While defense spending in the U.S. market may be declining, U.S. defense contractors are set to achieve record overseas sales of $46.1 billion in military hardware to foreign governments this year, almost a 50 percent jump from $31.6 billion last year.
Numerous multibillion-dollar purchases have buoyed the U.S. defense market including sales to India, Saudi Arabia, Egypt and other countries. The result has translating to more defense-related jobs at home.
Before India signed a deal recently to purchase 10 Boeing C-17 military cargo jets, the Boeing C-17 assembly line in Long Beach was planned to be shut down by the end of next year. Now, the plant is scheduled to remain open through 2014. The sales are also good for small, Southern California machine shops that supply parts.
"Every defense contractor is looking at the international market and saying they need to be more aggressive," said Mark Kronenberg, Boeing’s vice president of international business development. "We spend hours in countries talking with everybody from military officers all the way to top leadership to see what their needs are."
Foreign sales account for 18 percent of Boeing’s defense sales, compared with 7 percent six years ago, Kronenberg said. The company’s defense unit aims to have overseas sales hit 25 percent within the next five years. It also plans to beef up its international sales team to 100 by the end of the year, while in 2005, it was only 10. For major defense contractor 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.
More overseas weapons deals are in the works, including Australia’s desire to purchase two dozen Navy Seahawk helicopters valued at $1.6 billion. Saudi Arabia wants $330 million in thermal-imaging and night-vision equipment and Britain is looking to purchase $137 million in upgrades for its U.S.-made ship-mounted guns. Orders are also in from Morocco, Iraq and the United Arab Emirates.
The U.S. government is in the process of loosening restrictions on defense-related export rules, which will make it even easier for U.S. defense companies to sell overseas, while still protecting trade secrets. Northrop Grumman is one of many defense companies supporting the change that it believes will help U.S. companies win more overseas contracts.
"We have been so focused on protecting our technological edge that we have actually done severe and unnecessary damage to our defense industrial base," Northrop Chief Executive Wesley G. Bush said, as reported by the Los Angeles Times.
