Marine Hovercraft From Textron Flawed by Propeller Cracks

(Bloomberg) -- The U.S. Navy accepted delivery this year from Textron Inc. of the first two in a new generation of hovercraft for the Marines despite “extensive propeller blade cracking” that will require a redesign, according to service officials and documents.

The previously undisclosed problem was discovered during mid-2019 tests of the $5.7 billion program to build new air-cushion hovercraft to move Marines from ship to shore.

Even with the cracks unresolved, the Navy awarded Textron a $386 million contract for 15 more hovercraft that Congress had approved for fiscal years 2017-2020. But ordering those vessels was held up pending resolution of other technical problems, including issues with the main gearbox, drive-train integration and lubrication system, navigation electronics and bearings. The first two deliveries, in February and August, were each three years late.

Hovercraft “have always been important for supporting the Marine Corps’ ability to land forces ashore, and in coming years they are to form part of the toolkit for implementing the Corps’ new wartime island-hopping strategy for countering Chinese military forces in the Western Pacific,” Ronald O’Rourke, an analyst with the Congressional Research Service, said.

Taking delivery of the first two hovercraft allowed the Navy to begin initial operator training and “to move into the post-delivery test and trials period as we identify long-term” solutions for vessels in production, Navy spokeswoman Colleen O’Rourke said in an email. She described the flaws as “micro-cracks” in the composite structure of the blades that don’t pose a safety hazard or “an immediate impediment” to operations.

“The program is the first major naval acquisition program in more than 15 years to be designed ‘in-house’ by the Navy rather than by private industry,” according to a Navy fact sheet.

Reinforced Blades

O’Rourke said the Navy, Providence, Rhode Island-based Textron and subcontractor Dowty Propellers, a division of General Electric Co., conducted a study “to understand the underlying cause and mechanisms to improve propeller blade performance.” That led to a near-term plan to provide “reinforced blade sets that will deliver later this year” while production and post-delivery testing continue and “blade redesign efforts are underway,” she said.

She added that the eventual solution for the 73 hovercraft, known as Ship to Shore Connectors, “is not anticipated to result in any significant program cost increases.”

Scott Donnelly, Textron’s chief executive officer, told analysts Thursday on an earnings call that the program is “steadily improving” and “we’re starting to feel good about that.” He said the contractor has “started to get more craft deliveries, the production lines are starting to run better, we’re starting to get supply parts coming in at the right time” so “that’s a program that obviously is going to start to be a contributor to the profit in the rest of the businesses.”

Textron rose 6.6% to $34.21 at 10:24 a.m, the most since July 30, after third-quarter earnings per share from continuing operations beat the average analyst estimate.

Currently, 12 additional hovercraft are under construction in Slidell, Louisiana. The vessels will replace the aging Landing Craft Air Cushion vehicle that became operational in 1986.

The Ship-to-Shore Connector is a “franchise program” for Textron’s Marine & Land Systems division, “which could more than double in revenue over the coming years as production accelerates,” Bloomberg Intelligence analyst Douglas Rothacker said in an email. Textron reports third-quarter earnings Thursday.

Procurement funding is projected to soar from $20 million the Navy requested for this fiscal year to almost $380 million by 2025, according to program documents.

The Navy’s fiscal 2021 Selected Acquisition Report, obtained by Bloomberg News, said initial “Builders Trial” testing in mid-2019 uncovered “technical concerns with the propeller blades.” This resulted in a decision to divide the subsequent formal acceptance test into two events -- “unloaded” and “loaded,” which simulated carrying a 74-ton M1 tank.

“After the loaded builders test, craft inspection revealed extensive propeller blade cracking,” it said. “To avoid additional blade loss,” the first vessel’s acceptance tests “were conducted unloaded.”

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