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Can a Massive Saudi Arms Deal Help Save General Dynamics' Tank Biz?
 [Motley Fool] General Dynamics' (NYSE:GD) Lima, Ohio-based tank-building factory is back from the dead (the rest of General D was already doing just fine). But it's still a complicated situation -- so let me explain.Last quarter, General Dynamics reported a 3% decline in sales across its four major divisions. Combat systems, the division that builds Abrams main battle tanks, LAV light tanks, and Stryker armored personnel carriers took it on the chin, with sales down 7% year over year. This obviously was not great news for the company's Lima plant, which builds both the Abrams and the Stryker, and where the payroll has been slashed from a high of 1,200 employees 10 years ago, to about 400 today. But there's better news rumbling down the pike. Last week, the U.S. Defense Security Cooperation Agency -- the arm of the Pentagon responsible for coordinating foreign arms sales -- announced that it has notified Congress of a big new order for Abrams main battle tanks for Saudi Arabia. According to DSCA, Saudi wants to buy 153 M1Al/A2 "tank structures" from General Dynamics. Of those tanks, 133 will then be converted into the M1A2S "Saudi Abrams" configuration, being equipped in the process with a battery of smoke grenade launchers and 0.50-caliber and 7.62-mm machine guns to supplement their main guns -- and stocked with 6,650 rounds of tank ammo. The remaining 20 tank bodies will be used as "battle damage replacements" for Saudi tanks lost in the fighting in Yemen. Additionally, with casualties mounting in Yemen, the Saudis have placed an order for 20 of General Dynamics' M88A l/A2 Heavy Equipment Recovery Combat Utility Lift Evacuation System (HERCULES) Armored Recovery Vehicles -- used to recover damaged tanks from the battlefield, and return them to base for repair. Total cost for Saudi Arabia's shopping list: $1.15 billion. Posted by: Besoeker 2016-08-22 |
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