FARNBOROUGH, England — As the 2016 Farnborough International Airshow gets ready to kick off, US firms are coming to grips with the reality that their offset strategies have led to a growth in foreign competitors.

Jon Barney, managing director with Avascent, said that an annual survey conducted by the firm found confidence that traditional defense firms will continue to experience more competition going forward.

"We asked two years ago how companies view the competitive landscape," Barney said in a June 27 webinar. "Eighty percent said that they thought the competitive landscape would be more intense in the next 12 months. When we asked the question again this year, 87 percent said the same thing, so I think an overall takeaway, the implication for our clients, and people across the aerospace and defense sector is that you need to recognize that the competitive landscape is going to continue to grow in intensity.

"It's not only staying the same, it's actually getting even more competitive. So it's a recognition that this is the environment you're operating in, it's not going away."

Why is it getting more competitive? Ironically, one of the driving factors comes from the success Western defense firms have had in the last decade with selling abroad.

In a May report, Avascent warned that Western firms, which have been willing to give technology and knowledge transfers as part of offset packages, have created an opportunity for customer nations to turn into competitors. In particular, the report highlighted Brazil, Israel and South Korea as nations that are preparing to compete directly with the Western defense industry.

David Melcher, the head of the US-based Aerospace Industries Association (AIA), agrees that American firms need to keep in mind the risks of giving up too much as part of an offset agreement.

"I think companies are on a little bit of a slippery slope in terms of what are they willing to give up for today's sale, realizing you're going to be [making] tomorrow's competitor," Melcher said in a June 27 interview.

So where will competition come from in the future? US firms, Barney said, need to keep their heads on a swivel.

"The US is still far and away the country that is seen as the most frequent source of competition," Barney said. "Going from left to right, you'll see France, UK, Germany and then other countries such as Italy, Spain, Sweden."

"Israel comes up frequently as one of the key sources of competition. Increasingly we have seen China or Russia come up," Barney added. "India falls to that category as well. Then you see Canada and Japan both kind of showing up solidly. So the overall implication of this we see is that companies need to understand that the global competitive landscape is not just about US and western Europe anymore. Competition is coming from a lot of different countries now, and it's also being seen as becoming even more competitive from these markets in the coming years."

It's not all bad news for US firms, however. Remy Nathan, AIA's vice president of international sales, believes smart US companies can work with competitors in order to land new sales.

"In the best of all circumstance, you find a new partner, a new ability to bring the best technology, the best price, back into the US for the US war fighter," he said. "Ideally for small- and medium-size companies, they also see an opportunity as well."