Even as it announced a potentially huge contract with Taiwan and a new research focus on unmanned helicopters, Sikorsky Aircraft Corp. is zeroing in on a contract with Turkey that could push it to new heights.
Stratford-based Sikorsky expects to hear soon on whether Turkey will choose it or rival AgustaWestland to supply helicopters in what is expected to be a multibillion-dollar contract over several years ”“ albeit one that could require Sikorsky to establish some assembly or maintenance capabilities within Turkey”™s borders.
In seeking approval for a purchase of 60 Sikorsky Black Hawk helicopters in a contract worth $3.1 billion, Taiwan sought so-called offsets, a term used to describe the outsourcing of some non-sensitive work to companies within the borders of a country making such a purchase.
A Taiwan contract would also benefit Fairfield-based General Electric Co.”™s GE Aviation plant in Lynn, Mass., which would build the engines.
“The key for us on the international Black Hawk is low-cost sourcing and low-cost manufacturing ”¦ in Poland,” said Greg Hayes, chief financial officer of Sikorsky parent United Technologies Corp., in a conference call with analysts late last month. “(Poland has) significantly lower costs obviously than Stratford, so we think there”™s a huge market out there. The U.S. market, the European market is pretty well spoken for ”“ but the international Black Hawk still (has) opportunities we think in Taiwan and Singapore.”
The Taiwan helicopter order is part of a larger, $6.4 billion defense purchase that includes Patriot antiballistic missiles from Massachusetts-based Raytheon Corp., and two Osprey-class mine-sweeping ships from Northrop Grumman Corp. In response, the government of China suspended military exchanges with the United States and promised other sanctions.
The proposed contract value is equal to nearly half of Sikorsky”™s take for all 2009, a year in which it delivered 244 helicopters for $6.3 billion in revenue, up $1 billion from the year before. Even as many large Fairfield County employers made cuts in 2009, Sikorsky has mostly been maxing its Stratford work force of more than 9,000 employees.
In the fourth quarter, Sikorsky sales came up just short of the $2 billion sales mark, with its $1.95 billion up 22 percent from a year earlier and marking an all-time quarterly high for the Stratford-based manufacturer. Sikorsky shipped 87 helicopters between October and December, including 27 commercial helicopters.
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No other United Technologies Corp. division achieved a year-over-year increase in revenue, though UTC Fire & Security did so in the fourth quarter, even as it finalizes its acquisition of GE Security.
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Sikorsky was also the lone UTC subsidiary to post an increase in operating profits in 2009 at $608 million, up 27 percent from 2008.
In the recession economy of 2009, UTC revenue was down 11 percent to $14.1 billion, but the company fared better in the fourth quarter on a comparative basis, with sales down just 4 percent to $14.1 billion. UTC had $1.1 billion in net income in the fourth quarter and $3.8 billion in 2009.
“Sikorsky is going to have a good first quarter,” Hayes said. “The biggest opportunity in front of us right now is with the international Black Hawk, and I think the biggest opportunity on that program is going to be in Turkey in the near-term. That”™s a very large contract that”™s up for bid right now ”¦Â I think we”™ll hear on that contract shortly.”
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On the home front late last month, the Pentagon called for more helicopters as part of an update of its Quadrennial Defense Review, which could allow manufacturers like Sikorsky to capture a greater percentage of defense spending.
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Sikorsky unveiled its own strategic plan last month, articulating the goal of developing a helicopter can be controlled remotely without a pilot, while vowing to provide capital to smaller industry innovators as part of the new “Sikorsky Innovations” initiative.
Sikorsky indicated it would spend $1 billion on the program over the next decade.
“Sikorsky Innovations will identify our customers”™ toughest, high-value challenges and create solutions by understanding the requirements, quickly maturing technology options, and demonstrating solutions in flight,” Mark Miller, vice president of research and engineering, said in a statement. “We are currently working on challenges in the areas of high-speed flight, optionally piloted aircraft, systems that enable safe operation in blinding, brown-out conditions and many others that only a few years ago might have been considered technologically and economically unfeasible.”
An unmanned helicopter program would be Sikorsky”™s second major research project under way outside the auspices of a formal government program. Sikorsky currently is testing a prototype helicopter with a rear turbine mounted like that on a propeller airplane, designed to allow the aircraft to reach faster speeds than conventional helicopters can attain.
According to the Army News Service, the commander of the 160th Special Operations Aviation Regiment cited Sikorsky”™s X-2 prototype last month in arguing for faster helicopters for commando operations.
“We are looking to go farther, faster and carry more stuff,” said Col. Clayton Hutmacher, as quoted by the news service. “If you look at the fight in Iraq and Afghanistan, it is a nonlinear battlefield. I think speed ”¦Â and range are very important when you are dealing with non-state actors and fleeting targets.”
Sikorsky is also developing a cargo helicopter for the Marine Corps that would be the largest ever built for the military. Last month, the company opened a $20 million precision components technology center to make rotors and other parts needed for the helicopter.
Boeing Co. and Lockheed Martin are also developing unmanned cargo helicopters, the latter in conjunction with Bloomfield-based Kaman Corp.
