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General Dynamics Canada wins Saudi deal worth up to $13 billion

Gabriel92

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General Dynamics Canada wins Saudi deal worth up to $13 billion| Reuters

(Reuters) - U.S. weapons maker General Dynamics Corp (GD.N) has won a contract worth up to $13 billion for its Canadian division to build light-armored vehicles for Saudi Arabia, in what Ottawa said was the largest advanced manufacturing export win in Canadian history.

General Dynamics said on Friday the 14-year contract for military and commercial vehicles and training and support services has a value of $10 billion, but could be worth about $13 billion if all options were exercised.

The company did not identify the customer, but Canadian Trade Minister Ed Fast issued a statement saying the vehicles would be sold to Saudi Arabia and would create and sustain 3,000 jobs each year in Canada.

Fast led trade missions to the Saudi kingdom in 2012 and 2013. The deal is facilitated by Canada's international government-to-government contracting organization, the Canadian Commercial Corp.

"The whole-of-government approach to export sales gives us a strategic advantage as we pursue international markets," Danny Deep, vice president at General Dynamics Land Systems - Canada, said in a statement.

The Saudi order provides a huge shot in the arm for General Dynamics, whose combat systems business has seen declining revenues in recent years given the end of the war inIraq and the U.S. reduction of troops in Afghanistan.

"That's a biggie," said Byron Callan, analyst with Capital Alpha Securities. "The Saudi order for light-armored vehicles is a clear positive for General Dynamics. It is confirmation not only of the 2014 guidance, but of a more stable combat systems outlook in 2015 and beyond."

General Dynamics continues to bid for other international orders, including one from Morocco, he said.

General Dynamics's chief executive, Phebe Novakovic, flagged the deal -- without identifying the buyer -- during the company's earnings call last month and said she was confident that the contract would materialize in the first quarter after protracted negotiations.

At the time, she said a delay in the contract and a slowdown in spending by the U.S. Army had contributed to a $1.4 billion shortfall in revenues for General Dynamics's combat systems sector in 2013. Revenues are slated to decline again in 2014, but far more modestly.

General Dynamics shares were up 1.7 percent at $105.45 around midday on the New York Stock Exchange.
 
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Unless our population has grown a lot since I was there they must be approaching a military vehicle for each person that is a citizen by now.
 
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No production lines in KSA? By now KSA should have reached more self-sufficiency when it comes to indigenous production. Hope that changes.

Unless our population has grown a lot since I was there they must be approaching a military vehicle for each person that is a citizen by now.

What you mean? Nationals make up about 24-25 million today and KSA's population is one of the fastest growing in the region and among the youngest in the world. Numbers should not be a problem.
 
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No production lines in KSA?



What you mean? Nationals make up about 21-22 million today and KSA's population is one of the fastest growing in the region and among the youngest in the world. Numbers should not be a problem.

Perhaps I was over exaggerating lol.

But on a more serious note do you know how many LAV-25 a $13 billion can get us? we did buy around 70 LAVs back in 2011 and the unit cost was $3,602,740.

Say the unit cost hasn't changed, that should get us around 3600 LAVs. Does the RSLF/SANG really need that many LAVs?

I'm just saying unless KSA has plans to build a new army, 3600 LAVs is just way too many to operate.
 
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No production lines in KSA? By now KSA should have reached more self-sufficiency when it comes to indigenous production. Hope that changes.

And yeah what's with that? why not build more BMR-600s which is being Manufactured under license in ERAF Marines factory in KSA?

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Oh well, gutted.
 
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@Hadbani

I honestly don't know about the details of this deal nor do I agree with the need of having 3600 LAV's. It's too many indeed. Half of that number would be more than enough if we assume that the unit cost has not changed.

Yes, I don't understand it either hence my initial comment. I am sad to say this but the government COULD and SHOULD have focused more on ingenious production by now. I like the steps that have taken in that direction but still much, much more could be done. But maybe it's also bound in politics and pressure from the US/West? I mean they don't want to lose one of their very biggest clients partially at least. It's not in their interest and since it seems that we have an endless supply of money it's not a problem. But it's being wasteful. Like with many other things. That seriously need to change.
 
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