Industry Week in Review – March 18, 2011
Although stocks rose for the second day in a row on Friday as news of a cease-fire in Libya eased traders’ concerns about developments in the Middle East, the ongoing turmoil in Japan led to U.S. markets falling for the week. With the most recent Continuing Resolution (“CR”) set to expire on March 18th, the U.S. Senate voted on Thursday to approve a sixth CR that will fund the government another three weeks, through April 8th, and cut an additional $6 billion from the overall federal budget.
Earlier in the week, Defense Secretary Gates issued a 48-page memo aimed at freeing up $178 billion in defense spending over the next five years by retooling the responsibilities of the services and subordinate Pentagon agencies, as well as by cutting more than 1,000 contractor positions. More specific details of the Pentagon’s plans include the elimination of 102 general officer and flag officer positions, including 28 associated with operations in Iraq and Afghanistan, the elimination of 500 contractor positions in both 2011 and 2012 within the Missile Defense Agency, the reduction of exercises in Latin and South America by the U.S. Southern Command, and a 5% reduction to the DARPA budget over the next five years. The memo also calls for major consolidation within the Intelligence Community through the elimination of the Office of the Deputy Undersecretary of Defense for Technical Collections and Analysis and the Office of the Deputy Undersecretary of Defense for Human Intelligence, Counterintelligence and Security, with both agency’s responsibilities moving under a newly created Office of the Deputy Undersecretary of Defense for Intelligence and Security.
On Friday, a coalition of Western nations, including the U.S., Britain, and France, mobilized to launch quick air strikes against Libya after the U.N. approved military action to prevent Gadhafi from crushing insurgents. President Obama addressed the media, warning Gadhafi to adhere to the cease-fire the Libyan government issued in response to the U.N. Security Council resolution, while also insisting that American troops will not be deployed in Libya. Also announced on Friday was the SEC’s approval of Northrop Grumman’s plans to spin off its shipyards and leave the shipbuilding business. Northrop is shedding its shipyards after nearly a decade as the largest shipbuilder in the U.S., and repositioning itself to concentrate on aerospace, electronics, information systems, and technical services to government and commercial customers.
Notes on some big movers:
- Curtiss-Wright Corporation (Down 10.8%)
- Magellan Aerospace Corporation (Up 10.1%)
- The Shaw Group Inc. (Down 15.3%)