SIMI VALLEY, Calif. – General Dynamics CEO Phebe Novakovic believes the Asia-Pacific region represents a growing market for American defense contractors – as long as firms are willing to be patient.
“People spend money on defense when they’re worried, and I think many of our allies in Asia are justifiably worried,” Novakovic said of the region during a speech at the Reagan National Defense Forum.
“We have seen in the last year, year and a half increased demand signals coming out of Asia, and I suspect if you talked to our colleagues, they would tell you much the same,” she added.
But with opportunities come challenges, in part because of “unsophisticated buying authorities” or national interests, such as a desire to build indigenous capabilities.
Novakovic admitted that for GD, the sixth largest defense contractor in the world according to the Defense News Top 100, the Asian market is in the “relatively nascent stage.”
She added that the regional market is less focused on “major platforms” but features greater options for “upgrades to their current platforms, bringing their warfighting equipment up to the standards of the United States, at least to be able to communicate to fight together should the need arise.”
According to figures released last week by the State Department, American firms sold $7.96 billion worth of weapons to the Indo-Pacific region in fiscal year 2017. That was the second highest-region, following the Middle East.
On that latter region, Novakovic believes the U.S. will remain the biggest player, despite a major push by Russia to reach into the Gulf as a weapons supplier.
“One should never be sanguine. Arrogance is the first step to failure,” she said as a warning to U.S. companies who want to sell in the Middle East. “So I think we need to be mindful of what we can do to be supportive of this interoperability coalition requirements that we all face.”
Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.