On 2/28/06, Seth Sandronsky <[EMAIL PROTECTED]> wrote: > The Economist misses the main point, IMHO. Low price consumer goods in the > U.S. are a result of the nation's growing trade deficit, thanks to foreign > lenders. At some point in the future the prices of imported consumer goods > will rise as the U.S. trade deficit falls and the over-valued dollar > declines. A drop in the value of the greenback would help U.S. exporters > become more price-competitive globally. > > Seth Sandronsky
---------------------------- Given, the most prominent export from the US, that may be bad for the world: <http://www.latimes.com/business/la-fi-armsbazaar27feb27,0,3718373.story> Arms Dealers Fight It Out for Sales in Booming Asia With Pentagon buying likely to slow, firms show off hardware at a Singapore bazaar. By Peter Pae Times Staff Writer February 27, 2006 SINGAPORE - Stayne Hoff was stuck in a corner booth at the Singapore air show, but his tiny, unmanned spy planes attracted plenty of traffic. His Simi Valley firm, AV Inc., was a popular stop because its remote-controlled planes were on display. The Raven, a model with a 5-foot wingspan, weighs just 4 pounds yet is equipped with an infrared camera and can transmit live images from six miles away. The $35,000 aircraft is used by the U.S. Army in Iraq on reconnaissance missions and has generated lots of buzz in aerospace circles. Hoff had already talked to arms dealers, who boasted of government connections, but one visitor in a red and green military uniform stood out. He kept quizzing Hoff about the range and flight time of the robotic aircraft. Finally, an exasperated Hoff told him: "Sorry sir, but we can't export to China, and we can't answer any questions." The Chinese army officer quickly retreated into the sprawling exhibit hall filled with displays of tanks, fighter jets and antiaircraft missiles. The Singapore air show, which ended Sunday, is one of the world's largest arms bazaars. It's a hot spot for foreign countries looking to buy American-made fighters, drones such as those made by AV and other military equipment. The biggest U.S. defense contractors entertained generals here and cultivated contacts from nations on the Pentagon's approved buyers list. They were competing with defense firms from France, Britain, Russia and Sweden who chase the same market. During the Cold War, air shows in Paris and near London offered settings for the U.S. and the former Soviet Union to sell billions of dollars' worth of weapons to their allies, while spies strolled the exhibit halls. But in recent years, much of the deal-making has shifted to Singapore as American defense contractors, big and small, focus on boosting sales in Asia to make up for the coming slowdown in Pentagon spending. The biggest American companies - Boeing Co., Lockheed Martin Corp. and Northrop Grumman Corp. - had the largest exhibits here and rented the most lavish chalets, as generals and government ministers sipped champagne and watched aerial displays of weaponry. Lockheed's F-16 fighter plane and Boeing's rival F-15 jet, which costs about $60 million, were both flown at the show. Boeing had two large display areas. Its booth in the exhibition hall was filled with models of its commercial and military planes and boasted big screens, loud music and a flight simulator show for the F-15. The simulator was part of the sales pitch: See how it feels to fly this incredible machine. And outside on the tarmac, Boeing's F-15 and F-18 fighters were parked for viewing. In December, Singapore agreed to buy as many as 20 F-15s from Boeing in a deal worth about $1.7 billion, choosing the Chicago company over a French rival. Foreign military sales in Asia this year could top $10 billion, Boeing executives said. India, Thailand, Japan, Taiwan and Australia have increased defense spending and have ignited an arms race of sorts as they try to outdo one another with the latest and best weapons. "The entire region has tremendous opportunities," said Robert B. Trice, senior vice president of business development for Lockheed Martin, based in Bethesda, Md. "As the slowdown [in Pentagon spending] comes, you'll see the companies become more aggressive in the international market." All told, about 940 international companies had representatives in Singapore, and 35,000 people in the aerospace business from 89 countries, including the first contingent from China, attended the six-day air show. The event was mainly geared to the trade, however, and was open to the public for just two days. The main topic of conversation was the $8-billion contract up for grabs in India, which wants to buy 126 aircraft to replace its aging Soviet-era MIG-21 jets. In recent weeks India said it might expand the purchase to 200 planes, raising the stakes even higher. "It's the biggest fighter aircraft deal since the early 1990s," said Boeing's Mark Kronenberg, who runs the company's Asia/Pacific business. Boeing is trying to sell India on its F/A-18E/F fighter jets, while Lockheed Martin has proposed its F-16. India is also considering Russia's updated MIG-29M/M2 fighter and the Eurofighter Typhoon jet, built by a European consortium. Another competition has been dubbed the fighters-for-chickens deal. Thailand is in the market for 12 to 18 fighter jets, but it wants to pay for a portion of the purchase with frozen chickens, shrimp and agricultural products. Thailand is considering Lockheed's F-16, Sweden's Gripen fighter and Russia's Sukhoi Su-30. Asian demand is likely to lead to "very robust sales," said Lt. Gen. Jeffrey B. Kohler, director of the Pentagon's Defense Security Cooperation Agency, which oversees U.S. foreign military sales. "We don't see that abating." Kohler, who was in Singapore, plays a key role in helping the Defense and State departments decide which weapons can be exported and to which countries. Close allies such as Japan and Singapore can purchase some of the most advanced U.S. weapons, while China is banned from the export list. The Defense Department also controls what American firms may display in Singapore. This was the first year that AV, the spy plane firm, attended the show. Unmanned military planes attract interest because the U.S. has used them in Afghanistan and Iraq. Their size and cost vary widely. Northrop's $45-million Global Hawk is the most advanced spy plane in the U.S. arsenal. The jet-powered craft can reach speeds of 360 mph, record images from 60,000 feet and stay airborne for 35 hours. Northrop's overseas market for the Global Hawk is restricted to a few nations. However, the smaller, less powerful propeller planes AV makes might be cleared for foreign sale, so the company jumped at the chance to showcase its products in Singapore. Hoff, head of AV's foreign sales, spent hours talking to two dozen generals and defense ministers from various countries, who all asked for in-country flight demonstrations, he said. As a U.S. defense contractor, AV is strictly limited in the information it can give out. "We've had Russians and Chinese and even an Israeli with a Taiwan name tag ask us about the details," Hoff reported. "They know I can't say much, but they keep trying." Hoff hoped to return home with a couple of dozen leads that might turn into sales. Besides new revenue, foreign military sales have other benefits, said Richard Aboulafia, an aerospace analyst with Teal Group Corp. "No program is truly safe in this day and age, and a foreign sale is not just gravy anymore. It's harder for the Pentagon to kill a program with a foreign tie." Boeing executives hope foreign sales extend the life of its C-17 production line in Long Beach, where 7,000 people work. The C-17 factory is slated for shutdown in 2008, when the last of the cargo planes ordered by the Air Force is delivered. John B. Sams Jr., Boeing's vice president for mobility programs, was in Singapore looking for buyers. Australia was interested in four C-17s, which have a list price of $220 million. Norway was interested in four and Sweden two, Sams said. "Any new aircraft extends the [production] line three weeks," Sams said. If Boeing lands more foreign sales, it's a "win-win situation for everybody."
