European firms energizing U.S. defense market: industry executives predict EADS will in time win more Pentagon contracts.As more European defense firms establish a presence in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and begin to forge ties with the Pentagon, industry executives and analysts predict that these companies will help invigorate in·vig·or·ate
tr.v. in·vig·or·at·ed, in·vig·or·at·ing, in·vig·or·ates
To impart vigor, strength, or vitality to; animate: "A few whiffs of the raw, strong scent of phlox invigorated her" the market by challenging the dominant players in the U.S. defense business.
Among the companies seeking to gain a foothold in the U.S. market is the European Aeronautic aer·o·nau·tic also aer·o·nau·ti·cal
Of or relating to aeronautics.
aero·nau Defense and Space Company. Rolls Royce Rolls Royce
the millionaire’s vehicle. [Trademarks: Brewer Dictionary, 928]
See : Luxury , Thales and MBDA MBDA Minority Business Development Agency (US Department of Commerce)
MBDA Michigan Broadband Development Authority
MBDA Minnesota Band Directors Association
MBDA Matra BAE Dynamics Alenia
MBDA Magnolia Ballroom Dancers' Association also have a recognizable presence in the United States, while the U.K.-based giant BAE Systems BAE Systems
British manufacturer of aircraft, missiles, avionics, naval vessels, and other aerospace and defense products. BAE Systems was formed (1999) from the merger of British Aerospace (BAe) with Marconi Electronic Systems. already has established itself as a major defense contractor Noun 1. defense contractor - a contractor concerned with the development and manufacture of systems of defense
armed forces, armed services, military, military machine, war machine - the military forces of a nation; "their military is the largest in the region"; in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , by acquiring U.S. firms and competing successfully in large defense programs.
The added competition from across the Atlantic, experts said, is exactly what the U.S. defense market needs.
For military and political reasons, the United States cannot afford to shut the European firms out of the U.S. market, said Frank Cevasco, vice president of Hicks and Associates and a former assistant deputy undersecretary of defense for international development and production programs.
"If the U.S. government is perceived as being even more protectionist [than it is now], I fear that we will get an even bigger reaction from the European companies It may never be fully completed or, depending on its its nature, it may be that it can never be completed. However, new and revised entries in the list are always welcome.
This is a list of companies from the countries in the European Union. ," he told National Defense. "They can harm us much more than we can hurt them."
The United States has the largest share--65 percent--of the world's arms exports market. Europe has 23 percent. "If we put their 23 percent at risk, our 65 percent is put at risk," Cevasco said.
U.S. defense companies increasingly are becoming dependent on export sales to generate new growth, he said. Therefore, "there has to be a perception of a suitable level of a reciprocal access in the U.S." Today, he said, 10-30 percent of the revenue for U.S. defense comes from exports.
"U.S. companies are sitting on the largest defense market in the world, and yet, if you look at their marketing and revenue generation plans from 10-15 years ago, you find that exports were an aside to them--a gratuitous note. It was not part of their business base, it was not important," he noted.
Collectively, the United States and Europe have 87 percent of the defense market, he said. "We have to do a very graceful dance with one another," said Cevasco. "In facilitating EADS EADS European Aeronautic Defence and Space Company N.V.
EADS Expeditionary Air Defense System (USMC)
EADS Extended Air Defense Systems
EADS Environmental Assessment Data System
EADS Echelons Above Division Study to work here, while they may take away some work from U.S. companies, it may strengthen their power to get goods back in Western Europe Western Europe
The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). ."
The presence of European competitors could be a healthy development for the defense industry, given that many sectors of the U.S. market have been reduced to single suppliers. "It could be argued that there is a utility for the Department of Defense of having more than one alternative as a source, to be able to introduce competition into the acquisition process," he said. "As long as there is enough work to go around, this could be a good thing."
The EADS conglomerate was created in July 2000 from the mergers of German DaimlerChrysler Aerospace DaimlerChrysler Aerospace AG, or DASA, was the former aerospace subsidiary of Daimler-Benz AG (later DaimlerChrysler) from 1989. In July 2000 DaimlerChrysler Aerospace merged with Aerospatiale-Matra and CASA to form EADS. AG, the French Aerospatiale Matra and CASA Ca´sa
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Approximately 80 percent of these revenues come from the civilian aerospace market and 20 percent from the military sector. EADS officials said that the immediate goal is to alter the company's current 20-80 split between military and civil revenues to 30-70. They want the company to become less dependent on the financially strapped commercial aerospace industry.
EADS chief executive Rainer Hertrich Rainer Hertrich is one of the two current CEOs of EADS, and also head of the group's Aeronautics Division.
He was born December 6th 1949 and studied business administration at the Technical University of Berlin and the University of Nuremberg after an apprenticeship at wants to raise defense revenues from the current level of $6 billion to $9 billion by 2004.
"The U.S. operation of EADS is pretty tiny," said Cevasco.
If the company wants to increase its market share, it will have to offer better products and better prices to the Pentagon. "If they cant compete, they won't get bigger," he said.
Gregory Bradford, president of EADS Inc., North American operation North American operation Surgical oncology Radical surgery of a 'frozen pelvis', consisting of radical en bloc resection of the uterus and urinary bladder. See 'Frozen pelvis.'. Cf 'All-American' and 'South American' operations. , told National Defense that his company had only a small presence so far in the U.S. defense market, but plans to compete for large Pentagon programs.
An American executive, Ralph Crosby, was appointed chief executive of the company's U.S. operations. Crosby is the former president of Northrop Grumman's Integrated Systems Sector.
EADS has established industrial ties with U.S. giants by participating in joint ventures with Northrop Grumman Northrop Grumman Corporation (NYSE: NOC) is an aerospace and defense conglomerate that is the result of the 1994 purchase of Grumman by Northrop. The company is the third largest defense contractor for the U.S. , Lockheed Martin and Boeing.
The company's work with Lockheed Martin involves ballistic-missile defense technology. The consortium also is teamed with Lockheed Martin and Northrop Grumman for the U.S. Coast Guard Deepwarer program to modernize the service 's aircraft, ships and communication systems. EADS has been tapped to supply its HC-235ER maritime surveillance aircraft and to upgrade the Coast Guard's current HH-65 Dolphin helicopters. The upgrades for the HH-65 are being done by Eurocopter, which is a wholly-owned subsidiary of EADS.
Deepwater is the largest U.S. program with which the company has been involved. Revenues from that project are expected to reach $2 billion.
EADS has worked with Northrop Grumman on electronic warfare projects, the NATO-owned and operated Alliance Ground Surveillance capability (National Defense, September 2002), and is moving to cooperate on a high-altitude long-endurance unmanned aircraft.
At the United Kingdom's Farnborough air show The Farnborough International Airshow is a seven-day international trade fair for the aerospace business which is held biennially in England. The airshow is organised by Farnborough International Limited, a wholly owned subsidiary of British aerospace industry's body the Society in July, Boeing announced an agreement with EADS for joint research on a global missile-defense program. Currently, Boeing is a major systems integrator for the proposed ballistic missile defense system Noun 1. missile defense system - naval weaponry providing a defense system
missile defence system
naval weaponry - weaponry for warships , a contract worth up to $48 billion over 10 years.
"Ballistic missile defense is a great political and industrial opportunity to further the cooperation between transatlantic government and industry, and even beyond the traditional transatlantic links," said Philippe Camus, co-CEO of EADS.
Experts regard the Boeing-EADS alliance as a significant step toward building transatlantic industrial-military cooperation.
Nevertheless, EADS has yet to land a prime contract in the U.S. market. It lost out to Boeing on a tanker aircraft lease for the U.S. Air Force. According to Crosby, the defining factor in the Air Force's decision "had to do with capability." He said that EADS' offer was 40 percent cheaper than Boeing's for the initial phase of the program.
Crosby said he is hopeful that EADS has learned from the experience and will compete successfully in future Air Force programs.
According to Bradford, EADS will participate in the competition for the Air Force multi-mission command and control aircraft, the MC2A MC2A Multisensor Command and Control Aircraft (formerly Multi-Mission Command and Control Aircraft)
MC2A Multi-Mission Command and Control Aircraft (now Multisensor Command and Control Aircraft) . He also stressed that the company needs to gain exposure in big-ticket projects. "With the tight partners, we should be able to win those programs," he said.
Hertrich noted that entering the U.S. market takes "commitment and time." EADS, he said, plans to either acquire medium-sized companies or become part-owner. However, he cautioned, "Do not expect any huge news, like the TRW TRW The Real World (TV reality show)
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TRW Thompson Ramo Wooldridge Inc [acquisition by Northrop Grumman],"
The ticket to winning a large U.S. program is to open a production facility in the United States, said Bradford.
In late October, EADS selected Russellville, Ark., as the manufacturing site for the U.S. Army's Mobile Field Hospital System. Activities at the Russellville site will include the final assembly, testing, and maintenance of the systems intended for prototype, development and production for the U.S. military, as well as other federal agencies. The U.S. Army selected EADS for the concept design study of the Future Medical Shelter System.
The Mobile Field Hospital System, which is based on the company's advanced military field hospital system marketed under the name "TransHospital."
Eurocopter America, meanwhile, has acquired a new facility in the Golden Triangle area of Mississippi. This site will be dedicated to the manufacturing of helicopter components for the Eurocopter AS350, EC130, AS355 models, and the customization of helicopters. It will also include the final assembly of American Eurocopter AS350 series helicopters, serving the commercial, law enforcement and emergency services emergency services Emergency care '…services …necessary to prevent death or serious impairment of health and, because of the danger to life or health, require the use of the most accessible hospital available and equipped to furnish those services' sectors.
"It is a top priority to increase our industrial presence and workforce in the U.S.--particularly in the areas of homeland security and defense--and the placement of this facility is an important strategic move," said Crosby. Currently, EADS supports more than 100,000 U.S. jobs, and maintains subsidiary locations in 35 U.S. cities in 20 states and the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). , according to a company statement.
EADS has a "big task" ahead, said Cevasco. European defense spending is flat or decreasing, "so if they are going to grow, Europeans have are going to come to the U.S. market." EADS, he added, is "a long way from developing the sufficient critical mass" needed to become a dominant player in the U.S. market.
Tom Enders, the head of the defense and civil systems division, said that EADS is prepared to comply with whatever export control restrictions the U.S. government would impose on its technology, if it's funded by Pentagon dollars. If the company is involved in sensitive programs, he said, "the ownership back in Germany or France may be prohibited to get in the middle of that, they may not be getting access."