Political barriers surrounding the US defence market will continue to strengthen, but UK companies must try to breach them, says Cobham chairman Gordon Page.
Page, who is also a former president of the Society of British Aerospace Companies, does not expect the pressure to lift soon. "The Buy America issue has got worse and it will get worse as the [US presidential] election gets closer," he says.
Referring to efforts by House Armed Services Committee chairman Duncan Hunter to impose "Buy American" limits on the US Department of Defense, he says: "We noticed Congressman Hunter's words were not taken out of the budget, and have been repeated elsewhere. US industry recognises this as a problem, because they are now much more involved in international programmes. The elections have highlighted the issue, but it will not go away."
Despite the worsening political environment, Cobham will continue to build its US business, which grew from 31% to 36% of total sales in 2003. "We have almost doubled our North American sales in the last five years," says chief executive Allan Cook, adding: "Look at the strength of the US defence budget - it is now around $400 billion. We think we are in the right place to serve that market, and we would like to see that share increase."
Cobham is likely to continue its high rate of acquisitions - it made 13 in 2003, and finance director Warren Tucker says: "Our cash profile will allow us to repeat the existing acquisitions policy for at least the next three to four years".
Cobham posted a 16.8% increase in pre-tax profits for 2003, to £135 million ($243 million) on sales up 13.3% to £833 million.
ALEXANDER CAMPBELL / LONDON
Source: Flight International
