Asia Is a Growth Market for Military Aircraft

Bloomberg

02 September 2016

Since it first rolled out of a Fort Worth factory in the 1970s, the F-16 has been a symbol of U.S. military power. If its manufacturer, Lockheed Martin, manages to win a big overseas contract, though, the F-16 might become the latest U.S. product to get offshored.

Lockheed is vying for a contract to sell fighter jets to India, part of Prime Minister Narendra Modi’s $150 billion plan to modernize the country’s armed forces. To sweeten the deal, Lockheed is willing to shift F-16 production to the country. “What we are doing is putting India as the center of the supply base,” says Randall Howard, director for aeronautics business development at Lockheed. Rivals Boeing and Saab have made similar offers to move production to India.

Such proposals show the lengths U.S. military suppliers are willing to go to win customers worldwide. With Pentagon spending hurt by sequestration, the across-the-board budget cuts that took effect in 2013, the biggest U.S. contractors are hunting for new markets. Foreign buyers accounted for 24 percent of sales for the five biggest U.S. contractors last year, according to Bloomberg Intelligence, up from 16 percent in 2009. Last year contractors’ sales to foreign customers jumped 10 percent, while U.S. revenue declined 2.4 percent. Raytheon expects international sales to account for 35 percent of revenue in 2016, up from 31 percent last year. “Our global growth strategy continues to pay off,” says Chief Financial Officer Toby O’Brien. “The bookings were really strong.”

… “Quite a number of legacy systems are reaching their desperate sell-by date,” says Bernard Loo, a professor at the S. Rajaratnam School of International Studies at Singapore’s Nanyang Technological University.

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Last updated on 02/09/2016