INTRODUCTION
In the era of globalisation, United States defence companies can no longer rely on their home market any more need to secure an increasing share of international markets to maintain their revenues, profits and share prices.
It has long been an established requirement for foreign customers to demand local production, offset or workshare as a pre-requisite for purchasing American defence equipment. In the past decade as the Pentagon has cut back its defence equipment purchasing and research funding, international co-operation is increasingly being seen as a way for US defence companies to gain access to technology and products that they have neither the time or resources to develop themselves.
Partnerships are also a means for foreign defence companies to gain access to the US market, often it takes the application of a "made in America" tag to secure approval from US Congressmen.
The US Department of Defense is also usually keen to support international partnerships by America defence companies, where they coincide with US security policy goals or allow US production lines to remain open.
- WHOLLY OWNED SUBSIDIARIES
In countries where foreign ownership of defence companies is permitted, the establishment of wholly owned subsidiaries is a popular route for US defence companies seeking a local presence. This allows them to claim "local identity" in competitions with national champions, without having to entering into complex joint venture arrangements.
US companies have also purchased foreign companies for strategic reasons, to gain profitable business units, access of markets or new technology.
- JOINT VENTURES
In many defence markets, outright foreign ownership of defence interests is prohibited so American defence companies have had to enter into joint ventures with local companies, generally government owned enterprises, as a pre-requisite for establishing a local production line or support operation. Most of these programmes have their origin in the Cold War era and many US companies have had mixed results from them in recent years. As defence spending has declined over the last decade so US government aid and local funding for co-production projects has dried up. In some Middle Eastern countries foreign ownership of any local company is prohibited, so US defence companies have formed a number of joint ventures with local companies to provide local logistic support for US supplies defence equipment.
In the past decade US defence companies have moved to set up commercial joint ventures with a number of European and Israeli companies to co-produce or jointly market a wide range of products.
- GOVERNMENT TO GOVERNMENT PROGRAMMES
It is increasingly common for governments to pool resources with allies to fund the development of hi-tech defence equipment. The most high profile example of this currently underway is the Joint Strike Fighter (JSF), which has brought several foreign governments on board as partners and observers.
- LICENSE PRODUCTION FOR US MARKET
The US defence market is notoriously difficult for foreign companies to penetrate because of projectionist tendencies in the US Congress. To date the most successful way to get around this problem has been through partnering with a US company to establish a production line under license.
As the pace of Aerospace and Defence consolidation gathers steam, it is increasingly difficult to keep track of the multiplicity of relationships between the main players in the industry - who owns what has become a complex and confusing issue!
To unravel the conundrum, DSD commissioned Tim Ripley to produce this 'who's who' ready reckoner; it provides a snap-shot of American industry's global partners. We hope that you will find it useful, as you follow the consolidation process through the coming year.
DSD USER NOTES FOR LISTINGS
1. The listing are concerned with wholly owned subsidiaries located outside the continental USA, joint ventures with non-US companies and partnerships on specific programmes.
2. Programme partners can either be as sub-contractors, bidding partners or co-contractors to governments.
3. We are always happy to receive input and comments from interested readers, and of course early warning of any ownership changes that might be afoot! Please E-mail Hugh Dickens.
