Once the time reached the eleventh hour, of the eleventh day, of the eleventh month, Americans around the world took a moment to remember our military veterans and the sacrifices they have put themselves through to secure our freedoms. And, those freedoms are the exact reason why we have a capitalistic culture, which enables us to enjoy endless achievements and the tools to obtain our goals.
In order to continue receiving these freedoms, however, it is critical to maintain a secure defensive position against enemies that would like nothing less than to extinguish what we enjoy in this country. The United States is not alone in defense either; other democratic nations offer the same freedoms and need to protect their own ideals and way of life.
This continuing conversation about improving America’s defenses is more evident now because of the cost cutting taking place with the Obama administration. With healthcare reform being the top priority for the president, cuts in the defense budget are certain to take place for 2011 and beyond.
For shareholders of companies like BAE Systems PLC (BA:London), Lockheed Martin Corp. (LMT:NYSE), Boeing Co (BA:NYSE), Northrop Grumman Corp. (NOC:NYSE) and Raytheon Co. (RTN:NYSE), this hiccup in growth is not an option. As publicly traded companies, the focus will turn to the international stage as a way to increase revenues and expand market share.
“Major defense companies are facing lower spending in the U.S. and Europe, but shareholders are still demanding growth so arms makers are turning to emerging markets for business,” said Guy Anderson, lead analyst at defense consultancy Jane’s Information Group.
The Wall Street Journal recently commented on the demand for fighter jets by Arab sheikdoms. To wit:
Defense spending in the Middle East is expected to reach more than $100 billion by 2014, or 11 percent of arms orders globally, according to consultancy Frost & Sullivan.
This splurge on new weapons come as a relief to U.S. and European defense companies looking to boost overseas sales to help hedge against belt-tightening at home. The administration of U.S. President Barack Obama has made health care a priority and drastically cut military spending, including a high-profile measure to strip $1.7 billion from the budget for F-22 Raptor fighter jets.
“Threats including those from Iran or the instability surrounding Afghanistan and Pakistan, Iraq, and most recently Yemen certainly add to the need of Gulf states to review their defense policy,” said Christian Koch, director of international studies at the Dubai-based Gulf Research Center.
With geopolitical tensions on the rise, foreign governments are turning to Western companies to help them improve their defenses, while looking to deter outside enemies. American defense companies are poised to reap the benefits from this renewed sense of security, as U.S. companies already offer the technology and talent to help these countries accomplish their objectives.
“The world isn’t getting any safer,” Thomas Culligan, executive vice president of business development for Raytheon and chief executive of Raytheon International, told Zawya Dow Jones.
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