7 June 2010
Boeing eyes Asia for its defence sales

The Business Times  


SINGAPORE - Faced with slumping demand and budget cuts in the United States, American aerospace giant Boeing's defence arm is looking to Asia to pick up the slack.

Dennis Muilenburg, president and chief executive of Boeing Defense, Space and Security (BDS), estimates that countries such as South Korea, Japan, India, Australia and South-east Asian partners such as Malaysia will be strong markets for its fighter jets, unmanned systems, helicopters, energy systems security and even cyber-warfare technology amid a slowdown in defence spending in its US home market.

'We are seeing some pressure in our core business in the US, such as missile defence, but growth will come from other markets, particularly in Asia,' he said.

About 16 per cent of BDS's US$34 billion business comes from international sales. Mr Muilenburg, who was in Singapore last week for the Asia Security Summit, sees international business share rising to 25 per cent in five years.

Asian markets account for about half the international sales. And this could grow sharply in the next three years.

The company is awaiting a Japanese tender for some 40 next-generation fighters to replace its ageing F4 Phantoms.

In Korea, where it has delivered 61 F15-K Eagle fighters, it is looking at an opportunity to clinch another deal for 60 more of the planes.

In Australia, where it has delivered the first five of 25 F18 Superhornets and five C17 transport planes, it sees interest for the P8 anti-submarine planes.

In Malaysia, it is currently in talks to sell its F18 Hornets to replace the air force's ageing Russian MiG fighters, while in Singapore, it is in the process of supplying the 24 F15 Eagles on order.

But it is India which Mr Muilenburg sees as the 'Jewel in the Crown'.

The signing of the nuclear agreement by former president US George W Bush two years ago, and the subsequent thawing of relations between the US and India, have finally opened up the country's US$30 billion defence market to Boeing.

'In the past, Boeing's relationship with India was purely on the commercial airplanes side,' he said. 'Now, relations encompass the defence side.'

India has already inked a deal to buy eight P8i anti-submarine aircraft and has expressed an interest in purchasing 10 C17 military transport aircraft. If that US$4 billion C17 deal comes through, it will be Boeing's single biggest for this aircraft type.

But the biggest competition now going on is India's request for the supply of 126 multi-role combat fighter planes. Besides Boeing, others in the battle for this US$10 billion deal include Eurofighter Typhoon, Sweden's Griffin, France's Rafale and Lockheed Martin of the US.

Besides fighters, the Indian army is also looking to buy Apache attack helicopters and the Chinook heavy-lift helicopters.

Global Network