Frank Lanza, chairman and chief executive of L-3 Communications talks to Tim Ripley about his company's move into the training market.

L-3 test training waters run deep

This move into the dynamic training market adds to L-3 CEO Frank Lanza's reputation as a backer of hi-technology companies, but as a recognition of the Arlington-based operation's heritage, L-3 quickly re-named the Raytheon training devices and training services (TDTS) business to L-3 Communications Link Simulation and Training.

"We are pleased to welcome Link Simulation and Training into the L-3 family of companies," said Lanza. "By renaming TDTS as Link Simulation and Training, we have restored an extraordinary legacy with a franchise name that goes back over 70 years. In the future, we look forward to performing to the standards implicit in this legacy, that is now an important part of L-3, enhancing Link's position in the simulation and training market."

Its products and services are used by US and foreign military services and prime contractors. Link Simulation and Training is headquartered in Arlington, Texas. Link also has operations in Binghamton, New York, Orlando, Florida and Broken Arrow, Oklahoma.

Headquartered in New York City, L-3 Communications is a leading merchant supplier of secure communications systems and products, avionics and ocean products, training products, microwave components and telemetry, instrumentation, space and wireless products. Its customers include the Department of Defense, selected US government intelligence agencies, aerospace prime contractors and commercial telecommunications and cellular customers.

"L-3 is a communications company, developing hi-tech products for government. We sold $2b worth of products last year" he said. "Our products go into ships, subs, aircraft, vehicles and satellites."

"Training is already one of our products - we started two years ago for the US Army and medical markets. We did training for 20 years at Loral, where I was president. I recognised that training now has a higher priority for the US Department of Defense, where its operations and maintenance takes up a third of the budget.

We are starting to approach the point where training is a significant business because of commercial technology" he said. "This is due to availability of high precision data bases, high speed computers to generate polygons and advanced visual systems. Virtual reality training is now possible.

"Medical and military training have shown magnificent growth. We saw an undervalued company called Raytheon that was not performing well. 50 years ago Ed Link formed Link Training, with a 4,000 staff that is now down to 1,000 people. There is an opportunity to focus the company now it is free for fresh ideas.

"We can get back to where the old legacy Link company was. It delivered more training systems than any other company in the world. This list includes the F-117, B-2, F-16, F-22, C-130, F/A-18, MH-53E, AH-64, UH-60 and MH-60K. The action now is in replacing and up grading them with new technology.

"There is a growing market internationally for training. We want to partner, to export to Europe. We see an opportunity to expand horizontally, which is important for L-3. Currently 20 per cent of L-3s sales are international. The training group is a very small part of that. We want to expand that, to expand we have to partner. "Training is to have its own group within L-3. We already have a secure communications group, avionics and ocean systems group, a microwave group, a telemetry, instrumentation and space group and a commercial products group. Training is a growing segment in L-3's product base.

Lanza said the UK was a bit ahead of the US in the development of innovative commercial solutions to fund training, such as 'pay as you train schemes'.

"The US is starting to go that way" he said. "We've just won the contract to provide turnkey training for the E-3A AWACS in a $60m facility for US and international crews." The rapid advances in simulation technology are a major but not insurmountable challenge, said Lanza.

"We start with commercial technology, look at high speed computers off the shelf. Look at the best graphic engines, from Barco, Evans & Sutherland and others. The software is the golden nugget. You buy in the mechanicals, visuals and projectors. Our speciality is pulling them together, by writing millions of lines of code. By networking various simulators from a common data base, where you can fight air and land battles on differently configured simulators, linking them via terrestrial or satellite communications. SimNet was made by L-3, when it was Loral. It was the first distributive simulation training war game. We want to expand that kind of training as well as inter-active distance learning. There is a tremendous growth market for both the commercial and defence sectors."

"It is a lot easier for us to cope with rapidly changing technology than a large prime contractor. You have to develop technology three to four years ahead of new weapon systems. We have to spend a lot of money way ahead of time. I spend $100m on advanced products and $100m of Department of Defense funding developing boxes. That is my leverage. We are smart enough to work with procurement folks to know what the next aircraft, ships and subs are going to need. We also use commercial technology as much as possible.

"Training is now a good business because everything does not have to be special. In the past you did not sell very many units because they had to have specially made components. They were so expensive, so you didn't make much money. That's why everyone went bust. The price of a high fidelity motion simulator has fallen from $30m to $3m-$5m.

"The Farnborough airshow is the biggest event for L-3 during the year said Lanza. "We are also going to be at I/ITSEC where we will be illustrating the full range of products.