GD Seals Billion Dollar DealGeneral Dynamics Land Systems, a subsidiary of General Dynamics Corporation (NYSE:GD), received a sizeable contract worth $1.052 billion or C$1.064 billion from the Government of Canada to upgrade LAV III combat vehicles of the Canadian Army’s fleet.
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Under the comprehensive upgrade package, the company will modernize 550 vehicles that will significantly enhance their survivability, mobility and firepower and extend the fleet’s lifecycle to 2035.
Survivability up gradation includes the introduction of double-V-hull technology, an innovative enhancement developed by the General Dynamics Land Systems team, as well as add-on armor protection. Collectively, these improvements will provide crew members greater protection against mine blasts and other threats.
The LAV III armored vehicle is the latest in the Generation III Light Armored Vehicle (LAV) series and is powered by a Caterpillar 3126 diesel engine that develops 350 horsepower, and can reach speeds of 100 kilometers per hour. The LAV III is fitted with a two-man turret, armed with the M242 Bushmaster 25 mm caliber chain gun and coaxial 7.62-mm machine gun. One more 5.56 mm or 7.62 mm machine gun is positioned on top of the turret. The LAV-III also has eight 76-mm grenade in two clusters of four launchers positioned on each side of the turret.
Under the contract, the addition of mobility system upgrades such as a more powerful engine, more robust driveline and suspension, and a height management system (HMS), will optimize LAV III’s automotive performance, handling characteristics and payload capacity. The 25mm turret’s crew ergonomics will be improved by incorporating larger hatches, and its capabilities will be enhanced by the addition of the latest technologies, including improved fire control, thermal, day and low-light sights, and data displays. Work under the LAV III Upgrade Project is expected to be completed in 2017.
General Dynamics is well equipped to build nuclear-powered submarines in the U.S. Its revenue exposure is spread over a broad portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; shipbuilding design, repair and construction; and information systems, technologies and services.
However, the company is largely tied to the U.S. defense budget, where the threat of budget cuts is looming high. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Based in Falls Church, Virginia, General Dynamics engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation. The company operates through four segments: Information Systems & Technology, Combat Systems, Marine Systems, and Aerospace. The company mainly competes with The Boeing Company (NYSE:BA) and Textron Inc. (NYSE:TXT).