Lockheed, Northrop place bets on international markets

The international shift continues to gain momentum, particularly among the major defense players.

Lockheed Martin and Northrop Grumman have both announced actions in the last week that highlight how important international markets have become to them.

Coincidentally both of the announcements involve Australia, which looks like it’s become the launching point for a lot of activity in Asia.

Last week, Northrop Grumman’s Australian business unit completed the acquisition of Qantas Defence Services. The business provides integrated logistics, sustainment and modernization support. Most of its customers are with the Australian government.

The Australian Associated Press reported that the deal was worth $80 million and that the business had about $100 million in revenue last year.

The business has been renamed Northrop Grumman Integrated Defence Services and is now a unit of Northrop Grumman Australia, which itself connects back to the parent’s Northrop Grumman Technical Services.

“We expect this to be an important platform for international growth in our key focus areas of unmanned, cyber, C4ISR, and logistics and modernization,” said Ian Irving, Northrop Grumman chief executive for Australia, in a statement.

This week, the Australia Defence Science Technology Organisation announced a 10-year alliance with Lockheed Martin Australia for joint research projects in areas such as predictive logistics, trusted assurance, the Aegis combat system and other areas.

Raydon Gates, chief executive of Lockheed Martin Australia, said in a statement that the alliance will provide “important direction for future strategic investments in Australia and enable us to be more responsive to emergent customer requirements.”

Lockheed isn’t the only company to sign such agreements. The DSTO also has recently signed alliances with companies such as BAE Systems, SAAB and IBM.

Australia by itself is strategically important, just from the fact of how many shipping lanes pass near the country. Gaining situational awareness of that region is critical to international security and commerce.

And as Northrop said in its announcement, Australia is a great platform work throughout the region.

That companies such as Lockheed and Northrop are making investments in the region isn’t surprising, but what I wonder about is whether this activity will open more opportunities for other U.S. companies, particularly the next tier down.

Right now the international play is dominated by defense opportunities, but will we see that expand to more civilian operations?

If it will, companies will likely need to follow the pattern similar to Maximus, which has gone global with its social services expertise.

Maximus has an expertise that translates to nearly every country on the globe – building and managing systems that countries need to administer social services programs. Every country has a need here.

That’s the key for international expansion: Identify your expertise and then match those capabilities with needs in other markets. It could be cyber, financial management, modernization, data center consolidation. It’s a long list.

Stage two is identifying the specific countries to enter and how to enter them. You also need to identify who is providing those services today. They are your competitors and your possible takeover targets.

Stage two is well beyond my skill set, but we’ll be watching this international trend and who follows Lockheed’s and Northrop’s lead.

Maybe it’s time for road trip down under.