Pot of Gold: Overseas Companies Adapting to U.S. Market Needs

Article excerpt

PARIS -- With current commitments driving the high demand for military equipment, foreign companies perceive the U.S. defense market to be the proverbial pot of gold.

Though breaking through American bureaucracy and politics to sell wares remains a daunting challenge, industry representatives at a recent international ground warfare conference here say their businesses are becoming savvier at catering to U.S. defense needs.

While European defense budgets remain on a downward slope, U.S. military spending has surged dramatically since the 9/11 attacks. Non-U.S. firms acknowledge that the Pentagon generally buys most major weapons systems from U.S. manufacturers, but many niche areas in the market increasingly are open to international competitors.

From forming partnerships to custom-designing products, companies reveal they use multiple strategies to gain American clients.

"The U.S. is one of the most important markets," says Yair Atzmon, head of the ground division for Aeronautics Defense Systems Ltd., an Israeli company that produces unmanned aerial systems.

Two years ago, the company formed a "strategic alliance" with a business unit of General Dynamics, based in Falls Church, Va., to market tactical UAVs and other technologies to the United States.

"It's the most important partnership we have. Without it, we wouldn't have sold [products] to the U.S. market," says Atzmon.

Having such a relationship has allowed the company to gain insight into the market and gauge how it can provide better products.

"With friends in General Dynamics, we are adapting to the needs of the United States to respond to the needs of the market," he says.

That is a different mode of operation for the company, which usually deals with countries that are less familiar with available technological offerings. Often, it is the company informing the buyers of potential products and setting the pace of the market, not the other way around as it is in the States, he says.

"They know exactly what they want," says Atzmon of the U.S. defense market's biggest customer--the nation's armed forces.

Plus, "they have high standards," adds Aku Salmi, sales manager for SAVOX Communications Ltd., a small company based in Finland.

As a result, learning what those exact requirements are and conforming products to those specifications are mandatory if a product is to succeed, they say.

To get an edge on the market, SAVOX has been putting effort into designing U.S.-specific products so that it can put forth proposals that fit American forces, says Salmi.

"We need to adapt, so it feels good to the U.S. customer. We're aware of that," he says.

The company modified one of its communications headsets for use by U.S. Air Force rescue teams and also created a new product as a result of that adaptation, he says.

Manufacturers also need to recognize how buyers will employ their products. A technology can be extremely advanced, but if it doesn't fit the concept, structure or culture of a nation's military force, then it can be less useful, says Atzmon.

For example, he says, when the Israeli Army acquired the M-16 rifle from the United States, soldiers quickly discovered that they needed a new strap, because the way they held the guns at attention differed from how the weapon was designed to accommodate its intended users--U.S. forces. Small details, such as how a product will be operated, can be tricky to anticipate, but they are easy to overcome, he says. Aeronautics' products are made for English-speaking operators, but in order to sell unmanned systems to Russia, the company had to translate all of its printed texts and digital settings into Russian.

The biggest challenge for foreign companies is winning a contract in the United States, Atzmon says. Rather than trying to demystify the politics of contract bidding, his company focuses on making the best technology and relies on its U. …