It reported on Monday that by 2016, global aerospace and defense firms will have racked up a cumulative $500 billion of obligations in order to secure weapons sales with foreign countries.
Offsets, which first appeared after World War Two, are incentive contracts that weapons makers sign with procuring governments to facilitate arms sales. They often take the form of investments in the buying country’s own defense industry, but they vary widely in form and complexity.
Avascent said offsets posed “unnecessary risks” to some aerospace firms because they lacked a strategic approach to the issue, leaving oversight to lower-level executives and handling of such deals on a case-by-case basis.
Swanson said his company had a deliberate approach and planned offset agreements carefully, often even before concluding new arms sales. He said he viewed such obligations as a way to expand Raytheon’s global supply chain.
“If you don’t have a plan going in, then you have created a risk,” he said, adding his mantra, “Prior planning prevents piss poor performance.”
Boeing’s Chadwick said the entire market was becoming more global, which created an imperative for U.S. companies to step up their partnerships abroad as Boeing has in India, for example.
“If you want to succeed in the future you need to have a global approach to doing business,” he said.