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Boeing will compete in the long run with its Avionics supplier Rockwell Collins
Rockwell Collins, Inc. designs, produces and supports communications and aviation systems for commercial and military customers. The Company provides information management services through voice and data communication networks and solutions across the world. The Company operates through three segments: Commercial Systems, Government Systems and Information Management Services. The Commercial Systems segment supplies aviation electronics systemsproducts and services to customers located throughout the world. The Government Systems segment provides a range of electronic products, systems and services to customers including the United States Department of Defense, various ministries of defense, other government agencies and defense contractors around the world. The Information Management Services segment provides communications services, systems integration and security solutions across the aviation, airport, rail and nuclear security markets. Avionics consists of electronic solutions for a broad range of airborne platforms including fixed wing aircraft and military and civil rotary wing aircraft, unmanned aerial systems (UASs) and the associated aircrew and maintenance training devices and services. We provide complete avionics solutions, including cockpit avionics, mission system applications and system integration, and also provide individual avionics products to platform integrators. We serve various roles within these markets including system and sub-systems integrator as well as provider of various electronic products. For the UAS market we provide cost effective, high performance integrated flight control, navigation, communication and sensor capabilities. Simulation and training solutions are provided for both fixed and rotary wing aircraft.
Communication and navigation products include full spectrum communication solutions for voice and data connectivity for government and military use in the air, on the ground and at sea. These communication products support military user requirements for high availability, highly secure, jam resistant wireless communication. Products include radio communication, data links, electronic warfare and networked communication systems. The navigation products are primarily comprised of global positioning system based products used for precision navigation and targeting applications. These applications include airborne, vehicular, maritime, soldier navigation devices, precision targeting subsystems, precision-guided weapons products, range and training systems and a variety of embedded GPS applications.
In 2016, 33 percent of Rockwell Collin’s sales were derived from U.S. Government contracts, both directly and indirectly through subcontracts. Defense funding by the U.S. Government is expected to continue to be under pressure due to the overall economic environment, budget deficits and competing budget priorities. Cost cutting, efficiency initiatives, reprioritization and other affordability analysis by the U.S. Government on defense spending could present some additional opportunities for us, but continued pressure on U.S. Government spending on defense could also adversely impact our Government Systems sales and profitability.
“Boeing Co. BA -0.11% is creating a new unit to develop and build aircraft avionics systems, expanding its strategy of insourcing key technology to cut costs. The new Boeing Avionics unit will expand the aerospace company’s existing offering of electronics systems, focusing on areas such as navigation and flight controls for future commercial and military jets. The move, announced in a memo to staff Monday, takes Boeing deeper into the territory of big suppliers such as Rockwell Collins Inc. COL +2.94% and Honeywell International Inc. HON +0.48% following the recent expansion of its services business. While Boeing Avionics will focus on equipment for future products entering service over the next decade, it could also be used to produce more advanced parts for existing aircraft currently supplied by third parties. Boeing said the avionics business had been established in consultation with suppliers. Shares in Rockwell Collins extended an early decline and were recently down more than 6%. A spokesman said it didn’t expect any impact from Boeing’s move in the “foreseeable future,” and said they would continue to work collaboratively. With most aerospace sector shares down, Boeing shares continued the advance that has lifted the stock by more than 20% in July, buoyed by a firmer outlook for cash and profits. Chicago-based Boeing already produces a range of aircraft electronics, and the new unit will have an initial staff of 120, growing to an expected 600 by 2019. The company is pursuing more vertical integration of its aircraft manufacturing business, standing up internal operations in areas such as advanced materials, propulsion systems and actuators, which move the flaps on a jet’s wings. Boeing Avionics will be headed by Allan Brown, a senior defense executive, reporting to Chief Technology Officer Greg Hyslop.”
Doug Cameron reprinted news from 8/1/2017 WSJ “Boeing Creates Avionics Unit to Boost insourcing”