Boeing Begins Offsets In India
Boeing recently sold the P-8I maritime patrol aircraft to India. This country requires offsets for foriegn companies winning contracts and Boeing...Canada Buys CH-47 Helicopters
Filed under: Boeing, Business Line, Canada, Companies, Congress, Contract Awards, Countries, Events, Federal Budget Process, Military Aviation, United States, logistics, production program
Canada awarded Boeing a contact for fifteen CH-47 helicopters. The contract has a value of over $1 billion and requires and equivalent amount of offsets in the Canadian economy. Boeing already is selling the latest version of the heavy lift helicopter so valuable in Afghanistan to the U.S. and Great Britain. Canada being the third most heavily involved country in that war will certainly be able to use them.
The aircraft will be delivered in either late 2013 or early 2014 as they fit in to the current production. Canada has been requiring significant offsets in their latest round of contracts and this favor many U.S. companies as they have either Canadian subsidiaries or already buy parts and support from that nation.
So far the Obama Administration has made little changes to the existing plans for U.S. Army aviation modernization with the UH-60M, UH-72A and CH-47F. The replacement of the Armed Reconnaissance Helicopter (ARH) original canceled contract is also on current path for continuation at this time.
U.S. And India’s Weapon Buying Relationship Moves Forward
Filed under: Boeing, Business Line, Companies, Contract Awards, Countries, Events, India, Military Aviation, Proposal, development program, production program
As part of her diplomatic mission to India Secretary of State Hillary Clinton discussed a new agreement between the countries that will facilitate sales of U.S. weapons. This “end user monitoring” will make it possible for the U.S. to make sure that the Indian government does not sell its technology to a third party or misuse it for their economic gain. This type of agreement is fairly common among countries and allows sales to be made with some confidence.
India has embarked on a major upgrade to its military through acquisition of foriegn sourced weapons. This is a change from the past when the South Asian country tried to develop its own advanced weapons and relied on the U.K. and Russia. The decision to buy American, European and advanced Israeli technology allows India to leap forward in capability. As part of these contracts significant offsets are required of the selling companies through investment in the Indian economy.
European Union Limits Offsets
Offsets are the practice of when one country buys a system or services from a company in another they require that company to invest in their economy. They are not uncommon in the defense business. Right now India especially has very strict offset rules that have led to some controversy.
The European Union announced yesterday some rules to make offsets more targeted and defense related among its member countries. In the past some country’s have requested offset investment in their civil economy rather then in defense work. Normal procedure is to buy services, parts or maintenance related to the contract awarded.
The new rules require that the offsets be defense related. They also limit the total value to no more then equivalent to the awarded contract. Most often offsets are some percentage of the value so these rules are not to onerous. The EU has moved recently to tighten up competition among the various countries penalizing Italy for favoring their own internal industry over other available sources for example.
The offset rules announced will probably have limited effect since many of the projects are already shared among a variety of suppliers such as the Typhoon. If there is a decline in defense spending and the number of large contracts available there will probably be more efforts to expand competition and restrict protectionist policies.
Canada Buys American Trucks from Navistar
Filed under: Business Line, Canada, Contract Awards, Countries, Navistar, logistics, production program
Canada’s Government announced that they had placed a $274 million Canadian order with Navistar for 1,300 trucks to support operations in Canada. The Commercial Off-the-shelf (COTS) order was to replace aging trucks currently in use. The Gazette reports that there has been some criticism of the Government for buying American over vehicles made in Canada. The U.S. buys a great deal of equipment made in Canada, and many U.S. companies like Bell Helicopter and the “Big 3″ automakers have plants in Canada. The contract also requires Navistar to purchase $274 million in offsets which for a start will include the tires the trucks roll on. The U.S. and Canadian economies in many ways are integrated, so Canada turning to a U.S. company is not necessarily like buying from Europe or Asia.
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