General Dynamics, BAE Systems Will Remain At The Forefront Of Armored Vehicle Market

Overall, the state of the U.S. military vehicle sector of the defense industrial base is not great. Not only are procurement numbers way down but there are almost no new starts. The Marine Corps’ Expeditionary Fighting Vehicle and the Army’s Ground Combat Vehicle were cancelled. The land services are shedding MRAPs about as fast as they were acquired. There are only two new programs: the Joint Light Tactical Vehicle (JLTV) program, which is not technically an armored vehicle, and the Armored Multipurpose Vehicle, essentially an upgraded, turretless variant of the Bradley infantry fighting vehicle. Other than these, virtually all of the limited share of the Army budget going to vehicles (between $7 and $8 billion annually across the FYDP) will be focused on maintenance, reset and upgrades of existing systems such as the M-1 Abrams, Bradley, Stryker, Assault Amphibious Vehicle and Paladin. For this reason, the incumbent original equipment manufacturers, most notably General Dynamics and BAE Systems, look well positioned to hold and even extend their leadership positions. The only possible new player in this arena is Lockheed Martin if it wins the competition to produce the JLTV.

The future also is very uncertain. The Army has a small pot of money fenced to begin thinking about a new tank and a new infantry fighting vehicle, but it looks to be years away from actually starting new development programs. The Army’s strategy appears to be to await breakthroughs in materials sciences, power systems and weapons before trying to figure out how to pack an Abram’s worth of survivability and lethality into a lightweight and maneuverable package. The Army has started a whispering campaign about its desire for a set of extremely light (less than 35 tons) armored vehicles – a SCOUT platform, infantry carrier and mobile protected gun system. Whether this concept will amount to anything in an austere budget environment remains to be seen.

Both General Dynamics and BAE Systems are major players in the international armored vehicle market. General Dynamics UK was recently awarded a $5.5 billion contract by the United Kingdom’s Ministry of Defense to build nearly 600 SCOUT Specialist Vehicle platforms for the British Army. The SCOUT will come in six variants with state-of-the-art protection, information and targeting capabilities. BAE Systems just won an award to upgrade Brazil’s armored personnel carriers and delivered its first CV90 STING armored combat vehicle to the Norwegian Army. Foreign sales are important to these companies not only for financial reasons, but because they also provide the basis for maintaining a trained vehicle design and production workforce and allow the development of new systems and components that can then migrate into future U.S. armored vehicles.

While this is a difficult time for vehicle makers everywhere, the best of breed will survive and eventually prosper. Both General Dynamics and BAE Systems are certain to be among the winners.