Defense Contractors Look Overseas

OCONUS

While the U.S defense industry adjusts to cuts in U.S. military expenditures and budgets, U.S. defense contractors are looking overseas to boost sales. While U.S. arms companies already generate two-thirds of all overseas arms sales worldwide, they believe there are further opportunities as countries upgrade military technologies.

Two of the largest U.S. military contractors, Boeing and Lockheed Martin, are looking to adjust their sales strategies to sell overseas to make up for the lack of domestic military demand. Lockheed Martin said they wish to grow overseas sales from 13 percent of its current revenues to 20 percent.

Last April, Defense Secretary Robert Gates called for export-control reform that could help with the domestic industry’s effort to expand international sales, according to Lockheed Martin’s Chief Financial Officer Bruce Tanner, as reported by the Washington Post.

Boeing recently reached a deal with Saudi Arabia for sale of seven dozen F-15 fighter jets, estimated at $30 billion according to the Wall Street Journal. The deal keeps Boeing’s St. Louis defense division viable for years to come, analysts said. Boeing is also hoping to grow its mature military aircraft lines that are being upgraded with the latest digital electronics and precision-guided munitions. The company has already booked sales of its widely admired C-17 jet airlifter in Europe, the Middle East and India. India committed to a multi-billion-dollar purchase of the planes and is expected to purchase Boeing’s P-8 maritime patrol planes, AH-64 Apache attack helicopters, CH-47 Chinook helicopters and, potentially, F/A-18 fighters.

Lockheed Martin is selling its F-16 fighter to numerous countries overseas, even though its successor, the F-35 Joint Strike Fighter, enters serial production. Lockheed executives are hoping to keep the price tag of the popular F-35 variant at $60 million the same price charged for the newest version of the F-16. If successful, Lockheed Martin believes the sales potential of the tri-service program could approach 6,000 planes, making it by far the biggest weapons program in history, according to the Lexington Institute.

Lockheed Martin also sells the redesigned C-130J propeller-driven airlifter—the most popular military cargo plane in the world. This has vast sales potential as the installed base of planes in dozens of countries begins to age.

For Raytheon, more than a fifth of its sales come from international customers and the company’s management believes that could grow to a third in the near future.

Eric Pecinovsky is the Director of Marketing for ClearanceJobs.com, focusing on brand development, web site traffic growth, product development. Build and maintain relationships with all departments who support the product line. Support cross-functional initiatives. Assess the competitive landscape. Development of brand/product strategy.

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