An Airbus A350 participates in a flying display during the 50th Paris Air Show at the Le Bourget airport near Paris, yesterday.
PARIS: The fallout of US defence budget cuts was plain to see at this week’s Paris Air Show in a range of scaled back displays that in the past were packed with a crowd-pleasing array of US military hardware.
Lockheed Martin Corp, whose F-35 radar-evading jet is the biggest weapons programme ever, conspicuously left the mockup of the fighter which normally graces Europe’s premier industry meeting at home in favour of a billboard picture.
Yet there was also further evidence of a shift towards previously neglected markets in Asia and the Middle East, where economies and defence budgets are still growing strongly, which the industry says will allow it to weather the downturn.
The talk of the show among its US participants was about how well they seem to be riding out the biggest defence cuts in a generation — and how next year’s federal budget may prove more forgiving than had been feared.
“The other shoe hasn’t dropped yet,” said Tom Captain, head of aerospace and defence at the Deloitte consulting group, said at the air show. “The question is, will it ever?”
US defence budgets are being cut by hundreds of billions of dollars after more than a decade of strong growth, but the top 20 global defence companies reported only a 1.3 percent drop in combined revenues in 2012.
The uncertainty over revenues at home is taking a toll on investments, but executives also say big backlogs, strong international demand and commercial orders have alleviated the worst effects of the sequestration that kicked in in March. Some companies like Northrop Grumman Corp skipped the show entirely, a reflection, some argued of the industry’s shift in geographical priorities.
Lockheed Martin Corp, Boeing Co, Raytheon Co and others are rapidly building up offices in countries including Saudi Arabia, Brazil and India, where military spending is increasing.
Lockheed made about 17 percent of its $47bn of revenue abroad in 2012, or $8bn, and the company’s senior vice president for corporate strategy and business development, said it will “absolutely” exceed this year’s goal of 20 percent. “We’re moving much more aggressively in the international domain,” Pat Dewar told Reuters at the airshow. “We’re going global in a much bigger way.”
Industry executives are growing impatient about the inability of US lawmakers and the Obama administration to resolve their differences over future budget levels.
Reuters
