Pot of gold: overseas companies adapting to U.S. market needs.

AuthorJean, Grace
PositionGLOBAL DEFENSE - Cover story

PARIS -- With current commitments driving the high demand for military equipment, foreign companies perceive the U.S. defense market to be the proverbial pot of gold.

Though breaking through American bureaucracy and politics to sell wares remains a daunting challenge, industry representatives at a recent international ground warfare conference here say their businesses are becoming savvier at catering to U.S. defense needs.

While European defense budgets remain on a downward slope, U.S. military spending has surged dramatically since the 9/11 attacks. Non-U.S. firms acknowledge that the Pentagon generally buys most major weapons systems from U.S. manufacturers, but many niche areas in the market increasingly are open to international competitors.

From forming partnerships to custom-designing products, companies reveal they use multiple strategies to gain American clients.

"The U.S. is one of the most important markets," says Yair Atzmon, head of the ground division for Aeronautics Defense Systems Ltd., an Israeli company that produces unmanned aerial systems.

Two years ago, the company formed a "strategic alliance" with a business unit of General Dynamics, based in Falls Church, Va., to market tactical UAVs and other technologies to the United States.

"It's the most important partnership we have. Without it, we wouldn't have sold [products] to the U.S. market," says Atzmon.

Having such a relationship has allowed the company to gain insight into the market and gauge how it can provide better products.

"With friends in General Dynamics, we are adapting to the needs of the United States to respond to the needs of the market," he says.

That is a different mode of operation for the company, which usually deals with countries that are less familiar with available technological offerings. Often, it is the company informing the buyers of potential products and setting the pace of the market, not the other way around as it is in the States, he says.

"They know exactly what they want," says Atzmon of the U.S. defense market's biggest customer--the nation's armed forces.

Plus, "they have high standards," adds Aku Salmi, sales manager for SAVOX Communications Ltd., a small company based in Finland.

As a result, learning what those exact requirements are and conforming products to those specifications are mandatory if a product is to succeed, they say.

To get an edge on the market, SAVOX has been putting effort into designing U.S.-specific products so...

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