Are Terminator Robots the Future of Warfare?
Robert is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
How can patriotic investors save military lives and employ thousands of skilled American workers for the betterment of the U.S. economy? This article will focus on 3 dynamic U.S. defense companies.
The U.S. spends more on defense than any other sector, with the exception of Social Security. According to the Department of Defense (DOD), President Barack Obama requested a base budget of $671 billion for 2012. The proposed amount included $553 billion to fund defense programs and $118 billion to support overseas contingency operations (OCO,) primarily in Afghanistan and Iraq.
Small company big military orders
iRobot Corp (NASDAQ: IRBT) is in the process of fulfilling the following military contracts from 2012 thru 2015: the manufacturing of 68 models of the 310 Small Unmanned Ground Vehicle (SUGV) for the U.S. Army. Last June of 2012, 138 robots with spare parts were delivered totaling $24 million. The Navy also awarded a $28.8 million contract for the Man Transportable Robotic Systems (MTRS) used for bomb disposal.
However iRobot has not only focused on the military sector; it has diversified into the consumer sector. iRobot's catch phrase is, "Robots that make a difference", and they certainly have. Roomba is the best known in a growing consumer series of robots that perform everyday household functions, like vacuuming, floor washing, pool and gutter cleaning. There is a growing opportunity for robots specifically designed with the consumer market in mind.
This company aims to win in the consumer sector. Consumers are always looking for ways to reduce time on household chores: Not long ago the washer, dryer, and dishwasher was space age technology, now every home has these appliances now. iRobot intends to bridge the gap between robots and everyday use in the home for the consumer’s convenience in the 21st century. Imagine investing in the first washer and dryer company in the 20th century; this company definitely has a long term forecast.
Boeing and iRobot collaboration
The innovation of iRobot attracted the attention of Boeing (NYSE: BA) back in 2007 to help develop the next generation SUGV. Boeing is the second largest defense contractor in the world, on the back of a diversified non-military aviation business. iRobot teaming up with Boeing, the giant in the Defense sector, can only mean good news for higher EPS and long term growth.
Second largest defense contractor invests in robots
Northrop Grumman (NYSE: NOC) like iRobot, is another major player in the unmanned ground vehicle arena. Northrop's ground vehicle business is established in Coventry, U.K. where the company develops and manufactures unmanned drones. The Cutlass EOD platform by Northrop Grumman won an 80 vehicle contract back in 2006. There are currently more than 2,000 unmanned ground vehicles operating around the world today, manufactured by this company.
Big 3 defense contractors competing
Boeing, Northrop Grumman, and the up and coming iRobot are all competitors in the international arena for the future of military combat. Lockheed Martin's California-based Skunkworks has been developing drones for decades now. The latest project from Lockheed Martin is the Unmanned Carrier Launched Airborne Surveillance and Strike air vehicle (UCLASS).
The UCLASS is an inexpensive alternative to traditional manned aircraft like the $110 million F-35 joint strike fighter. The autonomous craft allows a single Air Force pilot to operate multiple drones simultaneously. Combining the capabilities of a trained pilot with an unmanned drone is the best of both worlds for the Air Force. From a military standpoint, multi-tasking flying drones 24/7, on recon missions utilizing an individual pilot, is the way of the future.
Lockheed Martin, the largest defense contractor in the U.S., has hedged its future with the unmanned drone program. If Pentagon budgetary cuts happen for FY 2014, Lockheed Martin will still fly high; supplying drones to the Pentagon and military powers of the world is a priority for this defense company.
National security spending will continue to increase with the political instability of combat zones in the Middle East. According to DOD estimates, $152 billion was spent on military personnel in 2011. The cost for a single U.S. soldier in Afghanistan was $850,000 per year, and this does not include support costs for wounded soldiers after leaving the service.
The fact is, in the 21st century, the future of warfare is in unmanned drones that eliminate or reduce soldier casualties. Human military personnel are expensive to maintain. The world of "Skynet" from the popular movie Terminator is here, with the exception that humans operate unmanned drones via remote control instead of a central A.I. computer.
According to the DoD, global spending is expected to exceed $13.4 billion by the end of 2013. Aircrafts account for 90%of unmanned drones; ground and maritime drones account for $2.4 billion. The unmanned aerial vehicle demand for the Middle East is projected to cost $1 billion according to International Defence Exhibition (IDEX) officials.
From household robots to military applications, robots are here to stay for the 21st century and beyond. As discussed above, there are avenues that investors can take to participate in this growing market.
More from the Motley Fool to help your dollars go farther
Tax increases that took effect at the beginning of 2013 affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "How You Can Fight Back Against Higher Taxes," the Motley Fool's tax experts run through what to watch out for in doing your tax planning this year. With its concrete advice on how to cut taxes for decades to come, you won't want to miss out. Click here to get your copy today -- it's absolutely free.
Robert Palmer has no position in any stocks mentioned. The Motley Fool recommends iRobot . The Motley Fool owns shares of Lockheed Martin and Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!