The defense needs for many South American nations have shifted toward small-scale platforms designed for homeland security and counternarcotics, posing a new challenge for U.S. and European companies looking to compete there.
“The trouble for U.S. and European companies that are used to big competitions and high-dollar programs is that South America is not the market for those kinds of goods,” said Steve Johnson of the Center for Strategic and International Studies. “Unless you’re [Venezuelan President] Hugo Chavez, and have an oil industry at your disposal to help you buy Russian fighters, you’re not going to buy that big. Most South American countries lack that and can’t buy very sophisticated equipment.”
U.S. firms build the world’s largest, more technologically sophisticated weapon systems, but scaling them down for markets such as South America is typically costly, making it a tough environment for firms seeking contracts for what will be small buys of those scaled-down platforms.
And as South American nations go shopping for light helicopters, small unmanned aircraft and the smaller naval vessels that U.S. and European firms produce, the South American market gets that much tougher for them, experts say.
So, just what do countries such as Brazil, Peru and Colombia want?
“The South American region’s defense procurement trends have shifted from traditionally conventional equipment used for a variety of roles, including national defense and counterinsurgency, to fulfill a new set of homeland security and counternarcotics missions,” said Inigo Guevara, a Washington-based analyst specializing in Latin America defense and security trends.
That means nations in that region want surveillance platforms that can operate in forests, deserts and at sea.
What’s more, they’re shopping for “fixed and mobile components, medium and light multirole helicopters, medium and light transport aircraft, maritime and coastal patrol aircraft, ocean and coastal patrol vessels, fast interceptor boats, radars and a new generation of turbo-prop combat aircraft,” Guevara said.
The shift has allowed suppliers from new places to break into the South American market, analysts say.
“U.S., Russian, Israeli and European firms, which have traditionally been the region’s main suppliers, are now being challenged by emerging global players such as China, India, Singapore and South Korea, which have managed to establish some niche markets,” Guevara said.
“China, for example, has recently assisted Argentina in setting up a license assembly plant for light helicopters and South Korea is in the process of transferring technology to Peruvian shipyards for the launch of an ambitious patrol vessel and logistic ship program,” he said.
Johnson called the unmanned aircraft market in South America a “flexible” one that is ripe for growth.
“There is a growing UAV and drone market throughout Latin America for use in counterdrug, traffic control, aerial surveillance on land and for agriculture use,” Johnson said.
While many South American nations want small- or medium-sized UAVs, rather than the large platforms the U.S. military buys, such as Global Hawks and Predators, there is a place for U.S. firms in this space.
“United Technologies, for instance, offers UAV components that can be assembled fairly easily,” and at a price most South American nations can afford, Johnson said.
Within that shift, Brazil remains the biggest South American defense market.
“Brazil’s domestic market is by far the largest, with a set of procurement goals planned out to the mid-2040s,” Guevara said. “These include the local development and construction of nuclear submarines, conventional submarines … but also aircraft carriers, guided-missile frigates, [off-shore patrol vessels], a medium-transport aircraft to rival the [Lockheed Martin-made] C-130 Hercules, helicopters, a new family of ... armored vehicles, multiple rocket launchers and a new-generation multirole fighter.”
But for the Brazilian government, one of its goals is the buildup of its domestic defense industry.
“Brazil is trying to get its own defense industry growing,” Johnson said. Brazil is developing its own helicopters and other platforms, “but that doesn’t mean it won’t buy equipment from a U.S. or European supplier.”
He noted the emerging regional power is buying submarines from France and might buy either American- or European-made fighter jets.
Still, Brazilian officials are eying bigger goals.
“Most of these [Brazilian] systems have been designed for their own domestic requirements,” Guevara said, “but with clear export potential aimed at regional requirements.”