Lockheed Martin benefits from increased focus on security

DUBAI — Governments throughout the Middle East are boosting their spending on security, according to executives from Lockheed Martin, the US-based company specialising in defence and security solutions for governments, speaking at the Dubai Air Show last week. James Jamerson, president, Lockheed Martin Corporation, Middle East/Africa, said: "Even though there has been a lot of changes, the Gulf region is a booming part of the world."


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Published: Sun 27 Nov 2005, 9:56 AM

Last updated: Thu 2 Apr 2015, 5:28 PM

He also said: "The emphasis on pure defence products has moved to the security remit. Governments are now asking questions such as: 'How do we protect our borders and control access to them; how do we survey our waters; and how do we protect our resources?" The need to protect resources is a particular concern in the Middle East, which is so energy-dominated.

The nature of the solutions has also changed. "Now, rather than a single point solution we look at the best way to solve the problem in aggregate," said Jamerson. The solutions can be air-based, sea-based or fingerprint. Network-centric operations are writ large. It is a growing area of interest out here."

Network-centric or network-enabled operations represent an integrated approach to intelligence gathering and security. Jamerson explained; "It's about how you process information for your peer military guys so that they can get the job done in the most efficient way. It is of interest to governments in this region especially as they have observed activities in Iraq and Afghanistan."

As counter-terrorism has become an important activity for most governments around the world, database management has become equally important, "keeping track of millions of people moving around borders," said Jamerson.

The Gulf region, like most countries, is vulnerable to attack. "As economies have prospered they have also become increasingly attractive as targets, so vulnerabilities have increased," said Willard Mitchell, vice president, international market development, Lockheed Martin Aeronautics Company. "All countries are focusing an increasing level of their budgets on security," he said.

With business in the region continuing strong for Lockheed Martin, Jamerson is also very positive about the impact free trade agreements (FTAs) will have for foreign companies doing business in the region. "They put business on a level that for the US and US companies is a much better way of operating. You get transparency. You understand what the processes are. FTAs make it easier to do business here because it reduces risk. They put business on a better footing for everyone who is out here."

Nonetheless, the business environment remains highly competitive. "Governments here negotiate very aggressively. Governments want the best value for the dollar," he said.

Of particular concern for Lockheed Martin is the challenge of negotiating deals that ensure a payback for governments, primarily by way of a work sharing arrangement or the transfer of technology. One of our challenges is to "provide work for people, especially in countries with young populations," said Jamerson. "When you reach an agreement you often have to work on what percentage of work will come to the country. Countries are negotiating some sort of work share. Each country has opportunities but they are harder to find."

Recently completed deals include the sale of 80 Block 60 F-16 E/F aircraft to the UAE armed forces, some of which have already been delivered. Delivery of the first two F-16 Advanced Block 50 aircraft to Oman also took place in October and Turkey has also announced a major capabilities upgrade for its fleet of F-16s.

The impact of governments increasing focus on security and counter-terrorism is reflected in Lockheed Martin's impressive financial performance. In 2004, it reported sales of $35.5 billion, a 12 per cent increase over 2003, and a backlog of $74 billion. It also generated $2.9 billion in operating cash. Since January 2000, the company has reduced its debt from $12 billion to $5 billion. Fifty-eight per cent of Lockheed Martin's business is concentrated on business for the US Department of Defense/Intelligence, 22 per cent on civil government and homeland security, 16 per cent on international and 4 per cent on the commercial US market.

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