Tue, Jul 15, 2008 page10

• Lockheed Martin urges less European protectionism

  • AP
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  Lockheed Martin Corp chairman Robert Stevens urged European regulators to continue to promote transparency and competition, warning that the idea that protectionism would strengthen markets is misguided.

  Speaking on the eve of the aerospace industry’s biggest air show, Stevens also said on Sunday that the spending gap between the US and European defense budgets threatened to create an unbridgeable transatlantic capabilities gap.

  Stevens said that Lockheed, the world’s largest defense supplier, welcomed the European Commission’s draft directive on defense procurement, which would open up the EU’s 80 billion euro (US$117.93 billion) a year defense market to more cross-border competition.

  The bills must be approved by EU governments and the European Parliament. Some governments have been hostile to the idea of the EU weakening national controls, but commission officials said previous consultations with national capitals left them confident the directives could be adopted quickly.

  “As the commission’s directive is reviewed and ultimately implemented by the European Parliament and the Council, it will be important to keep the focus on openness and competitiveness,” Stevens told reporters in a briefing ahead of the Farnborough airshow.

  “Protectionism is not now, and has never been, a substitute for competitive strength,” he said.

  Asked about the message sent to Europe by the disputed US$35 billion Pentagon Air Force tanker contract, Stevens said it should be viewed as an “acquisition issue.”

  The Air Force in February selected the Northrop team to replace 179 Eisenhower-era aerial refueling planes. Boeing filed a protest in March, and last week, US Secretary of Defense Robert Gates said the Pentagon would reopen the bid.

  The Air Force’s original decision provoked fury among US politicians, who objected to the military deal being awarded to an overseas contractor. Boeing had supplied refueling tankers to the Air Force for nearly 50 years.

  “I don’t think the tanker issue should be viewed as a trade issue as much as an acquisition issue,” Stevens said.

  Stevens said the positive implications of changes in Europe risked being undermined by the spending gap on defense between the US and Europe — US spending on defense approaches 4 percent of GDP while very few European countries meet the nominal requirement of 2 percent.

  “My worry is that the cumulative effect of this differential, year after year, is creating a trans-Atlantic capabilities gap that threatens to become unbridgeable,” he said.

  Stevens said he expected US core annual defense spending of about US$550 billion to remain at those levels, but conceded that supplemental spending — covering campaigns in Iraq and Afghanistan — averaging around US$170 billion to US$180 billion could fall in coming years.

  Lockheed’s F-22 Raptor fighter jet was expected to be a highlight of the first day of the Farnborough air show, where it was to make a flypast yesterday afternoon, the first time a fifth-generation fighter has debut at an international air show.
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