General Dynamics Corporation
) subsidiary General Dynamics Land Systems has entered into a $40
million agreement with the U.S. Army TACOM Life Cycle Management
Command. The deal comes under the U.S. Foreign Military Sales
contract to offer defense support to the Kingdom of Saudi Arabia.
Per the agreement, General Dynamics will provide procurement and
production services to the Saudi M1A2 (M1A2S) Abrams tanks. The
contract is a modification to an existing contract for the
improvement of the fleet of tanks in the Kingdom of Saudi Arabia.
The previous deal, signed in Jan 2013, was for the production and
delivery of 69 Saudi M1A2 Abrams tanks.
General Dynamics will roll out the services from its facilities
at the Joint Systems Manufacturing Center in Lima, Ohio. The
deliveries are expected to be completed by Jul 31, 2014.
M1A2 SEP V2 is the most advanced digital tank with improved color
displays, day and night thermal sights, commander remote operated
weapon station (CROWS II), a Thermal Management System (TMS) and
a tank-infantry phone. The M1A2S conversion increases the
efficiency and capability of the tank.
Over the years, General Dynamics has a long-standing strategic
alliance with the U.S. defense establishments and tries to meet
its commitments in terms of maintaining product and service
standards along with delivery timing. The company has been
upgrading the kingdom's fleet of M1A1 and M1A2 tanks for a long
General Dynamics' Abrams tanks provide the troops with a proven
and supreme decisive edge. In addition, survivability, mobility,
adaptability and maintainability are important features of the
tank. With these traits, these tanks are formidable and will
dominate the battlefield. Apart from the Saudi defense authority,
General Dynamics supplies the Abrams tanks to its international
allies including Egypt, Kuwait and Australia.
In Jan 2012, General Dynamics had received the contract for
upgrading M1A1 tanks to the M1A2 Systems Enhancement Package
(SEP) V2 configuration. In Feb 2008, the company had originally
received the order from the U.S. Army TACOM Lifecycle Management
Command to upgrade 435 M1A1 tanks.
We believe the effects of Arab Spring as well as the prevailing
unrest in the Middle East are propelling the Saudi defense
establishment to enhance and upgrade its arsenal capability. Last
month, the Royal Saudi Air Force entered into an agreement, worth
$253 million, with
Lockheed Martin Corporation
) to seek assistance for its F-15SA pilot and maintenance
General Dynamics Corporation currently has a Zacks Rank #3
(Hold). Other stocks from the sector that are presently
performing better include
) with a Zacks Rank #1 (Strong Buy), and
Alliant Techsystems Inc.
) with a Zacks Rank #2 (Buy).
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