Sikorsky's $8.5 billion contract provides stability for ...

1 Sikorsky's $ billion contract provides stability for company Rob Varnon Updated 10:49 , Tuesday, July 10, 2012 A black Hawk S-70i helicopter, manufactured by United Technologies Corp.'s sikorsky Aircraft unit, sits on display on the first day of the Farnborough International Air Show in Farnborough, , on Monday, July 9, 2012. The Farnborough International Air Show runs from July 9-15. Photographer: Chris Ratcliffe/Bloomberg Photo: Chris Ratcliffe, Bloomberg / Copyright 2012 Bloomberg Finance LP In this May 23, 2012 photo, special operations troops on an Army MH-60 Blackhawk fly at high speed along Seddon Channel as spectators watch from the parking garage at Tampa General Hospital in Tampa, Fla.

2 Troops rappelled from the Blackhawk to a barge anchored near the Tampa Convention center in a mock display of combined combat capabilities. (AP Photo/The Tampa Bay Times, Daniel Wallace ) TAMPA OUT; CITRUS COUNTY OUT; PORT CHARLOTTE OUT; BROOKSVILLE HERNANDO TODAY OUT; MAGS OUT Photo: Wallace, Daniel, Associated Press / Tampa Bay Times sikorsky Aircraft, a division of United Technologies Corp., announced Monday it has a new $ billion contract to build black Hawks and Seahawks for the military over the next five years. This is the eighth multi-year contract for Sikorsky's UH-60 black Hawk program.

3 Though the contract signing was not a surprise, it comes at a pivotal moment for the Stratford-based helicopter maker as global military spending continues to be pressured by slowing economies. "This contract will provide our Army, sister services and allies with state-of-the-art modernized helicopters," Col. Thomas Todd, utility helicopters project manager for the Pentagon, said in a news release. "Moreover, this effort will stabilize our manufacturing base during this period of fiscally challenging times." The new, five-year, 653-helicopter deal extends to December of 2017 and includes foreign military sales.

4 The Pentagon has options to buy as many as 263 more helicopters, bringing the potential value of an expanded deal to $ billion . John Palumbo, Sikorsky's vice president for black Hawk aircraft production, said in the same press release that the deal saves the military money and helps the helicopter maker stabilize its supply base. sikorsky employs about 9,000 workers in Connecticut with most of the production here geared toward the military. Company President Mick Maurer told Hearst Connecticut Newspapers last month that the multi-year contract is the most important contract the company has.

5 Delivery under this contract is to begin this month. Shares of Sikorsky's parent company, United Technologies Corp., gained 24 cents to close at $ in Monday trading on the New York Stock Exchange. "It gives them the bedrock and allows them to be more aggressive about exports," said Richard Aboulafia, vice president of analysis for Virginia-based Teal Group." It keeps that endorsement from the military." The contract puts the company in a strong position to compete for international contracts. One foreign military deal that looks promising for sikorsky is a $1 billion contract with the Indian navy.

6 sikorsky is offering a version of the Seahawk and appears to be a heavy favorite to win the prize after its main competitor wrote a letter to the Indian Defense Minister claiming Sikorsky's helicopter doesn't meet the ministry's exact standards. Aboulafia said that's a pretty clear sign sikorsky is in good position to win the contract . "When the other guy is resorting to impugning the credibility of his would-be customer, that's a sign of desperation," Aboulafia said. What's surprising Aboulafia about the black Hawk deal is that it has seemingly escaped the ire of the Washington reform crowd looking to cut spending.

7 But he also noted there's no alternative aircraft to the black Hawk, and the multi-year deal does save the country money in procurement costs. Rep. Rosa DeLauro, D-3, whose district includes Sikorsky's headquarters and massive plant, also emphasized the stabilizing effect of this contract . "This contract is good news for both sikorsky , which makes the best helicopters in the world, and its Connecticut employees, the best workers in the world," DeLauro said in an email. "The long-term certainty this contract provides is positive for the Connecticut residents who will continue to be employed by sikorsky , the company that can count on these orders and the military, which will likely see lower costs from this five-year commitment.

8 I will continue to work with sikorsky on opportunities to sell additional aircraft above and beyond this contract ." Ray Jaworowski, senior aerospace analyst with Newtown-based Forecast International, agreed with Aboulafia that the multi-year contract provides savings for the Pentagon and allows sikorsky to make long-range plans for managing the program. While it's a relief to have the contract set, sikorsky will face challenges, including how to find money to invest in new technology as money from the government becomes harder to get. " sikorsky has been in the forefront among manufacturers for taking on the risk and expense of such efforts," Jaworowski said, referring to the company's X-2 developmental aircraft.

9 "New technology development is key to maintaining competitiveness on the world market and can also help position the company for the ultimate prize of the military's Future Vertical Lift, Joint Multi-Role program." That program aims at creating a single helicopter type that can be configured to serve across several branches and in various capacities. Read more: #ixzz20 FPbQDCt