Tuesday, April 3, 2012

U.S. military sales to foreign nations doubles´ Dayton Business Journal by Joe Cogliano Sat. 28 Jan. 2012

I guess you could say "We´re No. 1"



U.S. military sales to foreign nations doubles

Dayton Business Journal by Joe Cogliano, Senior Reporter

Date: Saturday, January 28, 2012,

Sales of military weapons to foreign countries have risen dramatically in the most recent four-year period, with sales to top 10 buyers more than doubling from the previous period.

The 10 contries that bought the most U.S. military goods and services from 2007 to 2010 placed combined orders of $66.3 billion, up from $29.4 billion in the 2003 to 2006 periods, according to data from the Congressional Research Service.

While the total sales are increasing, the mix of countries buying the most from the U.S. also is changing, with long-time allies Poland, Japan and Israel being replaced on the Top 10 list by a slew of Middle East nations. Countries from the Middle East now make up the largest chunk of the top buyers, and includes Saudi Arabia, U.A.E., Egypt, Iraq, Pakistan and Turkey.

During roughly the same period, the U.S. was the top exporter of arms, selling almost a third of the military hardware that changed hands across the world.

Click here for slideshow of Top 10 foreign buyers of U.S. weapons.

Click here for slideshow of Top 20 global arms exporters.

The surge in arms sales to the Middle East comes amid the backdrop of failed negotiations aimed at stopping Iran from continuing its nuclear program. Most western nations believe Iran is trying to build a nuclear weapon, whereas officials in Tehran have insisted their nuclear program is for domestic energy and medical research purposes only.

The overall growth in foreign military sales comes at a good time for domestic defense companies as U.S. military cuts are looming.

"It allows the continuation of production capability and advancement of technology that, in many ways to a degree, insulates the defense industry from ups and downs," said Joe Zeis, vice president and chief strategist for the Dayton Development Coalition Dayton Development Coalition Latest from The Business Journals Photos: Dayton's 20 By 20 Internship FairDBJ selects 2012 40 Under 40 Hall of Fame honoreesDBJ names 2012 40 Under 40 Hall of Fame honorees Follow this company . "That's important for our national industrial infrastructure."

At the end of December, the U.S. confirmed it would sell 84 Boeing F-15 fighter jets to Saudi Arabia for $30 billion. The White House said the deal would support more than 50,000 U.S. jobs. While it is unclear as to how many of those jobs are located in the Dayton area, Boeing has a big impact in the Dayton region, where it has 23 different suppliers based on its 2010 annual report. The aerospace giant has roughly 500 suppliers in Ohio and spent more than $4.7 billion in purchases from Ohio companies in 2010, supporting an estimated 150,000 jobs in the state. Boeing, which has an office in Dayton, has 600 employees in Ohio and more than 6,600 retirees.

In late 2010, the U.S. Department of Defense announced it had notified Congress of the multi-year deal to sell more than $60 billion in aircraft and weapons systems to Saudi Arabia. The sale to Saudi Arabia's government would include 84 F-15SA aircraft, a variety of helicopters, engines, missiles, bombs, radar and other systems.

And reports say tensions with Iran have sparked other foreign military sales such as a recent $3.5 billion advanced antimissile interception system to the United Arab Emirates and a $1.7 billion deal to upgrade Saudi Arabia's Patriot antimissile missiles. Lockheed Martin Corp. and Raytheon Co. Raytheon Co. Latest from The Business Journals Raytheon gets 7M missile contractUnmanned aircraft test site could land in ArizonaDreamliner design also will add life to 737s, other Boeing planes Follow this company are involved on providing the components for those deals, according to Reuters. Lockheed also has deals worth more than $1.4 billion to sell F-16 fighter jets to Oman and Iraq, and Boeing makes the new bunker-busting bombs the U.S. is selling to the United Arab Emirates.

Reuters also reports that Israel is going to be the first nation to buy the modern F-35 Joint Strike Fighter developed by Lockheed, Northrop Grumman Corp. Northrop Grumman Corp. Latest from The Business Journals Decline in government spending offers opportunities for mid-size contractorsWashington Capitals score charity pointsUnmanned aircraft test site could land in Arizona Follow this company and BAE Systems, all three of which have operations in the Dayton region.

Many of the sales of jet aircraft will have a direct impact on Dayton through GE Aviation's facilities in the region that make parts for jet engines. GE Aviation, a unit of General Electic, has roughly 3,500 employees in the Dayton region and southwest Ohio, including a manufacturing plant in Beavercreek that employs more than 300 workers and makes tubes, ducts and manifolds for jet engines.

The Top 25 largest defense contractors account for 4,200 Dayton-area employees and more than $900 million in combined local DoD contract awards in the most recent year, according to the Dayton Business Journal's Book of Lists.

As more nations line up to buy high-tech weapons from the U.S., it also provides a boost to operations at Wright-Patterson Air Force Base Wright-Patterson Air Force Base Latest from The Business Journals Follow this company in Dayton. Wright-Patt is host to the Air Force Security Assistance Center, or AFSAC, which employs more than 500 to facilitate aircraft sales to allied countries.

Here's how AFSAC works:

An allied country submits a request for an aircraft to a diplomat, the White House, directly to the U.S. Air Force or by other avenues and that request eventually ends up at AFSAC. The Air Force decides if it wants comply with the aircraft request and then figures out where to get it.

AFSAC then works to determine a cost, whether excess aircraft exist or if a purchase order will be made with a manufacturer, such as Maryland-based Lockheed Martin Corp. From there, the center's officials contact the country and work out a purchase plan. Following the deal, AFSAC also can manage maintenance and parts supply for the aircraft.

The center also makes sure everyone is playing by the rules, such as following the Arms Export Control Act, which requires weapons from the United States be used only for legitimate self-defense. Officials say the entire operation works with allied security in mind and the U.S. does not profit from the venture.

E-mail jcogliano@bizjournals.com. Call (937) 528-4424. Twitter.com/joecogDBJ

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