General Dynamics 2010 Annual Report Download - page 26

General Dynamics Annual Report • 2010 6
refurbishment of battle-damaged vehicles, the replacement of equipment
that has reached the end of its service life and the replenishment of
ammunition and other supplies for the U.S. armed forces. As the sole
provider of Abrams tanks and Stryker vehicles, Combat Systems is
the primary contractor for the maintenance, repair and reset of these
vehicles. The group is also a provider for the upgrade of Mine-Resistant,
Ambush-Protected (MRAP) vehicles.
With the expertise from our incumbency on current production programs,
the Combat Systems group is well-positioned to participate in future U.S.
vehicle development programs. We are competing to lead the design and
development of the Army’s next-generation armored personnel carrier,
the Ground Combat Vehicle (GCV). The group is developing the
Expeditionary Fighting Vehicle (EFV), a mission-critical combat platform
designed to address the U.S. Marine Corps' amphibious assault requirement.
As part of a system design and development contract, we have delivered
seven new prototypes, which have performed well in customer reliability
testing. The group is also a member of one of three teams awarded
technology demonstration contracts for the Joint Light Tactical Vehicle
(JLTV), which is intended to replace a portion of the U.S. fleet of High
Mobility Multi-purpose Wheeled Vehicles (HMMWV).
Combat Systems has a significant presence internationally and is a
recognized military-vehicle integrator and leading defense-materiel provider
worldwide. The group has manufacturing facilities in Australia, Austria, Brazil,
Canada, France, Germany, Spain and Switzerland.These operations are a key
part of the defense industrial base of their home countries and have an
extended customer base in more than 30 countries. The group’s European
business offers a broad range of products, including light- and medium-
weight tracked and wheeled tactical vehicles, amphibious bridge systems,
artillery systems, light weapons, ammunition and propellants. Key platforms
and their customers include the Leopard 2E tank and the Pizarro tracked
infantry vehicle, produced for the Spanish army; the EAGLE wheeled vehicle
for Germany; and the Piranha and Pandur wheeled armored vehicles, which
the group produces for several European and Middle Eastern countries.
Combat Systems is experiencing strong international demand as a
result of the demonstrated success of its fielded products. The group’s
U.S. export activities include Abrams tanks and light armored vehicles
(LAVs) for U.S. allies in the Middle East. Additionally, in 2010, the group
was selected to manufacture tracked combat vehicle hulls for the Israeli
Ministry of Defense. Combat Systems is also leveraging the strong
customer relationships developed through its in-country operations. For
example, Combat Systems continues work on Canada’s next-generation
LAV at its Ontario facility and expects to transition from development to
production in 2011. Through a contract awarded in 2010 to the United
Kingdom operations of the company’s Information Systems and
Technology group (see pg. 8), we will co-produce with a U.K.-based
partner the Specialist Vehicle for the U.K. Ministry of Defence. The
Specialist Vehicle is based on one of the group’s proven platforms. The
program is envisioned to field up to 1,200 vehicles of different variants.
The Combat Systems group continues to emphasize operational
execution across the business to drive cost reductions and margin
improvement as the group delivers on its substantial backlog. In an
environment of dynamic threats and evolving customer needs, the group
remains focused on innovation, affordability and speed-to-market to
secure new opportunities.
Revenues for the Combat Systems group were 28 percent of our
consolidated revenues in 2008, 30 percent in 2009 and 27 percent in
2010. Revenues by major products and services were as follows:
MARINE SYSTEMS
Our Marine Systems group designs, builds and supports submarines and
surface ships for the U.S. Navy and Jones Act ships for commercial
customers. The group is one of two primary shipbuilders for the Navy. The
group’s diverse portfolio of platforms and capabilities includes:
•nuclear-powered submarines (Virginia Class),
•surface combatants (DDG-51, DDG-1000, Littoral Combat Ship),
•auxiliary and combat-logistics ships (T-AKE),
•commercial ships (Jones Act ships),
•design and engineering support (SSBN) and
•overhaul, repair and lifecycle support services.
The substantial majority of Marine Systems’ workload supports the
U.S. Navy. These efforts include the construction of new ships, and
the design and development of next-generation platforms to help the
customer meet evolving missions and maintain its desired fleet size.
The group also provides maintenance and repair services to help
maximize the life and effectiveness of in-service ships and maintain their
relevance to the Navy’s current requirements. This business consists
primarily of major ship-construction programs awarded under large,
multi-ship contracts that span several years. The group’s three mature
Navy construction programs are the fast-attack Virginia-class nuclear-
powered submarine, the Arleigh Burke-class (DDG-51) guided-missile
destroyer and the Lewis and Clark-class (T-AKE) dry cargo/ammunition
combat-logistics ship.
The Virginia-class submarine is the first U.S. submarine designed to
address post-Cold War threats, including capabilities tailored for both
Year Ended December 31 2008 2009 2010
Wheeled combat vehicles $ 3,475 $ 4,017 $ 3,916
Munitions and propellant 1,470 1,541 1,612
Tanks and tracked vehicles 1,563 1,670 1,567
Rockets and gun systems 512 595 616
Engineering and development 673 960 372
Drivetrain components and other 501 862 795
Total Combat Systems $ 8,194 $ 9,645 $ 8,878