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General Dynamics

The primary business of General Dynamics is supplying weapons systems and services to the US government and its international allies. The company, which once was the largest defense contractor with $10.2 billion in revenue in 1990, underwent a massive downsizing between 1992 and 1994 in the face of declining defense budgets. General Dynamics reversed course in 1995, making niche acquisitions and expanding it's focus on weapons system integration. GD has dominant market positions in areas of the defense budget where there is little competition, such as land combat systems, and has emerged as the dominant shipbuilder for the US Navy.

The company is a Delaware corporation formed in 1952 as successor to the Electric Boat Company. The company employs 29,000 people and has three main business segments, Marine, Combat Systems, and Information Systems and Technology. Marine includes Electric Boat Corporation (Electric Boat), Bath Iron Works Corporation (BIW), and American Overseas Marine Corporation (AMSEA). Combat Systems includes General Dynamics Land Systems Inc. (Land Systems), General Dynamics Defense Systems, Inc. (Defense Systems), and General Dynamics Armament Systems, Inc. (Armament Systems). Information Systems and Technology includes General Dynamics Advanced Technology Systems, Inc. (ATS) and three operating units which comprised Computing Devices International: General Dynamics Information Systems, Inc. (GDIS), Computing Devices Canada, Ltd., and Computing Devices Company Ltd. in the United Kingdom.

Land Systems designs and manufactures the M1 Series Abrams Main Battle Tank for the U.S. Army and various foreign governments. Land Systems also performs engineering and upgrade work, and provides support for existing armored vehicles. Production of the M1A2, the latest version of the M1, was initiated in 1992. Land Systems is currently in its second year of its five year multiyear contract with the U.S. Army to upgrade 120 tanks per year from the M1 to the M1A2 version. Land Systems is also under contract for the development of several other major armored vehicle programs. The first is the Advanced Amphibious Assault Vehicle program for which Land Systems was recently awarded a development contract, including prototype design and construction. The second is the Heavy Assault Bridge program which is currently under development and is expected to enter production late in this decade. The third is the Crusader Self-Propelled Howitzer development program of which the company's share is approximately 25 percent.

In 1991, the U.S. Navy terminated for default a contract with the company and McDonnell Douglas Corporation for the full-scale development of the U.S. Navy's A-12 aircraft. On February 23, 1998, a final judgment was entered in favor of the contractors for $1,200 million plus interest. The U.S. government has filed a notice of appeal.

Two of the company's primary operating units, General Dynamics Land Systems Inc. and Bath Iron Works Corporation, were acquired in 1982 and 1995, respectively.During the period 1992 through 1994, the company divested its tactical military aircraft, missile systems and space launch systems businesses. On January 1, 1997, the company acquired the assets of Defense Systems and Armament Systems, formerly operating units of Lockheed Martin Corporation. On October 1, 1997, the company acquired the assets of Advanced Technology Systems, formerly an operating unit of Lucent Technologies. On December 31, 1997, the company acquired the assets of Computing Devices International, formerly a division of Ceridian Corporation. Computing Devices International is a defense electronics and systems integration business for primarily the US, Canadian and UK governments. Advanced Technology Systems is a leading supplier of undersea surveillance systems, signal processing and vibration control systems and related technologies primarily for the US Navy. With these acquisitions, the company formed in 1998 a third primary business segment, Information Systems and Technology.

At December 31, 1997, the company had approximately 29,000 employees (excluding contract labor), of whom 47 percent were covered by collective bargaining agreements with various unions, the most significant of which are the International Association of Machinists and Aerospace Workers, the Industrial Union of Marine and Shipbuilding Workers of America, the Metal Trades Council (MTC) of New London, Connecticut, the United Auto Workers Union, the Office and Professional Employees International Union and the United Mine Workers of America.

Divestitures

  • February 1992: Sold Cessna Aircraft Co. to Textron Inc. for $600 million in cash.
  • August 1992: Sold its missile systems business to Hughes Aircraft Co. in exchange for stock in General Motors Corp. (the parent of Hughes) that was later sold for $387 million. Later, received an additional $9 million from Hughes as part of the deal.
  • November 1992: Sold a military electronics business to the Carlyle Group for a $9 million gain.
  • March 1993: Sold its jet-fighter business to Lockheed Corp. for $1.5 billion in cash. (Lockheed merged with Martin Marietta Corp. in 1995.)
  • May 1994: Sold its rocket business to Martin Marietta for $209 million.

Acquisitions

  • September 1995: Bought Bath Iron Works from Prudential Insurance for $300 million.
  • March 1996: Bought Teledyne Vehicle Systems for $55 million.
  • January 1997: Bought two defense units that specialize in turrets, transmissions and ammunition from Lockheed Martin for $450 million.
  • October 1997: Bought Advanced Technology Systems, formerly owned by Lucent Technologies and, before that, AT&T Corp., for $267 million.
  • December 1997: Purchased Computing Devices International for $500 million.
  • November 1998: Acquired NASSCO Holdings, a San Diego shipyard, for $415 million in cash and assumed debt.
  • April 2001: Proposed purchase of Newport News Shipbuilding, for $2.6 billion. The combined company would account for about 70% of the Navy shipbuilding budget, employ about 80% of America's military ship designers and engineers, and give General Dynamics control over the manufacture and maintenance of all nuclear- powered military ships. An attempt in 1999 to buy Newport News for $1.4 billion failed due to opposition from Newport News and the Navy. With the addition of Newport News General Dynamics will have four military shipyards, while Northrop-Grumman owns the other two.
  • December 2002 - General Dynamics agreed to pay $1.1 billion in cash for the defense business of General Motors Corp. The deal would make the Falls Church-based defense contractor the world's biggest supplier of armored combat vehicles. General Motors Defense, based in London, Ontario, is a joint-venture partner with General Dynamics in the production of the Stryker, the Army's new generation of combat vehicles.
  • On 27 July 2003 General Dynamics announced the purchase of Intercontinental Manufacturing Co., which makes bodies for aircraft bombs. IMCO, based in Garland, Texas, employs about 600 people and had revenue of about $145 million in 2003. The company is expected to become part of General Dynamics Ordnance and Tactical Systems.



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