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February 9, 2023

Turbulence Ahead: Sikorsky faces uncertain prospects after Army contract loss

PHOTOS | GARY LEWIS Sikorsky President Paul Lemmo speaks at a January event commemorating the 5,000th Black Hawk helicopter to roll off the company's Stratford production line.

Three generations of employees in one family. Two workers with 42 years each on the job. One hundred years in business as of this year.

Sikorsky Aircraft's commemoration of the 5,000th Black Hawk helicopter to roll off its Stratford production line in January was all about the company’s storied past and loyal workers.

But what about the future?

Quizzing President Paul Lemmo at the event, a reporter called it “the white elephant in the room” — Sikorsky’s loss of the contract bid for the U.S. Army’s Future Long Range Assault Aircraft, a program seen as the successor to the Black Hawk helicopter.

Texas-based Bell Textron’s V-280 Valor tiltrotor was chosen over the Defiant-X, a dual Sikorsky-Boeing craft “purposefully designed for the U.S. Army’s Future Long Range Air Assault competition, a top modernization priority,” according to a joint statement. The contract will initially be worth up to $1.3 billion and eventually replace about 2,000 Black Hawks.

The significance of the contract loss to both Sikorsky and the state was evident in the spate of “I am disappointed” statements from lawmakers that were issued within hours of the Dec. 5 announcement.

“I will continue to fight like hell to ensure Sikorsky, and other organizations and companies in Connecticut, receive funding opportunities that support our workers and our economy — and that ultimately preserve jobs,” said U.S. Rep. Rosa DeLauro, then House Appropriations Chair.

In subsequent days, workers at coffee shops and restaurants near the Stratford plant were quoted in local media as fearing loss of business due to potential layoffs resulting from the U.S. Army’s contract decision.

A Sikorsky Black Hawk helicopter on the company's Stratford shop floor.

Sikorsky filed an official protest with the Government Accountability Office, a watchdog agency for Congress, seeking a debriefing for elected officials on details of the Army’s decision-making process.

Parent company Lockheed Martin did little to allay fears about Sikorsky’s future with its Jan. 24 announcement that it would be cutting 800 jobs across its national Rotary and Mission Systems workforce — a division that includes Sikorsky.

So how real is the risk to the 7,900 jobs at Sikorsky’s Stratford facility and its overall 13,000-person workforce?

It’s not totally clear but there’s a lot at stake for Sikorsky and the state’s economy.

In addition to the main Stratford plant, Sikorsky maintains administrative offices in Shelton and Trumbull and a Bridgeport assembly facility. Not to mention the 250-plus suppliers the company buys from across the state.

Also on the line is the $50 million in incentives the state of Connecticut pledged to Sikorsky if it won the U.S. Army contract. The funding was contingent on a commitment by Lockheed Martin to keep Sikorsky's headquarters in Stratford.

Speaking at the Black Hawk event in January, Lockheed Martin President and CEO James Taiclet – a veteran Air Force pilot – expressed confidence in the future of Sikorsky’s signature aircraft.

“I think we can really take the Black Hawk to the next level and make it even more valuable than it is today,” he said.

“No other aircraft can do the breadth of missions that this helicopter can do,” Lemmo said of the Black Hawk. “That's why we see Hawk aircraft continuing to have a global impact for decades into the future.”

Production on the platform will continue for at least the next five years, he added, with Sikorsky just starting its 10th multiyear contract with the Army.

High demand

Lamont, U.S. Sen. Chris Murphy, Rep. DeLauro and an array of local officials have expressed support for Sikorsky’s Army contract award appeal, the company’s workforce and the future of Black Hawk production in Stratford.

“I served on the [Senate] Foreign Relations Committee and so I spent a lot of time traveling the world listening to other militaries that want to get their hands on these helicopters,” Murphy said. “We only sell it to our friends. But our friends make it clear that they are in high demand.”

In a Jan. 24 conference call with investors, Taiclet said that a 10% boost in the national defense budget would translate into increased Black Hawk orders.

“We view this funding outcome as positive for the future, and our current expectation is that growth will materialize over the longer term starting in 2024,” Taiclet said.

Sikorsky officials said the company has plenty of work manufacturing the Black Hawk platform in the short and medium term. In addition to its domestic business, the Black Hawk is flown in 34 countries with increasing demand from Pacific militaries like those of Australia, Japan and Thailand.

Easy to modify, sturdy and compatible across a range of fighting forces, the Black Hawk is also being adapted to a range of new uses including firefighting, maritime military use and search and rescue.

The outlook for the company’s CH-53K King Stallion heavy-lift chopper is also promising, with the Marine Corps awarding Lockheed Martin a contract to build nine more CH-53Ks last year, to be built in Stratford and delivered starting in 2025.

The Israeli military has also contracted for four CH-53K helicopters under a U.S. Navy foreign military sales agreement, with each costing $90 million to $100 million apiece.

Sikorsky has also developed a prototype on its own for the Army’s Future Attack Reconnaissance Aircraft program, a contract due to be awarded in 2024-25. Sikorsky’s Raider X is considered a strong contender for the contract, especially considering its recent loss of the Future Long Range Air Assault bid.

Mixed views

Even so, some national analysts are less upbeat: “It is no exaggeration to say that much of the domestic rotorcraft industry is at risk in the aftermath of the Army’s December award,” aerospace expert Loren Thompson wrote in an article for Forbes.

Both Sikorsky and Boeing are at risk of major job cuts, and Boeing could exit the helicopter sector entirely, he added.

Military customers are increasingly looking to unmanned and autonomous craft like drones for warfighting, which threatens the helicopter business as a whole, analyst Byron Callan of Capital Alpha Partners told investors in a letter quoted in

Sikorsky President Paul Lemmo.

The contract award being appealed by Sikorsky and Boeing will likely come up far short of a 1-to-1 replacement of existing aircraft, he added.

Ray Jaworowski, a senior aerospace analyst at Newtown’s Forecast International, countered that Sikorsky has strong prospects for the future due to both its legacy business and new technology.

“There's no question that, should the protest not be upheld, the loss of the (Future Long Range Air Assault) contract will be a big disappointment for Sikorsky,” Jaworowski said. “However, the ramifications should not be overstated.”

The company’s ongoing Army contracts, the export market for the Black Hawk and the “upgrade, modification and sustainment work on the large number of existing Black Hawks around the globe will help keep the company busy,” he said.

And even though it wasn’t chosen by the Army, the Stratford firm’s prototype for the Future Long Range Air Assault program will likely result in new products, Jaworowski said.

“Sikorsky can be expected to leverage technology from the Defiant X as well as from its X2 technology effort into new rotorcraft models or even upgrades and enhancements for existing models,” he said.

Defiant X technology could also be used to bid for business in Europe: France, Germany, Greece, Italy and the U.K. have launched an initiative under the auspices of NATO for a next-generation rotorcraft to replace existing fleets starting in the 2030s.

“Sikorsky will continue to be one of the major players in the military rotorcraft market, but it will have a reoriented product line concentrated on a refocused mix of designs and mission areas,” Jaworowski said.

The recent turbulence around Sikorsky’s failed bid didn’t seem to dampen enthusiasm for the company by employees at the Black Hawk event. Sharmee Walton, a senior manager at the company, spoke of her family’s history with Sikorsky, starting with her grandfather who was hired in 1981.

“My daughter recently completed basic training to join the Air National Guard based here in Connecticut, and I look forward to the day when she will have the opportunity to pursue her dream with Sikorsky,” Walton said.

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