Idex 2019: Lockheed Martin eyes doubling of Middle East business amid rising demand
Exclusive: Firm to expand non-defence offering and roll out UAE science centre to other GCC states
US defence giant Lockheed Martin aims to double the size of its Middle East business as it eyes a bigger share of what it estimates to be $10 billion (Dh36.7bn) worth of defence opportunities in the region.
“In the past five years, we have seen consistent growth of our regional business, but looking at the opportunities out there we could double cumulatively what we’ve achieved in that period in as little as one year,” said Bob Harward, chief executive of Lockheed Martin Middle East, whose remit encompasses the wider region except Saudi Arabia, which is a separate business due to the size of the market.
Not all of those opportunities will come to market in the short term as they are subject to government procurement processes and political budgeting decisions, Mr Harward said in an interview with The National on the sidelines of the five-day International Defence Exhibition and Conference (Idex) being held in Abu Dhabi.
However, if Lockheed manages to secure only a small proportion of the estimated $10bn figure “in the not too distant future”, this could help Mr Harward reach his target to grow the Middle East’s contribution to global turnover to 5 to 6 per cent from 4 per cent today, he noted.
Last year, Lockheed reported annual revenues of $53.7bn, a 7 per cent year-on-year jump, with overseas revenues growing especially in the past four years. “This gives an indication of the scale of opportunity and the importance we’re placing on fast-growing regions like the Middle East,” Mr Harward said.
Regional governments are ramping up military expenditure to strengthen national security amid geopolitical tensions. Defence spending in the Arabian Gulf is forecast to increase to $110.86bn in 2023 from $103.01bn in 2019, as sovereigns modernise military equipment and expand military capabilities, according to a report by Jane's IHS Markit last week.
In addition, GCC defence procurement budgets are starting to expand again following project delays during the three-year oil price slump that began in 2014, the report said.
“The threats the Middle East has faced for decades from an increasingly powerful Iran and [other sources] are maturing and compounded by global political uncertainty,” Mr Harward said. “We aim to provide the capabilities to nations to show that they could retaliate and defend themselves against those threats should the need arise.”
In 2019 and beyond, defence demand from the UAE - Lockheed’s longest-standing Middle East defence partner and its biggest source of regional revenues - will centre on command and control systems, F16 fighter jets, armed Black Hawk helicopters and infrared portable air defence systems, among other security products, the chief executive said.
Aerospace systems are also likely to be in high demand as the UAE ramps up its standing in the global "space race", with an ambitious programme that includes the Emirates Mars Mission to land a spacecraft on the Red Planet by 2021.
Another priority for Mr Harward - a former US Navy seal who served on the Bush administration’s National Security Council and was appointed to lead Lockheed Martin Middle East last June - is to expand the firm’s commercial (non-defence) offering in the region, in line with global expansion plans.
“We are actively looking beyond defence to sectors such as renewable energy and expect this part of the business to expand in the coming years,” he said.
Also this year, Lockheed plans to start rolling out research centres similar to the one it opened in the UAE’s Masdar City in 2014, called the Centre for Innovation and Security Solutions, to its other regional markets. The facilities aim to provide advanced security solutions in the UAE, as well as to improve skill of UAE nationals in the defence industry.
Updated: February 17, 2019 06:30 PM