This week, the Joint Select Committee, better known as the “Super Committee,” failed to identify $1.2 trillion in reductions to the federal deficit. The committee’s failure triggers automatic spending cuts and sequestration beginning in 2013. If defense budget cuts are not softened, the defense base budget in 2013 would be cut to approximately $472 billion, nearly $100 billion under the Pentagon’s 2012 budget request for the following year.
While defense cuts seem inevitable, the amount and timing are under debate. A main factor in the debate is the 2012 Presidential election; Committee failure and pending job loss from defense cuts in a tough economy are key considerations in the President’s re-election. Several members of Congress and the White House agree the defense cuts under sequestration go too far. Policymakers are likely to seek spending reductions and revenue increases in other places in order to avoid the full effects of defense cuts.
Zodiac Aerospace (Up 5.4%) – Shares are up this week after the company announced a bullish view on aerospace growth, projecting Q1 organic sales up 20% when its fiscal quarter ends next week. The company which supplies plumbing, power and parts for Airbus and Boeing Co jetliners, said on Tuesday their supply chain was robust enough to keep up with record production needed to meet demand in the Middle East and Asia.
Northstar Aerospace Inc. (Down 21%) – Shares are down again this week as investors remain wary of weak earnings reports and agreements made with employees to end a 30-day workforce strike. The company, which produces flight-critical parts for military and commercial aircraft applications, ratified a new collective bargaining agreement in which it conceded cost-of-living allowances and job security clauses.
NetScout Systems acquired Sterling-based Simena, a provider of network monitoring switching technology. The acquisition expands NetScout’s capabilities in packet-flow switching technology that will help its enterprise, public sector and service provider customers tackle diverse traffic requirements and improve monitoring. Terms of the deal were not disclosed.
Czech arms and aircraft company Omnipol AS acquired ERA AS, a subsidiary of U.S.-based company SRA International, Inc. for an undisclosed amount. The acquisition solidifies ERA’s position in the global market and gives Omnipol ownership of ERA’s passive surveillance system, known as “Vera,” which is touted as being capable of detecting stealth jets.