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Boeing Defense Executive: Global Market Ripe For Sales

By Ann Keeton, Of DOW JONES NEWSWIRES

CHICAGO -(Dow Jones)- A combination of worn-out military equipment and new technology is creating fertile ground for international sales, said Christopher Raymond, vice president of business development at Boeing Co.'s (BA) defense unit.

"I've never seen this much opportunity in terms of competitions," Raymond told the Bank of America Merrill Lynch 2009 Defense Outlook Forum, which was Webcast on Tuesday.

Countries must assess the capabilities they need from military jets, helicopters and ground equipment, taking into account weapons systems they can deploy as well as the emerging technology for unmanned craft, Raymond said.

Global politics and government policies add complexity to those decisions, he said. Some 38 countries require "offsets" for costly investments in U.S. military equipment, to bring economic compensation with things like local jobs. With the recession, work is slow at some local factories, giving Boeing and other contractors a chance to provide work there, Raymond said.

In addition, he said, military equipment, both in the U.S. and abroad, is showing a "surprising" amount of wear.

Boeing's international commercial airplanes business gives it a leg up on competitors when dealing with customers outside the U.S., Raymond said. Not only does the company have a firm footing in many countries, but the commercial side can help facilitate offset programs. Overall, Boeing is the top U.S. exporter, by annual sales.

U.S. defense contractors face a difficult domestic market in the next year, Raymond said, as the Pentagon tightens its budget, trimming some major programs and emphasizing fixed-cost payments. Broad areas where spending is expected to grow include cybersecurity and energy management.

Six weeks ago, Boeing shuffled top management within in its operating units, elevating Dennis Muilenburg to head of Integrated Defense Systems after he held a number of management posts.

Boeing in the past two years has been restructuring its defense business-- which accounts for about half of annual sales--to diversify into more services that help customers maintain and upgrade equipment. Still, Raymond said, with fewer big programs coming along, "we're seeing more gaps between research and development and production." That means it's harder to attract and retain younger workers--a key issue for an industry that hires engineers and other highly trained workers.

Maintaining a strong manufacturing work force should remain a top goal for the U.S., Raymond said, to assure that the nation can continue to export goods the world wants and provide good jobs at home.

-By Ann Keeton, Dow Jones Newswires; 312-750-4120;ann.keeton@dowjones.com

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  11-10-091304ET
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