Arms trade

Changing Landscape Overseas Creates Headwinds for U.S. Defense Companies

U.S. defense contractors are becoming increasingly anxious about the overseas arms market as they see changing political winds and shifting attitudes from countries that have long been reliable buyers. 

This is the main takeaway from newly analyzed data on foreign military sales by the Washington, D.C., consulting firm Avascent. 

“We have absolutely had clients come to us and ask us to help understand what's going on in the international market,” said Avascent Managing Director Doug Berenson. 

Since U.S. defense spending peaked in 2010, many American defense companies pursued an explicit strategy of growing foreign sales. Non-U.S. sales have partially offset the decline in domestic demand since 2010, when only 17 percent of defense equipment manufactured in the United States was exported, Avascent estimated. By 2015, that number jumped dramatically to 34 percent. Foreign sales of American-manufactured defense equipment rose from $24.2 billion in 2010 to $45.1 billion in 2015 — an average rate of 13 percent per year — while domestic sales declined from $112.8 billion in 2010 to $84.7 billion in 2015.