Foreign firms attending the IDEX defence expo are targeting increased sales in the Middle East as spending in their home countries slows.
Showcase for world's defence giants
Armoured vehicles, missiles, warships and unmanned aircraft will be showcased at the International Defence Exhibition & Conference (Idex), Abu Dhabi's most eye-catching trade show, which starts today at the Abu Dhabi National Exhibition Centre.
Some 1,060 companies, including all of the world's major defence contractors, are attending the week-long biennial event, the humble roots of which date back to 1993 as a small regional affair. But it is now one of the most important defence expos in the world.
Heads of state and top-ranking military officials will be among more than 50,000 visitors and 150 official delegations expected at the five-day event. Pavilions representing the various countries taking part, and company stands, will cover 124,000 square metres while the nearby naval exhibition, called Navdex, will feature navy ships from Italy, the UK, France and the UAE.
Many companies will be hopeful of winning new business: in 2009, the UAE's Armed Forces announced contracts and deals in progress worth Dh18.5 billion (US$5.03bn).
Idex is taking place amid a major shift in the global aerospace industry, as defence companies seek new opportunities in countries such as the UAE, Saudi Arabia, India and Brazil that are increasing investments to deal with potential threats and step up humanitarian and peacekeeping missions. The four nations are expected to add $30bn over the next five years to existing defence budgets, according to Jane's, a UK defence publication.
At the same time, defence budgets in traditional markets are merely treading water. In the US, the government is cutting some projects to deal with the nation's forecast $1.65 trillion deficit for this year. "Flat was the new up last year," said the consultancy Deloitte in a report.
"With the global recession, the mentality for defence spending is now 'faster, better, cheaper'," said John Brooks, the president of Northrop Grumman International.
In a trend that started with the collapse of the Soviet Union, and which accelerated following the attacks in the US in September 2001, defence requirements are shifting away from developing platforms, such as ships and aircraft, and more towards building enhanced capabilities for cyber security, surveillance and unmanned systems.
Aerospace and defence companies are focusing on developing technology "meant for current and future conflicts, not the cold war", according to Deloitte. "Priorities should be considered in the 'new reality' areas being emphasised, including remotely piloted vehicles, cyber security, intelligence, surveillance and reconnaissance (ISR), mission operations systems integration, data fusion, directed energy, precision strike and energy security."
That includes fighting "asymmetric threats" such as terrorism and insurgency. Elettronica of Italy, an electronic warfare specialist, is marketing technology designed to disable the tracking systems of heat-seeking, shoulder-launched missiles. This marks its first foray into hacking infra-red signals after six decades of producing radar jamming devices and other systems based on the electromagnetic spectrum.
A focus on these new threats has also prompted the development of new agencies focused on homeland security.
This new reality will be showcased at Idex, where cutting-edge products will jostle for space with traditional weapons and systems. New systems include Raytheon's Silent Guardian directed energy weapon, known informally as the "pain ray". In addition, Northrop Grumman will display its Fire Scout unmanned surveillance helicopter.
Foreign aerospace and defence companies are increasing their focus on the region. Italy's Finmeccanica announced it would open an office in Saudi Arabia, while in December, Boeing opened an office in Doha to position itself for upcoming regional fighter jet sales campaigns as well as take advantage of continued demand for commercial airliners.
"If there are countries that are investing in defence, they are going to be at Idex," said Andy Pearson, the Middle East managing director at Babcock, a UK engineering services firm. "With a backdrop of low UK spending, we're looking to countries that can spend some money."
There have been major acquisitions programmes for air force, air defence and naval programmes in the GCC, to act as "force multipliers" and compensate for the countries' smaller populations.
"If you can't put boots on the ground, then you have to rely on technical superiority," said Gianluca Trezza, the UAE resident manager of Elettronica. That includes regional demand for the Patriot and Thaad missile defence programmes and airborne early-warning aircraft such as the Advanced Hawkeye, while local ambitions to increase humanitarian and peacekeeping missions is also driving up demand for transport aircraft such as the C-130J from Lockheed Martin as well as the C-17, produced by Boeing.
Business from the Gulf has sustained tens of thousands of manufacturing jobs, with Boeing extending the life of the C-17's Long Beach factory out to 2013 due to the number of orders from the region.
Willy Moore, the UAE chief executive for Lockheed Martin Global and a former naval commander of the US Fifth Fleet, said regional governments were also heavily investing in systems that allowed their defences to communicate with friendly forces.
"Interoperability and being able to operate with neighbours, allies, with friends here in the region, including the US, is a major issue," said Mr Moore. "It is one that I see them pursuing in virtually every discipline." That drive could see GCC states working with Lockheed and other companies to integrate secure communications systems into their fleet of aircraft and warships, such as the Link 16, which is used by Nato countries.
* additional reporting by Rory Jones