on a major project. BAE faces considerably fewer hurdles in this sense than their European counterparts, as there is a high degree of integration between the U.S. and British defense establishments.
In late March 2004, after more than 30 years with the company (and its predecessors), BAE’s longstanding Chairman Sir Richard Evans announced his successor. Dick Olver, former Deputy Chief-Executive BP succeeded Sir Richard on July 1.
This appointment comes at a significant time, stock market confidence is still recovering from a shock profit warning in December 2002. This was due to cost overruns of the Nimrod MR4 maritime reconnaissance/attack aircraft and the Astute SSN projects. BAE took a hit of $1.369Bn on these projects.
BAE SYSTEMS' CEO is Mike Turner, who replaced John Weston in 2002. Weston was forced out in what was a surprise move. It is understood that Turner, like Evans, has a poor working relationship with senior Ministry of Defence officials, including the Defence Secretary Geoff Hoon. Significantly the first meeting between Olver and Hoon is said to have gone well, a MoD official has said "He is a man we can do business with. We think it is good to be taking a fresh look at things." [1]
In May 2004 it was reported that BAE is considering selling its shipbuilding division (two Clyde shipyards and the Barrow-in-Furness yard.) The company will only say that it is reviewing its operations. If it decided to sell it is understood that General Dynamics would like to acquire the submarine building facilites at Barrow while Vosper Thornycroft is said to be interested in the remaining yards. BAE SYSTEMS without its shipbuilding assets would be a more attractive partner to an American company such as Boeing - which has stated that the shipbuilding operations are of no interest to them.
On June 4, 2004 BAE outbid General Dynamics for Alvis Vickers. What had seen a certain win for the American company was stopped by BAE's surprise move and is seen as an attempt to keep such a strong competitor at bay in BAE's "backyard."
In July, 2004 Olver announced a review of all of BAE's activities, this review will be conducted by independent analysts lead by investment bank Morgan Stanley. This review will advise the group on what its strategy should be and hence what acquisitions or disposal it needs to make. Harry Stonecipher, CEO of Boeing, has criticised the vertical integration of BAE.
[edit] Products
BAE Systems is in an enviable position. They either lead or have a major stake in some of the most high profile, high technology civil and military aerospace and maritime projects in the world. Some examples are;
- Joint Strike Fighter, or JSF
This stealthy, supersonic multi-role fighter is to be designated the F-35. BAE brings experience in advanced manufacturing techniques and STOVL operations - Eurofighter Typhoon
Produced in collaboration with DASA and CASA (now part of the EADS Aerospace Group), and Alenia (formerly Aeritalia) The Typhoon is a highly agile air-superiority fighter with a secondary ground attack capability.
BAE is the leader of the Euroradar CAPTOR consortium which produces the Typhoon's radar. - Panavia Tornado
A Multi-Role Combat Aircraft the Tornado is another European collaboration and model for the Eurofighter project. The Tornado was initially developed for low level penetration of the Warsaw Pact countries. The Tornado was later developed by British Aerospace as a long-range air defence interceptor.
BAE seem well placed to provide the replacement for the Tornado in the deep strike role. This will be provided through the Future Offensive Air System, due for delivery around 2018. - Royal Navy Future Carrier (CVF)
These vessels (built to a Thales Group design) will replace the UK's existing Invincible class aircraft carriers. Estimates put the displacement of these ships at 60,000 tonnes - three times the displacement of the carriers they will replace and the largest aircraft carriers after the US Navy's Nimitz class carriers. - Airbus
Holding a 20% stake in Airbus, BAE produces all the wings of the Airbus family. Airbus accounts for more than 20% of BAE's profits. BAE's Airbus UK is at present working on the wings for the massive A380, the consortium's double-decked jumbo. - BAe 146
Developed into Avro RJ Series. A commercial feederliner. BAE ceased production of this jet as a result of the downturn in commercial aviation following the September 11, 2001 attacks on Washington and New York. It was the last jet aircraft to be wholly designed and built in the UK. - Goshawk
Aircraft carrier-ready Hawk variant for the US Navy - Hawk
The Hawk and its variants is one of the most successful advanced trainer and lightweight ground attack aircraft. - Harrier - AV-8B Harrier II - RAF Harrier II - Sea Harrier
BAE's Harrier has been produced in many variants. The current types in operation are the Sea Harrier FA2 (soon to be retired) and the Harrier II/GR7. The Harrier II is produced jointly by BAE and Boeing. This latest aircraft takes advantage of a more powerful Rolls-Royce Pegasus engine and advanced composites to offer twice the payload/range capability of the original Harrier. - Astute class submarine
New generation of nuclear attack submarine (SSN) for the Royal Navy. The order for the initial batch of three ships was place in 1997, with Vickers Shipbuilding and Engineering, since absorbed into BAE. - Type 45 AAW Destroyer
Designed to replace the Royal Navy's Type 42 destroyer, these new ships will carry out the roles of fleet protection and protection of friendly forces in hostile territory using the BAE SAMPSON radar and PAAMS missile system. - RO Defence (Royal Ordnance)
Explosives, Artillery Ammunition, Mortars, Small Arms, Naval Ammunition Launchers, Warheads (e.g BROACH), Multiple Launch Rocket Systems, Tank and Artillery Ordnance, Electronic Systems.
[edit] Affiliations
- Airbus Industrie (20% Share)
- MBDA (Matra BAE Dynamics) (37.5% Share)
- Boeing
- Saab Military Aircraft
[edit] See also
