Business is Booming
Projections for slow growth in US government spending on military weapons are sending firms looking across the border for new markets. And our government is ready to help them peddle “aerospace and defense” products all over the globe.
It’s not just the federal government getting behind the global arms trade. What Dwight Eisenhower called the “military industrial complex” reaches into state economic development offices, at least in New Hampshire. That’s one of my takeaways from the second annual New Hampshire Aerospace and Defense Conference, which drew about 200 people to the Radisson in Manchester on June 1.
Perhaps I should not be surprised. After all, the state’s largest industrial employer is BAE, a British firm that was the Pentagon’s third largest contractor last year. And the state’s Department of Resources and Economic Development (DRED) is headed by Jeff Rose, who worked as director of public affairs for BAE Electronic Systems prior to entering state service and who served as one of the conference’s opening speakers.
Rose’s department, through the Division of Economic Development, hosted the conference in partnership with the NH Manufacturing Extension Partnership, a private group that happens to be housed at the DRED office on Pembroke Road in Concord.
Federal officials, both elected and appointed, were there, too. The keynote speaker was Kenneth Hyatt, Deputy Under Secretary for International Trade at the US Department of Commerce, who said he had recently attended a meeting of the Aerospace Industries Association, the biggest lobbying group for firms that sell missiles, bombers, and other weapons. They were talking about “flat or declining defense sales in the US,” he said, and that’s why “the US government needs to support exports.”
It’s a “competitive mandate that you’ve got to export,” Hyatt advised.
Kling’s comments were reinforced later in the day by Paul Kling, Deputy VP for Operations and Supplier Partnerships at BAE, who said, “Keep your eyes open to the world.”
New Hampshire’s Congressional delegation stands at the ready to help.
“I will do everything I can to make sure New Hampshire’s aerospace and defense industry continues to be successful … in the global marketplace,” pledged Congresswoman Ann McLane Kuster, also via video.
Senator Kelly Ayotte, who was there in person, said she was working on making it “easier and more efficient” to sell products overseas, a top level demand of arms traders held back by government regulations that require them to jump through various hoops before their products can reach foreign markets.
“If there is anything you need from us, do not hesitate to reach out,” Congressman Frank Guinta offered.
“Opportunities for Aerospace and Defense Products, Technologies and Services in the International Marketplace” was the conference theme. The opportunities are abundant, explained Diane Janeway, who spent 30 years at Northrup Grumman and now works on market forecasts at Jane’s IHS. “Global defense spending will increase as perceived threats to stability grow in Asia, Europe, and the Middle East,” she projected.
According to Janeway, growth in Russia’s military spending will end due to fiscal realities, presumably drops in the price of petroleum. And China’s rapid growth in military spending will slow to single digits. But NATO spending is trending upward, she said, and overall, “the global aerospace and defense industry has a solid future.”
Granted, the industry is not all about armaments. But little distinction was made by conference speakers.
Camilo Gonzalez, Senior Regional Commercial Specialist with the US and Foreign Commercial Service in Bogota, Colombia, expressed hope for that country’s peace process, but reassured listeners that ongoing civil strife still requires “a lot of government spending in the defense sector.”
“There’s a lot of helicopters,” he said, pointing out that the billions of dollars in US aid to the Colombian government to fight the FARC insurgents was “a big plus for you guys.” Not only that, but “all these aircraft are being shot at on a daily basis, so there’s a lot of parts needed,” Gonzalez explained. War means market opportunities.
For BAE, Jeff Rose’s former employer, nearly 93% of its revenue came from the military sector in 2015.
Kennedy, an official with the US Department of Commerce, about a recent decision by the Obama administration to cut off sales of cluster bombs to Saudi Arabia. “It’s the first concrete step the United States has taken to demonstrate its unease with the Saudi bombing campaign that human rights activists say has killed and injured hundreds of Yemeni civilians, many of them children,” Foreign Policy reported on May 27. The decision will have a significant impact on Textron, which has sold millions of dollars’ worth of cluster bombs to the Saudi government.
Do staff in Kennedy’s office at the International Trade Administration advise US businesses to watch the human records of countries where they are considering doing business? Nope. Human rights “is a State Department angle,” Kennedy responded.
Do forecasters need to understand the downside risks that revelations of human rights abuses might affect markets? Apparently not, based on Janeway’s answer. “That’s nice that the Obama Administration did that, but who are they going to get them from, somebody else? I understand if you don’t want people bombing Yemen but military balance is the name of the game.”
After all, she said, “Saudi is still one of our allies whether we like it or not.”
A lunchtime conversation with a manager of a Connecticut firm which services machine shops in the aerospace industry was revealing. He’d love to get contracts with firms that build components for the superconducting supercollider, he said. But he’ll take contracts working on components of cluster bombs or nuclear triggers if that’s where the business is.
And business is booming.