US weapon-makers look overseas as the Pentagon cuts back

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WASHINGTON - With the United States looking to cut defence costs and rethinking the way it fights wars, many American defence contractors are looking for international buyers for the big, pricey weapons the Pentagon no longer wants or needs.

Boeing and Lockheed Martin are competing to sell fighter planes to countries such as India and Brazil. Boeing is trying to spark international interest in its C-17 cargo plane. Middle Eastern nations fearful of threats from Iran are bulking up on missile defence equipment from Lockheed and Raytheon.

"This is a world market right now,'' said Boeing's president of military aircraft, Chris Chadwick.

Globalisation is nothing new for many US industries, which often use overseas operations and sales to tap into fast-growing areas like China and as a hedge against domestic downturns. But the defence industry is closely tethered to one primary buyer, the American government.

It has been a lucrative relationship. Defence spending is up more than 40 per cent over the past eight years, fuelled in part by spending on wars in Iraq and Afghanistan.

But the US military is cutting back on weapon spending. Last year, the US military spent US$164 billion ($237 billion) to buy weapons. For the 2010 fiscal year, the Pentagon proposes spending only US$131 billion.

Overseas arms sales represent a relatively small segment of defence contractor sales. But many are turning to the global markets for growth now that the appetite for big and expensive weapons is waning in the US.

The push is helped by countries worried about security threats from nations such as North Korea and Iran. Many European allies need to upgrade their ageing equipment, and are turning to American firms as likely suppliers.

New markets have also emerged. Iraq was the second largest potential buyer of US military equipment last year, behind Israel, according to a March report by the Arms Control Association, a Washington think-tank. AP

From TODAY, World –Monday, 15-Jun-2009

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