Textron's Landing Hovercraft Cut 20% in U.S. Navy Five-Year Plan

(Bloomberg) -- The U.S. Navy is proposing a 20 percent cut in its planned fleet of new hovercraft being built by Textron Inc. to bring Marine and Army forces and equipment ashore from amphibious warfare vessels.

The service’s next five-year budget will call for 58 of the new Ship to Shore Connector instead of the 73 currently envisioned. The Navy is focused on its plans to expand to a 355-ship fleet from 286 today, but the hovercraft, which has been hampered by early development problems, doesn’t count against that total.

The vessel will replace the aging Landing Craft Air Cushion vehicle that became operational in 1986. The new hovercraft is designed to land on 80 percent of the world’s shorelines with at least 26 passengers and their gear while remaining afloat in 10-foot waves. Textron received its first production contract for the new vessels in 2012.

Asked about the cutback in hovercraft, Captain Danny Hernandez, a Navy acquisition spokesman, said in an email that “we still obviously can’t comment on” budget figures.

Congressional Support

The hovercraft program enjoys strong congressional support. In the defense spending bill for the current fiscal year, Congress appropriated funds for eight of the vessels, three more than the Navy requested. Congress and the Pentagon have authorized the service to buy 29 of the hovercraft under a “low-rate initial production” phase even before full testing is completed. Eight are on contract, and six are in various stages of production.

The support hasn’t been eroded by technical problems that are in various stages of resolution with the vessel’s engine gearboxes, drive-train integration and lubrication system, navigation electronics and bearings. That’s contributed to a delay of at least 19 months in delivery of the first test vessel, which had been planned for February 2017, the Navy said.

Textron “is still working toward a calendar year 2018 delivery,” Colleen O’Rourke, a spokeswoman for the Naval Sea Systems Command, said in an email.

The second test vessel, which was due for delivery in August 2017 also is running at least 16 months late. O’Rourke said Textron is expected to deliver that vessel “several months after the first.”

Despite the delays, the Navy hasn’t yet adjusted the August 2020 date for when it will declare the craft has initial combat capability, service officials have told the Pentagon.

“Textron is currently testing improved” parts to ensure that “the gearbox meets its 30-year service life requirement,” O’Rourke said.

The Government Accountability Office said in its annual report on major weapons systems that once the two initial vessels are delivered, testing “will occur while the contractor produces” those on contract. Citing the use of this approach on the F-35 fighter plane, the GAO said it “has found that concurrent testing and production increases the risk of discovering deficiencies that could require costly design changes and modifications to units already produced.”

Hitting a Bridge

The latest complication occurred Oct. 1, when the first of the hovercraft hit the Chef’s Pass Bridge on Highway 90 in New Orleans, near where it was built. The crash occurred “following routine test events” after the craft experienced what O’Rourke said was “a reported loss in propeller pitch control” combined with high winds. The vessel was towed back to Textron’s facility where it remains under assessment, O’Rourke said.

Scott Donnelly, chairman and chief executive officer of Providence, Rhode Island-based Textron, was bullish in discussing the hovercraft on an earnings conference call on Oct. 18.

“As we look through the balance of this year and certainly as we start thinking about 2019, we expect to see that program ramping” up, and the “funding for the volume of Ship-to-Shore Connector, as we expected, is happening.” He didn’t discuss the program’s technical setbacks.

Textron shares tumbled to their lowest in almost a year this month after third-quarter earnings fell below Wall Street’s estimates. The company’s industrial unit posted third-quarter profit of $1 million, down from $49 million a year earlier.

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