Roulston Research April 2nd Aerospace and Defense Conference Call

April 3, 2013

Roulston Research held a conference call on April 2nd with Jill Wittels, CEO of Sostenuto Strategic Advisors, and Joe Hoffman, former group vice president of L-3 Communications.  Dr. Wittels has extensive management, engineering and leadership experience in the Aerospace and Defense industry.  When she was a former VP at L-3 Communications, her work included business unit strategy development, business case development for innovative strategic thrusts, assessment of technologies, and influence management.  She has worked for over 20 years with BAE systems and its heritage companies.  Joe Hoffman is a strategically focused Senior Executive skilled at identifying and capturing new business and operational opportunities.  As former VP of L-3 communications, he was responsible for strategic direction, mergers and acquisitions and representing the Group on Corporate Business Development Council. 

The first topic that was discussed was sequestration and its issues.  This is something that varies agency to agency but for the defense department, paperwork is already slowing down and people are working fewer hours.  There seems to be a lack of guidance and no instruction flowing down explaining to people how the cuts should be absorbed.  Secretary of Defense, Chuck Hagel, is bound to bring down the budget by downsizing the military by killing off a number of programs in which he feels are weak.  One topic he has not brought to the public’s attention is his solution on cyber security.  The FAA is allowing research and test centers to integrate drones in air system by 2015, a process that seems to be moving forward.  A couple drone issues at hand include collision avoidance, requiring new dynamics for non-pilot vehicles, bandwidth and safety improvement.  All these factors present many opportunities and challenges for the suppliers.  Air Commercial market has controlled market size around 90 billion dollars, the U.S owning 70% of this. 

50 countries are already operating UAV’s and there are approximately 200 non U.S manufacturers, which is really allowing boom for airplane and equipment manufacturers even though the integration challenges are very large and something that should not be underestimated.  From 2010-2011 M&A increased 20% but 2012 was a down year and that is continuing right into 2013.  Future M&A activity will not be at the top end but more so with smaller companies.  This is being driven by risk aversion from senior management, regulatory issues, budget constraints and sequestration.  Platform programs are under enormous threat and will continue to slide.   Action will be in companies of next generation of new products and new capabilities, private companies looking to go public or get investment. Much new technology is being developed such as fused imagery, data mining, and robotics.  The amount of pilots will decrease in the future and all automated vehicles are blossoming and are in a huge commercial market as well.  As for cyber issues, we are just starting to dive into maelstrom.  As for green technology, hydrogen fuel cells are creating generational capabilities.  The electric taxi, which essentially allows airplanes to have movement without jet engines being powered, creates very interesting and significant benefits.  Ion batteries is something that is also being seen as implemented in the future.  They are currently in the process of flight testing now.  All this technology will come to aircrafts and as of right now, agencies are just trying to workout the small problems.   If you are interested in hearing the podcast of the conference call or engaging Jill or Joe in a 1 on 1 discussion please contact info@roulstonresearch.com.

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