As budgets and major program resources become more restricted, aerospace and defense companies are looking to foreign military sales or direct commercial sales as part of their strategic business plan, and insight into the sales environment is vital, according to one company official.
International sales efforts need predictability and transparency, said James Lovelace, corporate vice president International Programs at L-3 Communications [LLL] and a retired Army lieutenant general. “Those [items] should be how we measure the effectiveness of anything we are trying to do.”
In the United States, every service has an architect for the future, the acquisition process is staffed by trained professionals and in the budget process companies can see where money is going over about a seven-year period, Lovelace said at Center for Strategic and International Studies Ground Forces Dialogue, on July 19.
Thus, companies need to ask if the potential foreign customer has similar processes, for example if there is someone doing requirement definition or if there is a command that manages the life cycle of a product, he said. Learning these things can help how a company approaches sales.
Avascent Partner Jon Barney said India, for example, has an “opaque, very, very, lengthy acquisition process.”
Even companies that have had offices in India for a long time don’t have deep insight into the process and that increases competition uncertainty.
Barney said companies do a good job of a high level understanding of the threats and risks for their potential customer. But they do need to get a better understanding of capabilities of that country. That means understanding how the potential customer’s current capabilities–the ships, ground force and planes—line up with what the country needs to counter threats, and then understanding where the gaps are.
That allows companies to then determine how their capabilities line up and they are able to provide a complete solution to a country’s threats, based on what they can do.
Renaissance Strategic Advisors Co-founder and Managing Partner David Scruggs said “competition is going to get worse” in the future. But he noted that Western business ethics appear to be spreading as a general trend, citing the U.K. Serious Fraud Office investigating bribery, and the jailing of Italy’s former Finmeccanica CEO ahead of a corruption trial.
Lovelace said it was important for companies to know who they were competing against, and as offsets are an important part of doing business, to understand which companies would be a good fit as a partner and their strengths and weaknesses.
The Defense Department’s Better Buying Power 2.0 calls for designing exportability into products before Milestone B, so companies could make a decision about investing research and development into products and have some certainty as to whether that technology can be transferred to another country.
If that happens, “we can start marketing right up front,” Lovelace said.
To build partner capacity as part of national strategy, Lovelace said the government needs to “allow us to find out earlier in the acquisition process if you’re going to allow us to market a technology in export.”
Some Combatant Commands, such as U. S. Central Command (CENTCOM), are working to help build partner capacity, Lovelace said. Under Marine Gen. James Mattis, the former CENTCOM commander, CENTCOM formed a Foreign Military Sales section to facilitate such sales.
Barney said international business is important to aerospace and defense CEOs. Sharing one data point from a recent Avascent survey on executives, 93 percent said international business would be more important over the next several years, and international growth would be a focus.
Brazil, the United Arab Emirates, Saudi Arabia and India are cited as the countries most important to executives. Countries in the next tier include South Korea, Canada and Turkey, he said.