2013-09-20 By Guy Martin
Over the last year Boeing Defence has been increasing its focus on Africa and sees the continent as a new market, particularly for rotorcraft, while Algeria may order C-17 Globemaster III strategic airlifters from the company.
Up until last year, Boeing Defence, Space and Security (BDSS) did not have a strong presence in Africa, according to Paul Oliver, Vice President, Middle East and Africa, International Business Development at BDSS.
Boeing was then tasked with looking into the continent and has been doing so for the last year.
“We do not have a strong presence,” Oliver said, with some elderly Chinooks, AH-64 Apaches and MD500s being Boeing’s only military aircraft on the continent. “There is not much to build off,” he said, and as a result Boeing needs to begin with maintenance, training and logistics activity before moving on to larger sales.
“We anticipate strong growth in mobility and vertical lift first,” said Dennis Muilenburg, Boeing Executive Vice President and President and Chief Executive Officer of BDSS. “As economic capacity continues to increase, other needs will follow.”
Oliver said that BDSS’s main focus has been on South Africa as an entry point into sub-Saharan and then North Africa. Shep Hill, President, Boeing International and Senior Vice President, Business Development and Strategy at Boeing, said that the company was still deciding where would be best to locate an African office: in East or West Africa.
Boeing does have limited partnerships with Africa, such as a collaboration with South Africa regarding titanium processing, but does not have industrial manufacturing in sub-Saharan Africa yet.
However, there are various prospects in the region.
Oliver said that there is demand for logistics, vertical lift and airlift on the continent, particularly relating to peacekeeping and humanitarian aid missions.
The recent operations in Mali as well as numerous peacekeeping missions across Africa are all examples of the importance of airlift. One possible option is for African countries to collectively acquire a shared/buy-in airlift capability like NATO does with its pooled C-17 Globemaster III fleet.
However, this seems like a long-term prospect.
More definite options for Boeing on the continent are coming from North Africa, where Libya is interested in buying more than 20 CH-47 Chinooks and Algeria is seriously enquiring about the C-17, with a requirement for 6-8.
Boeing in April this year demonstrated a C-17 for the Algerian Air Force and is hopeful of a request for proposals either this year or early next year.
Defense News last month reported that Morocco may buy three more CH-47Ds and Egypt may acquire another six CH-47Ds – the latter is receiving a number of AH-64 Apache attack helicopters ordered through its Foreign Military Financing (FMF) scheme.
“Africa is a new market to us. We’re trying to do it smartly,” Oliver told journalists in Washington. He pointed out that Boeing Defence was trying to establish footprints in Africa and was trying to get its foot in the door.
“We’re starting to understand the market better…It takes time,” he cautioned. “Africa is not going to be a holy grail now but in the long term will be an exceptional market.”
Boeing Defense is currently pushing to increase its foreign sales, with the goal of having 30% of its defense business coming from outside the US.
This year at least 25% of Boeing Defence contracts will come from overseas countries, versus less than 10% some years ago, according to Muilenburg.
He noted that the defense and space environment is a challenging one around the world, and has been especially hard hit by sequestration in the United States and the declining defense budget in Europe, but is offset by strong growth in the Asia-Pacific and Middle East, with countries like India, Korea, Saudi Arabia and Qatar being big markets.
Of the Boeing defense arm’s international business, around a third of that will be derived from the Middle East, a third will come from Asia and the other third from other world regions. Muilenburg said “uncertainty” was a clear driver of Middle East arms spending as “strong security relationships” add stability to the region and address the many security issues, notably the current Syria crisis.
Of Boeing’s 2012 revenue of $81.7 billion, 40% of that came from the defense business side, something that has been increasing over the years. Over the next ten years, between now and 2022, Boeing Defence estimates the international defense market to be worth $387 billion. The Middle East and Africa will account for $89 billion in spending and the Asia-Pacific region $140 billion.
Guy Martin is in the United States as a guest of Boeing.