The Arizona Republic
A proposed $6.4 billion U.S. arms sale to Taiwan could be a windfall for Boeing's Mesa helicopter plant and Raytheon's missile factory in Tucson.
The deal also provides job security for the 12,000 employees at Raytheon and the 4,500 workers at Boeing and could result in some new hires.
Such contracts could become increasingly important for Arizona defense contractors due to an expected drop in U.S. defense spending.
The deal, which has drawn strong protests from China, includes 30 next-generation Apache Longbow helicopters for $2.5 billion and $47 million worth of Raytheon's Javelin missiles.
It's the latest in a string of foreign military sales that have included $30 billion worth of announced deals in the past 30 days.
They included the sale of 12 Apaches to Saudi Arabia for $600 million and a $90 million deal with Israel for anti-armor weapons made in Mesa by Nammo Talley, formerly Talley Defense Systems.
As a result of the wars in Afghanistan and Iraq and unprecedented military budgets, the defense industry in Arizona has boomed while other segments of the economy have lagged. But the growth could slow.
Paul Kinsinger, a global business professor at Thunderbird School of Global Management in Glendale, said U.S. defense contractors will be relying more on international sales, given inevitable U.S. defense cutbacks.
"The buildup cycle of the Bush years is coming to an end, and there will be a likely downturn in U.S. weapons procurement no matter who becomes president," he said. "The winning strategy now is to focus in international markets."
Defense spending for next year is slated at $612 billion, comprising the largest segment of the federal budget.
That, combined with the $700 billion aid for the ailing financial industry, has prompted various analysts to predict cutbacks in defense spending.
For many companies, international sales already are a big part of their business. Others will have to cultivate those markets, Kinsinger said.
"Foreign military sales already make up a big part of our portfolio," said John Patterson, a spokesman for Tucson missile- builder Raytheon. "It's a segment of our business that we see increasing in the years ahead."
Indeed, in the past month, there have been nine separate foreign deals for Raytheon's Tucson-made missiles valued at more that $2 billion. That includes a $737 million order from the United Arab Emirates shared with Boeing Aerospace in Huntsville, Ala.
Foreign military sales have risen sharply in the past year as the U.S. moves to fortify friendly governments in the Middle East in advance of troop withdrawals from Iraq.
The Department of Defense proposed more than $70 billion in foreign military sales during the government's fiscal year that ended Sept. 30. That compares with $22 billion in the prior year.
Many of those deals involve countries in the Middle East, such as Jordan, Kuwait, Turkey, Egypt and Israel, as well s Greece.
The deals are put together through the Defense Department and administered by the Defense Security Cooperation Agency. The agency notifies Congress about a proposed sale, and lawmakers have 30 days to block a deal. But such action is rare.
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