DeMuro: BAE is investing in facilities to prepare for increased DOD spending

BAE Systems' U.S. business is spending on its ship repair, electronic warfare and combat vehicles facilities to prepare for an anticipated increase in Pentagon buying, the business' chief executive said today.

Speaking at an event hosted by Defense One, Jerry DeMuro said BAE is focusing on capital investments "to be prepared for these volume increases."

The Navy, he noted, is seeking to grow its fleet to 350 ships.

"One of the ways they're going to get there is by keeping the existing ships in operation longer," DeMuro said, noting that BAE is expecting a roughly 25 percent increase in related sales from 2017 to 2018. "In anticipation of that, we spent about $100 million to put in a new large dry dock in San Diego."

Additionally, he said the company has spent about $150 million to recapitalize factories and move work around to manage ramp-ups related to the electronic warfare suites it provides for the F-35 and other aircraft.

"Same thing in combat vehicles," DeMuro continued. "We will spend, starting last year through next year, $100 [million], $125 million in recapitalizing our factories, automated welding, more modern systems so that we can actually meet a huge ramp-up in combat vehicles."

Asked about the contractor's services business, which was considered for divestiture in 2015, DeMuro said today he's pleased with the unit's performance.

"We have no present plans to divest it, but the mere fact that it performs well makes it an attractive target," he said.