Issue link: https://iconnect007.uberflip.com/i/271756
120 The PCB Magazine • March 2014 It may surprise many to learn that the mil/ aero prime contractors are actually prospering in the current environment, and in fact, the in- dustry actually performed much better than the broader market in 2013. Several factors are driv- ing their current success. Certainly, cost cutting in advance of sequestration at the operational level has contributed to their profitability, and years of consolidation in the sector has nar- rowed the competition—and they have very diverse operations—but the chief factor driving the growth is their participation in the foreign military sales (FMS) program. For those unfamiliar with this, the U.S. DoD FMS program facilitates sales of U.S. arms, de- fense equipment, defense services and military training to foreign governments. In this sce- nario, the purchaser does not deal directly with the defense contractor; instead, the Defense Security Cooperation Agency (DSCA) serves as an intermediary and handles procurement, lo- gistics and delivery. Currently, America's allies in Asia are increasing their expenditures due to the China threat and in parallel with higher de- fense spending by China. Tracking FMS trend spending is important to PCB and CEMs because all of the electron- ics contained in the aircraft, the radars, the ord- nance, guidance systems and the communica- tions systems being procured through the FMS program are largely legacy systems. This, of course, means that many of us have already tooled up and previously produced ei- ther circuit boards or circuit card assemblies at the sub-component levels for our military prime customers. There are many examples of FMS spend- ing for us to examine, but if we look solely at the venerable F-16 Fighting Falcon multi-role fighter aircraft, we can begin to understand some tremendous opportunities. Produced by Lockheed Martin, the F-16 is the world's most prolific fighter with more than 2,000 aircraft in service with the USAF, and another 2,500 opera- tional in 25 additional countries. In addition to the outright aircraft sales, the market for upgrading the electronics suites in the existing fleets of participating FMS coun- tries is in rapid growth mode. Last year, BAE Systems finalized a deal worth over $1 billion to upgrade over 130 South Korean F-16 fight- ers, and the company seeks additional orders in Europe and Asia. Just three weeks ago, the DoD notified Congress that it had approved the sale to Singapore of upgrade packages for 60 F-16s for an order valued at $2.43 billion. DSCA in- dicates the upgrades would provide Singapore's F-16 fleet advanced radar systems, new global positioning systems (GPS), newer friend-or-foe identification systems, and an array of newer weapons to include laser-guided bombs. In an interesting sidebar to the deal, BAE Systems, who has been a key supplier at the sub- assembly level for Lockheed Martin on the F-16 program, seeks to compete against Lockheed Martin for the upgrade deal. Depending upon the configuration and ap- proved upgrades for each country's version of the F-16, electronic content could include the Lockheed LANTIRN infrared navigation and targeting system, a BAE Systems holographic display, HARM targeting system from Raythe- on, or ordnance systems, radar and jamming systems by a plethora of the primes to include ITT, Northrop Grumman, Rockwell Collins and many others. Do your due diligence research, be informed and check in with your customers in the mil/ aero sector that participate on the F-16 program. The chances are very high that there are either current requirements, or requirements planned near-term for circuit boards and assemblies that you are already prepared to support. I appreciate your feedback. With your input, we can explore areas based upon your interests to help grow our businesses, while strengthen- ing the United States defense industrial base as it pertains to PCB manufacturing and electron- ics contract manufacturing. PCB John Vaughan is president of circuit solutions llc., based in the washington, d.c. metro military market, and a provider of integrated supply chain and program management solu- tions to the military c4isr, unmanned systems and ied detect and defeat communities. to contact Vaughan, click here. FOREIGN MILITARY SALES continues