Military companies are looking for millionaire contracts abroad

Spanish military companies are immersed in a golden decade for their business.

Oliver Thansan
Oliver Thansan
10 March 2024 Sunday 11:30
14 Reads
Military companies are looking for millionaire contracts abroad

Spanish military companies are immersed in a golden decade for their business. Growing turnover, skyrocketing order books, more employment... The instability caused by the wars in Ukraine and Gaza has opened up a horizon in which all governments that can invest like never before to improve defense. The present is positive and the horizon is even more encouraging, they admit in the sector. In this context, the national industry has launched en masse in search of large commercial agreements abroad. They intercepted a multitude of countries with military and technological capacity with the aim of selling armaments made in Spain.

"We have never been better than now", admit sources in the Spanish military industry. The situation is unique for an atomized market (90% is dominated by a dozen companies, which are the ones with the ability to export). And they all work on this: to make foreign governments see that their tanks, fighters, frigates, submarines, radars or defense systems are useful to preserve the so-called strategic sovereignty. The sector still remembers that before the Russian troops set foot in Ukraine, the big arms companies were going through a delicate situation. Airbus, for example, came to announce hundreds of redundancies in Spain, which have not been carried out.

Last week, a Spanish business delegation traveled to India to coincide with an official visit by the Secretary of State for Defence, Amparo Valcarce. Managers of the main companies have been there. Navantia is one of them. His goal is to try to get the Asian country to buy the new S-80 submarine, the jewel in the crown of the public company. Airbus has also visited. The company has already sold more than seventy C295 transport aircraft to the Indian Government and this is the line of work it wants to promote.

Indra is another company with a clear vocation for internationalization. The group embodied in the strategic plan, presented on Wednesday, that it cannot grow only with the national market, but must fight for contracts abroad. It has proposed to grow in the arms market of the United States, the most important. For this reason, Indra sealed a strategic agreement with the world's leading military company, Lockheed Martin, in January. The Maryland-based giant already worked with Indra on a radar project for the Navy's F-110 frigates. But the business venture was not successful. Relations have now been restored.

Another large arms company that wants to aspire to new contracts in other countries is Santa Bárbara, a subsidiary of the American General Dynamics, with an extensive commercial history with other armies.

More than half of the turnover of military companies with Spanish capital originates from international markets. Specifically, of the 12,135 million revenues of companies dedicated to defense, aeronautics, security and space in 2022, half came from abroad, according to data from KPMG.

To achieve internationalization, the military companies ensure that the political support of the State Government is essential. The current one is actively involved, because, they say, they don't just compete against companies, they compete against countries. French President Emmanuel Macron sponsored a trade delegation to India in January. In this sense, business sources highlight the importance of the good relationship between the Executive of Pedro Sánchez and the Biden Administration. Less than a year ago, the Council of Ministers authorized an expenditure of 820 million to acquire eight MH-60R helicopters, known as Romeo in military jargon. The manufacturer of these devices is Lockheed Martin.

The new golden age of the military industry also causes great joy in the stock market for arms companies. Indra is trading at highs since 2008 and General Dynamics is hitting historic records, as are Airbus, France's Thales and Britain's BAE Systems. The Italian Leonardo is at the highest levels since 2000.

Josep Borrell, High Representative of the EU for Foreign Affairs and Security Policy, has emphasized that Europe must not only spend more on defence, but spend better and together. This message pervades the plans of Spanish companies, which aspire for the European Union to strengthen coordination. For years Indra, Airbus or Santa Bárbara have been claiming a stable budget environment. Now they have it and they want to take advantage of it.