The Motley Fools Gold (Official) fool/investing/general/2014/10/04/weekender-will-huntington-ingalls-build-the-navys.aspx The U.S. Coast Guard has confirmed Huntington Ingalls (NYSE: HII ) will not be building its new fleet of Offshore Patrol Cutters -- and great is the lamentation in Newport News, Va. For years, Huntington Ingalls has been the Coast Guards go-to builder for building its multiple coastal and deepwater patrol vessels. News that Huntington didnt even make the short list in February, however -- and that its archrival, General Dynamics (NYSE: GD ) , did -- must have cut Huntington Ingalls stock owners to the quick. Worse, the Coast Guards reluctance to entrust the building of its OPC fleet to Huntington appeared to bode ill for the companys plan to bid on an even bigger contract to build a new class of warship for the U.S. Navy. OPC, meet SSC Earlier this year, we told you about the Navys plan to design and build a fleet of new Small Surface Combatants, or SSCs. Essentially a new class of frigate to replace the FFG 7 Oliver Hazard Perry-class warships, the SSC would be bigger and more capable than the Navys much-maligned Littoral Combat Ships, but smaller than its popular line of DDG 51 destroyers. With as much as $40 billion in Pentagon defense dollars potentially up for grabs, the SSC would be pretty popular itself. Indeed, at last report, everyone from Huntington and General Dynamics, to Lockheed Martin (NYSE: LMT ) , Australias Austal (NASDAQOTH: AUTLY ) , and even Raytheon (NYSE: RTN ) is angling for a piece of this pie. Huntingtons loss of the Coast Guard OPC contract, however, appeared to make it odd-man-out in this next competition. Or did it? Huntington finds a port in the storm Last month, a news item reported by DefenseNews gave us one clue as to why Huntingtons race to build the Navys new SSC may not be lost just yet. You see, according to DN, Huntingtons work on the National Security Cutter program -- a bigger vessel than the OPCs -- has recently hit its stride, with the company reporting a steady drumbeat of successes. Sea trials of Huntingtons fourth National Security Cutter, the USCGC Hamilton, are producing 50 percent fewer reports of items that still need work before the Coast Guard will accept the ship, than were found in previous versions of the NSC. This, notes Huntington, is helping to keep the ships construction on cost and on schedule. If improvements in the construction process on the Hamilton translate into similar improvements in cost and timeliness on the other three NSCs that Huntington currently has in various stages of completion (eight vessels are currently planned), the Coast Guard should end up being a very satisfied customer indeed. Music to the Navys ears And maybe not just the Coast Guard. On cost and on schedule? In an era of constrained defense budgets, those are the kinds of things that Navy ship-buyers like to hear, too. Lockheed Martin and General Dynamics, after all, are behind schedule and overbudget on their respective versions of the Littoral Combat Ship (in fact, by some estimates theyre charging the Navy twice what they promised initially). Combined with increasing criticism over the vessels performance (which has itself contributed to the Navys desire to build the SSCs as a bigger, better, frigate-class of warship), Huntingtons recent performance on the NSC program just might be the factor that tips this contest in its favor. The right ship for the job? At last report, many experts were of the opinion that Lockheed Martins version of the Littoral Combat Ship, if upsized and built a bit bigger than it presently is, was best positioned to win the SSC competition. But being half again as big as Lockheed Martins Freedom-class Littoral Combat Ship already, Huntingtons NSC design wouldnt need to be scaled up much -- if at all -- to reach the size the Navy envisions for its SSC. Whats more, the $684 million average cost of the eight NSCs that Huntington Ingalls is building appear to line up quite nicely with the Navys desire to build its new SSCs for $700 million to $800 million apiece. It suggests that a more militarized version of the Cutter could slot right in with the Navys requirements for SSC -- and give Huntington Ingalls the win on this multibillion-dollar contract. You cant afford to miss this Made in China -- an all too familiar phrase. But not for much longer: Theres a radical new technology out there, one thats already being employed by the U.S. Air Force, BMW, and even Nike. Respected publications like The Economist have compared this disruptive invention to the steam engine and the printing press; Business Insider calls it the next trillion dollar industry. Watch The Motley Fools shocking video presentation to learn about the next great wave of technological innovation, one that will bring an end to Made In China for good. Click here!
Posted on: Sat, 04 Oct 2014 19:02:19 +0000
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