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Closer Look: General Dynamics Corporation Deal Is The Largest Single Order From U.K. In 30 Years

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Closer Look: General Dynamics Corporation Deal Is The Largest Single Order From U.K. In 30 Years
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General Dynamics Corporation (NYSE: GD) just received an order to provide Scout SV armored fighting vehicles to the British Army, the biggest award for that type of equipment from the U.K. in the last 30 years.

The Virginia-based defense contractor will provide nearly 600 vehicles starting in 2017, replacing other models that have been around for decades. The contract, coming at a time of growing unrest around the world and even in the face of declining defense budgets, is worth $5.8 billion to the company.

Foreign Experience

General Dynamics is no stranger to the international defense community. The new contract, while large, is just one of many that the company has fulfilled overseas though the years.

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General Dynamics, through its ASCOD subsidiary, manufactures various types of military vehicles including the LT105 light tank and the ASCOD SV. 

The company supplied the F-16 Fighting Falcon aircraft, currently used by several air forces around the world, for 18 years. In 1993, production was taken over by the world’s biggest defense contractor, Lockheed Martin Corporation (NYSE: LMT). The multirole F-16 is now provided only to a few overseas customers. About 4,500 aircraft have been built to date.

General Dynamics also produces the M1 main battle tank, the primary heavy tank used by the U.S. Army. The M1 is also deployed by the armies of Egypt, Kuwait, Saudi Arabia, Australia and Iraq.

Job Creation

The program, in addition to being a boon to General Dynamics investors, the world’s fifth-largest defense contractor will benefit the U.K. as about 1,300 jobs will be created.

What It Means

Even though it just received the largest military contract from the U.K. for military vehicles in 30 years, General Dynamics is also profiting from sales of other equipment to foreign countries, such as the M1 and LT105 tanks, as well as the ASCOD SV vehicles.

Investors will probably be rewarded as the company continues to be awarded contracts of this nature in the future.

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