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[Music]
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oh sakori is the leading uh helicopter
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manufacturer in the world we uh we build
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the iconic Blackhawk helicopter
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Seahawks uh mostly military although we
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have a thriving commercial business and
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then of course all that leads to a a
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pretty good aftermarket business as well
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so vertical lift is our is our primary
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focus well the the theme of the
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conference was strategic execution and I
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and I guess if I had one sentence to sum
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it up from the presentation it was that
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85% of sustainable success is execution
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15% is strategy so the focus was and and
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primar in the defense industry was that
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uh whether it be uh through operational
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execution or more importantly through
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developmental execution that we as an
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industry had to get better at what we do
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because the data is astounding the
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amount of of of months late cost
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overruns program terminations that we're
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seeing in a very constrained DOD budget
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uh cycle has has has got to be a signal
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to us that we've got to get our
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development
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programs uh together and get them out
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the door on time and within the cost
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that the contract
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specified you know there will be 10
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people in here eight will say it's
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negative two will say it's positive and
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I'm lucky enough to say that actually
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we're one of the two that would say
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positive as the as the quadrennial
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defense review that secretary Gates
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conducts says where should we be
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focusing our dollars it's clear that
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asymmetric Warfare I.E nonlinear Warfare
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and Insurgency and terrorism are top of
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the list and the fact of the matter is
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you don't move in that environment
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unless you're in a helicopter it's too
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dangerous on the ground we've all seen
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the videotapes we've all heard of IEDs
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so helicopters help that so we're
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actually seeing I wouldn't say
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tremendously growing I would say solid
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growth but not the kind of trouble I
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would say that some of the other uh
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contractors are in right
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now oh absolutely absolutely if um if
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you go back to Katrina Haiti last year
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Haiti this year the tsunami in Asia a
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couple of years ago if you saw a
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helicopter on your television screen and
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said that's a sakori you would have been
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right over 80% of the time so we're
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seeing we're seeing a lot more of of the
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government using that as a reason to
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keep their quantities in the defense
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department budget but then we're also
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seeing
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historical government missions of that
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kind of life saving and rescue actually
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being contracted out to commercial
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operators so what we're seeing is our
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commercial business is starting to get
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and reap the benefit of the life-saving
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nature of our product as the militaries
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become really focused on milit Ary
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operations many International militaries
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were also doing let's say paramilitary
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quasi military
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missions nobody has the time to not do
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what is in their core so they're
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Contracting that out saves money frees
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up the assets to do the military Mission
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and we're reaping the benefit primarily
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because of the size class of the
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helicopters we build which tend to be on
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the larger
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size we had we had a great series of
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events as as we were tripling literally
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our revenues over the last couple of
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years our facilities in Connecticut
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could not you know contain that kind of
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growth so we had the great opportunity
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to maintain a solid professional
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Workforce in Connecticut and then move a
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lot of this needed capacity to lower
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cost sources we found a tremendous
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opportunity in Poland with a factory
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that used to build a me aircraft fighter
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a day a Russian fighter a day was
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basically idle so we moved in with an
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opportunity to replace that work with
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good solid uh helicopter work government
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supported we purchased and they're
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turning out product that we can put into
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the government supply chain as well so
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uh we've put about 3/4 of the extra
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hours that we've been adding I've all
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been into lower cost sourcing and the
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majority of that internationally we just
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announced a a
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major uh joint venture in India to
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produce structure for our product um we
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have announced more uh work in China for
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some of our commercial products and we
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have a great source in the Czech
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Republic who is our second largest
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supplier by dollar to our entire supply
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chain so I would say Eastern Europe
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we're moving into Asia I think Latin
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America is our next Focus
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I think the biggest challenge will be to
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ensure that as we see the military
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budgets level and probably even slightly
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decline that we've got to replace that
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work and but I think I think the
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natural outcome of of what we do for our
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government is that many countries in the
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world look to see how the United States
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does military paramilitary Mission they
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see the equipment they use and so our
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view of the world is we have to double
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everything except the US government to
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go International military our
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support uh our support business as well
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will increase its capabilities so so I
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think we have a good plan to replace or
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at least amplify the business that the
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US government has for
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us yeah that's an interesting question
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and I'll answer that I'll answer it a
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lot differently the in the Chinese
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market we are absolutely banned from any
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military activity or any dual use
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activity so strictly commercial in China
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it will be very big and we will be there
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but for our particular product set India
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has got probably the largest single
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let's say medium-term to long-term
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potential so India will be a huge player
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in terms of the quantity of government
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and Commercial helicopters that they
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need as they start to become a dominant
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world power as a percent of
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GDP uh and you know the Indian GDP is
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quadrupling every 10 years as a percent
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88.5% is three times what our government
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spends as a percent of of GDP so uh and
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again given the nature of the threat
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it's not we're going to line two big
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armies up and clash it's
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Insurgency it's small operations it's
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counterterrorism and then of course is
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is sadly uh is good for us uh if you
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look at South Korea as an example and
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even Taiwan they virtual mirrors of the
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US military structure including
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equipment and so that really helps us
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and gives us some some room to continue
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our top and bottom line growth right now
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the Middle East is the largest growth
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area in our portfolio outside the United
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States uh you know they're right there
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the thread is there but our product is
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there and they watch our helicopters go
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out and back every day uh we're very
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proud of the fact that we have a million
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combat flight hours in our products a
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million combat flight hours and not one
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material or workmanship defect and
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everybody sees that and so uh whether it
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be the United Arab Emirates who have
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announced recent purchases Bahrain has
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announced recent purchases Saudi Arabia
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has announced recent purchases so
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shortterm to midterm that's the growth
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area for
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us
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percent of production
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overseas is is is still pretty small
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probably on the on the 10 to 20% scale
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uh I see it I see it growing uh the
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quality of the workmanship is good the
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barriers in terms of logistics and
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Licensing are being ameliorated by some
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favorable reactions of our country to
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others and what we're finding is when
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countries want to buy
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major fleets of of of product they don't
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just want to buy it they want to build
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it they want the jobs they want the
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technology they want the intellectual
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property and so you can carefully
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provide that and will increase the
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production that's done overseas as we
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move forward without a
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doubt
