Defense firms sight on new target: increased sales in foreign markets.

With attache cases in hand, Los Angeles County aerospace and defense contractors are traveling the world looking for new customers for their military wares.

From warships to fighter aircraft to air defense systems to military satellites, local contractors are seeking "friendly" governments to buy products that once were almost exclusively sold to the Pentagon.

Some contractors have set up overseas sales operations. And all of the big local contractors are urging changes in U.S.-government rules that govern the sale of military items to overseas governments to make export sales of their war products easier.

Although all the big local defense contractors like Northrop Corp., Hughes Aircraft Co. and Lockheed Corp. say they want to expand commercially, their stock in trade remains defense. But spending by their primary customer -- the U.S. Department of Defense -- is being cut back at a record rate, forcing them to look overseas for new buyers.

* Hughes Aircraft, based in Los Angeles, has established separate sales and marketing subsidiaries in Europe, the Middle East and the Orient.

* The shipbuilding division of Beverly Hills-based Litton Industries Inc. has begun work on a contract to build three Corvette patrol boats for the Israeli Navy.

* Lockheed, based in Calabasas, is working with the Japanese to build a Japanese version of the F-16 fighter aircraft.

* Century City-based Northrop has picked up additional subcontracting business on sales of the F-18 fighter aircraft to Switzerland. Malaysia and Israel also want to buy the plane.

* Several local subcontractors picked up business last year when former President Bush approved the sale of 72 F-15s to Saudi Arabia.

"We're out there beating the bushes, just like everybody else," said Litton spokesman Robert Knapp.

Since the cuts in defense spending started, international air shows and military gatherings have become even more important stops for local defense contractors seeking buyers. In addition, those gatherings have attracted the attention of the Clinton administration, said representatives of local contractors.

They noted that at the recent Paris Air Show, U.S. Secretary of Commerce Ronald Brown met with foreign governments' officials to push the sale of U.S.-made military products.

But local contractors also say the U.S. government should do even more to ease restrictions on exporting military products. Under current regulations, such sales are handled on a case-by-case basis. Some approvals are fairly routine. In other instances, proposed deals must be approved by the Defense, State and Commerce departments, as well as Congress and the President, as was the case with F-15 sale to Saudi Arabia.

Lockheed Chairman Daniel Tellep late last year told then President-elect Clinton that the U.S. should develop a new policy on exporting military products. Other local defense contractors noted that the current policy was developed during the Cold War.

The Aerospace Industries Association of America, the Washington, D.C.-based trade group that represents defense contractors, is seeking changes in current restrictions to make exports easier, a spokeswoman said last week.

One of the more active local contractors in the overseas market is Hughes. In recent months, it has set up marketing divisions in Brussels and Tokyo, and it has announced the formation of a similar division for the Middle East.

Also in the last few months, Hughes signed an $800 million deal to build an air defense system for Saudi Arabia. It has also started or will soon start work on similar but smaller air defense systems for Kuwait and Egypt. An air defense system is basically radar.

Ray Silvius, a Hughes spokesman who specializes in international business, said contractors are searching for new markets but that has meant more competition. In addition, a worldwide recession and the demise of the Soviet empire has brought down demand, he said.

"The only real build-up we are seeing in defense spending is in the Middle East and to a lesser degree the Pacific-Asia region," said Silvius. "Japan is becoming a bigger customer for defense."

Also active in military export is Litton, which, for example, has teamed with Raytheon Co. and Tracor Inc., two other defense contractors, to build electronic warfare systems -- offensive weapons used by aircraft -- for foreign governments. One system is being installed on F-16 fighter aircraft used by the Greek Air Force at a total project cost of about $100 million.

"What you have to remember here is that we have always been in the international market," said Robert Knapp, a Litton spokesman. "It's just that now we are going after it a little more aggressively than we did."