Generally dynamic, General Dynamics is a prime military contractor to the Pentagon (the US government accounts for about 70% of sales). The company's military operations include information systems & technology (information technology and collection, as well as command control systems); marine systems (warships, commercial tankers, and nuclear submarines); and combat systems (battle tanks, wheeled combat/tactical vehicles, munitions, and rockets and gun systems). Its aerospace unit, which is composed of Gulfstream Aerospace and Jet Aviation designs, makes, and refurbishes business jets primarily for civilian customers.
Unlike some of its rivals who cater only to the military market that is at the mercy of government budgetary fluctuations, General Dynamics caters to military and civilian sectors, manufacturing both combat systems and high-tech systems, with each side buffering the other in times of market downturn. The Combat Systems division is composed of Armament and Technical Products; European Land Systems; Land Systems; and Ordnance and Tactical Systems.
General Dynamic's Marine Systems group is a major shipbuilder for the US Navy, and it provides MRO (maintenance/repair/overhaul) services to keep those vessels ship-shape. Marine systems manufactures the Virginia-class nuclear-powered submarine, the Arleigh Burke-class guided-missile destroyer (DDG-51), and the Lewis and Clark-class dry cargo/ammunition combat-logistics ship (T-AKE). Subsidiary Electric Boat builds nuclear submarines (Seawolf, Ohio, and Los Angeles classes), while Bath Iron Works builds DDG-51 and DDG-1000 destroyers.
On the civilian side of the business, the company's Aerospace segment produces mid- and large-cabin business jet aircraft, for which the company provides maintenance, refurbishment, and outfitting.
Last, but not least -- serving both the military and civilian sides -- the company's information systems & technology business unit provides cyber security, tactical communication systems, sensors and cameras, ruggedized computers (for use in harsh environments, such as those with strong vibrations, extreme temperatures, and wet or dusty conditions), and antennas to customers in the DoD, the Department of Homeland Security, the intelligence community, federal civilian agencies, and international customers.
Year-over-year 2011 revenue rose .6%. Revenue decreased 3% for information systems and technology (34% of sales) due in part to less demand for ruggedized computing products. The only business group in that segment to enjoy an uptick was information technology services, which headed up about 8%. Tactical communication systems and intelligence, surveillance, and reconnaissance systems went down 12% and about 5% respectively. It was the former business that was mainly affected by slower orders for ruggedized computing products, such as the Common Hardware/Software III (CHS-3) program.
Combat systems' 2011 year-over-year revenue decreased .6%. The segment's US military vehicle business struggled with less work for the Abrams tank, weaker orders for survivability enhancement kits for the Stryker, and a slowdown for the Expeditionary Fighting Vehicle because the project was nearly completed. The segment accounts for 27% of sales.
Aerospace revenue (19% of sales) increased 13% thanks mainly to deliveries of 12 green (as opposed to already outfitted) G650 aircraft, a new model. The aircraft manufacturing, outfitting, and completion business of this segment similarly went up 13%. The aircraft services business of the aerospace segment rose 15% with an increase in activity of the air-travel sector.
Marine systems (20% of sales) sunk .7%. The segment struggled with lower activity for its ship-construction business but enjoyed more business from the Navy for engineering and repair programs.
For the civilian market Gulfstream has introduced two new jet models. The super-midsize G280, replacing the G200, boasts more cabin space than its predecessor and flies the longest range at the fastest speed in its class. The ultra-large-cabin G650 includes such luxuries as a handheld device for passengers that controls lighting, temperature, and other features for the cabin environment.
In the military market, though challenged by budget cuts in the US, General Dynamics is also enjoying more international sales. The company's combat systems segment has been making tracked combat vehicle hulls for export to Israel. Abrams tanks and Light Armored Vehicles are also in demand by US allies in the Middle East.
Though US defense spending is in decline -- with the President making a fiscal 2013 defense budget request of $525 billion, down from $531 billion in fiscal 2012 -- General Dynamics' business addresses programs that the military continues to emphasize, including the need for warfighters and the need to replace resources lost in Iraq and Afghanistan. As the first US submarine to be configured for a post-Cold War defense landscape, General Dynamics' Virginia-class submarine continues to meet needs of the US Navy.
In an effort to boost its commercial networking business, General Dynamics in mid-2012 acquired IPWireless (renamed General Dynamics Broadband), a manufacturer of broadband wireless infrastructure and network access equipment for customers that range from wireless operators to public safety organizations. The purchase will help General Dynamics specifically serve municipalities who are moving broadband public safety networks.
In 2011 the company acquired Massachusetts-based Fortress Technologies, a secure wireless networking equipment provider with a customer base that includes the US military and other government agencies. Fortress Technologies continues as part of General Dynamics C4 Systems. That same year General Dynamics acquired Vangent Holding Corp., parent company of Vangent, a leading provider of health care IT systems to federal agencies, in a cash transaction valued at about $960 million. – less