Textron Opens Canadian Facility

Textron Systems, an indirect wholly owned subsidiary of Textron Inc. (TXT - Analyst Report), has opened a new facility in Ottawa, Canada that will initially operate as a business office. Textron System hopes that this new facility would be a window for offering the business’ broad capabilities to Canadian customers.

Textron has already a much-entrenched presence in Canada with more than 1,800 people employed there. Over the last four years, Textron companies Bell Helicopter, Cessna, Textron Defense Systems, and Textron Marine & Land Systems have purchased more than $3.5 billion of supplies manufactured by Canadian companies.

Bell Helicopter has also been recently awarded a 10-year, $640 million contract to provide support services for the Canadian Forces CH146 Griffon fleet.

Textron Systems is currently competing for the Department of National Defence Canadian Forces’ Tactical Armoured Patrol Vehicle program. The company plans to focus on this program from its Ottawa office.

If Textron Systems Canada wins the bid, it would coordinate a team of Canadian companies for vehicle assembly and integration, provide direct product support, manage the 25-year In-Service Support contract, as well as execute Industrial Regional Benefits program.

Textron’s diversified presence across commercial, manufacturing and industrial products as well as financing operations protects it from specific business risk. The company is increasingly focused on its core manufacturing business and is gradually exiting from its commercial finance business through orderly liquidation and selected sales.

However, Textron remains exposed to defense spending cuts. Moreover, a slower recovery in the business jet market could lead to deferrals of orders in its backlog. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

Textron Inc. is a global multi-industry company that manufactures aircraft, automotive engine components, and industrial tools. It is also a provider of solutions and services for aircraft, fastening systems, and industrial products and components. In the near term, we would advise investors to accumulate its short-term Zacks #1 Rank (Strong Buy rating) peers like Lydall Inc. (LDL) and LSB Industries Inc. (LXU - Snapshot Report).

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