In recent weeks, earnings calls from the major U.S. aerospace and defense firms showcased the desire for international expansion, much of it outside traditional NATO markets.
The pressure is on senior executives to increase international sales, with the Middle East and Asia providing the most attractive opportunities. But beyond the financial headlines, how do A&D executives really feel about the global marketplace and their firms' prospects abroad? 111 Furthermore, what can they and governments do to improve industry competitiveness?
Avascent and strategic communications firm FleishmanHillard wow' ell surveyed more than 350 A&D executives, 11.11 many of them representing U.S. firms. More than 80 percent suggested the global competitive landscape will be more intense in the coming three years. More-over, a clear majority expressed considerable doubt that their respective firms were up to the challenge.
To address these issues, firms have been re-organizing their corporate structures, re-calibrating their offerings, and bulking up international business development and sales support. The survey suggests these efforts have a way to go.
Government could provide a vital leg up for A&D firms, but a majority of survey participants expressed skepticism of their government's commitment to global defense exports. And when such support is applied, many industry leaders express concern about its effectiveness.
In response, officials in Washington have sped up procedures, simplified administrative and export control burdens, and more aggressively marketed the Foreign Military Sales (FMS) process. While these steps are positive, U.S. industry still faces significant headwinds from an assertive and at times less-than-scrupulous competitive landscape. Industry and government must do more to counter this evolving competitive threat. *
In terms of the most competitive markets, our respondents highlighted traditional markets such as the United Kingdom, Canada, Middle Eastern stalwarts such as Saudi Arabia and the UAE, as well as emerging markets in India, Brazil, South Korea and Poland. Converting a defense requirement into a sale in such a disparate set of countries--from a funding, customer, exportability and requirements perspective--demands a degree of nimbleness that only a limited number of firms can boast of consistently.
But it is not only a diversification of demand, but a proliferation of supply that is creating challenges for established players...