INTERNATIONAL

At DSEI, Defense Companies Optimistic About Future

9/15/2015

LONDON — Tensions with Russia and the war with the Islamic State are expected to drive growth in the global defense market, said executives attending the Defence and Security Equipment International conference.

This year, more than 1,500 exhibitors and 32,000 visitors from 120 countries are expected at DSEI. The massive exhibit floor at the ExCel Conference Center was filled with trucks, weapons and drones on the first day of the show.

Many executives interviewed said they believed the global defense market — or at least segments of it — was set to grow in the comings years.

“We’re seeing global events driving various governments and markets to review the levels of [defense] expenditure and how that money is spent,” said Peter Grogan, head of business development for cyber and security at Airbus defence and space’s U.K. and Northern Europe divisions.

He pointed to Russian aggression, the Syrian refugee crisis and the fight against the Islamic State as drivers for increased defense spending in the coming years.

Higher demand also is expected for surveillance and border security technology, he noted. "From a pure commercial point of view I think we’re coming out of what’s been” an austere market in the United States and U.K.

Jukka Holkeri, chief strategy officer at Patria, a Finnish defense company, said tensions between Western Europe and Russia could fuel a greater demand for land systems.

“For 20 years we’ve … lived in Europe in a state where most countries have said that Russia is not a threat, and now suddenly for the past year everybody is saying, ‘Russia is a threat,’” he said.

“One of the things that the Russians have done and shown in the Ukraine and the illegal annexation of Crimea and so on, is the very rapid … ability to react — to move troops, to concentrate troops,” he said.

There is now the potential that European countries may invest more heavily in land assets to try and counter Russia’s aggression, he said. The company has so far sold 1,400 of its 8x8 armored modular vehicles, with Poland being its biggest customer.

Jonathan Hoyle, Lockheed Martin’s vice president for Europe and Latin America, said the company has noticed a trend among NATO countries where their defense budgets are either flat or increasing. “There is a mix across the 28 nations as to what direction they are going in but we’re now seeing in total an increase in defense expenditures across Europe."

He noted that there is an increased focus on threats from Eastern Europe.

“When you talk to the Baltic Republics it’s the Russian threat. I think even in the Balkans … they’re much more focused on the Russian threat than perhaps they were five years ago.”

Gregory Sancoff, president and CEO of Juliet Marine Systems, Inc., said that he doesn’t see the overall global defense market improving, but believes certain market areas could see growth.

An estimated $48 billion is to be spent internationally on patrol boats over the next eight years, he said. Juliet Marine, a United States-based boat manufacturer is now looking internationally to sell its GHOST system, a reconfigurable high-speed small waterplane area twin hull vessel, he added.

“We have a bigger international market opportunity than we do a U.S. market opportunity and … one reason is that the United States is not a patrol boat culture,” he said. “We see the international marketplace being … the growth opportunity for this company.”
Countries like Singapore, South Korea, Taiwan, Saudi Arabia and Qatar are all potential customers, he said.

“A lot of countries cannot afford to go out and spend $400 million on a large ship to use a patrol craft, and that’s where we come in,” he said. “We provide a low-cost solution that also gives a country a lot of capabilities.”

Topics: International

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