BAe in the CMpoo

[big duke 6]

Heard an interesting snippet the other day that BAe need to make a savings of £18000 per day on a linear spend and growing in order to break even over the life of the CMU contract at marham!

Holy sh1t. They are fooked!

 

[Rocket_Ronster]

Why ?
They can`t go bankrupt.

 

[Rigga]

Commerce versus want.
If it's not "cost effective" to operate four hangars then BAE just need to close a Hangar or two and sit back.
At some point the RAF will baulk at the lack of Flying Hours available and pay them to increase production again...or not.
Sorted.

 

[John Lloyd]

Commerce versus want.
If it's not "cost effective" to operate four hangars then BAE just need to close a Hangar or two and sit back.
At some point the RAF will baulk at the lack of Flying Hours available and pay them to increase production again...or not.
Sorted.

It's not like they are short of practice in Saudi.

 

[Downsizer]

Commerce versus want.
If it's not "cost effective" to operate four hangars then BAE just need to close a Hangar or two and sit back.
At some point the RAF will baulk at the lack of Flying Hours available and pay them to increase production again...or not.
Sorted.

Then they'd be defaulting on their half of the contract surely?

Is the issue here not BAe underbidding to win a contract then suddenly realising they're not going to make any money?

 

[Tin basher]

Is the issue here not BAe underbidding to win a contract then suddenly realising they're not going to make any money?

A factor that seems more and more apparent with other contracts across the MOD and not just BAe. The once brave new world of civvy contracts is starting to show the cracks. The company running stn workshops here has changed three times and the catering company running the messes had been changed more time than Gems shreddies. Each new company reduces staff numbers compared to the previous in an attempt to make something from the lowest bid contract they signed up to.

 

[propersplitbrainme]

Just as well the government hasn't reduced the number of uniformed personnel down to a level where they couldn't rustle up a bunch to go in and paper over the cracks.......

Uhhh ohhh DT_Xtremez_42:

 

[Rigga]

Then they'd be defaulting on their half of the contract surely?

Is the issue here not BAe underbidding to win a contract then suddenly realising they're not going to make any money?

No. Its not likely to be underbidding, as the contract was signed before the recession started. It is, however, likely to be rising prices, or dropping values, of things not previously encountered or budgeted.

Having once worked there it may also be a change of financial responsibility from ever-changing customer requirements.

 

[Downsizer]

Yeah, fair points. Nothing is ever BAes' fault.

 

[Rigga]

Wrong again. It's not ALWAYS BAE's fault.

As an ex-employee, I'm not a BAE fan, but I think I'm a realist.

 

[vim_fuego]

Wrong again. It's not ALWAYS BAE's fault.

As an ex-employee, I'm not a BAE fan, but I think I'm a realist.

Agreed...you need to walk a mile in all involved parties shoes before you follow a party line and generalise. The customers will and does change it's mind...especially on long programmes when over it's lifespan new technology becomes available that it wants but that is a deviation to the contract and therefore will take time and money to include. I was as critical as the majority on here of defence contractors and by no means am I a company man now but I now have the knowledge to make a judgenment that the blame is more evenly shared than papers would report.

 

[Downsizer]

I never said it was one side or the others fault, I can take a pragmatic view. What I will say is that I had recent conversations with a relatively senior BAe guy who admitted the only way they are going to win future contracts is by underbidding then save during the life of the contract. Make of that what you will....

 

[vim_fuego]

I never said it was one side or the others fault, I can take a pragmatic view. What I will say is that I had recent conversations with a relatively senior BAe guy who admitted the only way they are going to win future contracts is by underbidding then save during the life of the contract. Make of that what you will....

I wouldn't know on that point...It's a huge organisation these days and more compartmental than the military so what commercial get up to compared to engineering or programme management for example are worlds apart. I think we all can make some assumptions on how contracts are awarded and weighted towards UK options even if they don't know for sure. Happens all over the globe as well.

In the end UK defence contractors do knock out some great products that are regarded highly by most...how they get there sometimes isn't pretty and as end-users without all the correct info it's easy to get grumpy about things quite quickly...

 

[Downsizer]

It struck me as a pretty risky business model. I am no business expert I hasten to add.....

 

[busby1971]

I never said it was one side or the others fault, I can take a pragmatic view. What I will say is that I had recent conversations with a relatively senior BAe guy who admitted the only way they are going to win future contracts is by underbidding then save during the life of the contract. Make of that what you will....

Pretty much standard contractor behaviour, you win with an at cost or slight loss price then make your profit on the contract variations, these tend to be expected.

This makes any extra work seem excessively expensive but people fail to take into account the initial bargain.

Sent from my Nexus 5 using Tapatalk

 

[Gord]

Agreed...you need to walk a mile in all involved parties shoes before you follow a party line and generalise. The customers will and does change it's mind...especially on long programmes when over it's lifespan new technology becomes available that it wants but that is a deviation to the contract and therefore will take time and money to include. I was as critical as the majority on here of defence contractors and by no means am I a company man now but I now have the knowledge to make a judgenment that the blame is more evenly shared than papers would report.

The reason you should walk a mile in the other guy's shoes before you criticise him is so that when you turn round and yell back to him that he's a c*nt, you're a mile away and he's shoeless so your chance of escape has just moved up several notches on the "this is gonna hurt" meter.:biggrin:

 

[Rigga]

It struck me as a pretty risky business model. I am no business expert I hasten to add.....

I'm no expert either, but the risks anyone takes when trying to forsee the next ten years is a hazardous business. Add to that the fact your customer is both brash and naive at the same time; doesn't care a toss about your commercial worries; that some of your best assets could dissappear overnight; that almost all of your assets are beyond your control and then you might see some of the issues of so-called foresight and its arguement with the much more accurate hindsight.

...you should have heard some of the (focussed) debates with those customer chappies about cost and who pays it....

 

[LoneRanger]

I see they lost the UAE contract today, BBC reckon they'll go with the French jet, just like India.

 

[ady eflog]

Commerce versus want.
If it's not "cost effective" to operate four hangars then BAE just need to close a Hangar or two and sit back.
At some point the RAF will baulk at the lack of Flying Hours available and pay them to increase production again...or not.
Sorted.

Thats what they have done, with the reduced throughput of filthy tonkas due to drawdown of the fleet, 2 Hanger is now doing Hawk majors to keep them ticking over till JSF pitches up

 

[Downsizer]

Thats what they have done, with the reduced throughput of filthy tonkas due to drawdown of the fleet, 2 Hanger is now doing Hawk majors to keep them ticking over till JSF pitches up

It's my understanding that BAe are in no way guaranteed depth maintenance of F35 yet?