Northrop Grumman [NOC] sees the market for unmanned systems starting to “open up” internationally, according to a key executive.
Corporate Vice President and CFO Jim Palmer told an audience Feb. 6 at the Cowen Group aerospace conference in New York that the company’s line of Global Hawk unmanned aerial vehicles (UAV) has developed interest among Asia Pacific nations, including reported interest by South Korea.
Northrop Grumman received permission from Congress last year to export Global Hawks to South Korea, though company spokeswoman Rene Freeland said it’s not a blanket approval.
Palmer said Australia has also been following Northrop Grumman’s development of its relatively new MQ-4C Triton high altitude, long endurance (HALE) UAV to see if it may meet its needs. The U.S. Navy plans to purchase 68 MQ-4Cs to carry out maritime surveillance missions.
Palmer said the company sees future international strength for its electronics sector, one of Northrop Grumman’s four business segments along with aerospace, information systems and technical services. Palmer said about 25 percent of the company’s electronics sector’s revenues come from the international marketplace on a “fairly regular basis.” Northrop Grumman, overall, sees opportunities as more real and potentially “nearer term,” Palmer said.
Palmer, overall, painted a rosy outlook for Northrop Grumman for 2014. Palmer cited a reduced level of uncertainty than a year ago due to the passage of a FY ’14 appropriations bill as opposed to uneasiness from the potential implication of sequestration-related budget cuts. It’s starting to feel like the return to a more normal budgeting process, Palmer said.
“Clearly we, and our customers, are in a better situation today than we were a year ago when we had the uncertainty around how sequestration was going to be implemented,” Palmer said, adding a feeling of an “enhanced planning ability” to deal with the current environment.
Palmer also said Northrop Grumman was bullish on international F-16 upgrades due to the constrained budget environment domestically, which he said reduces the likelihood of new program starts and, instead, increases the chances of upgrades to existing fleets. Domestic budget pressures help drive the international market, Palmer said, because they encourage the United States to rely more on its allies and make sure they have capabilities that are interoperable with U.S. capabilities. Palmer also cited the maturity of Northrop Grumman’s products as well as U.S. leaders’ willingness to consider reforms to export control laws for the international outlook looking more favorable.
Global Hawk is not the only Northrop Grumman business line involved with Australia. Palmer said the company hopes to finalize its recent purchase of Qantas Defense Services by the end of March. Qantas Defense Services, the military wing of Qantas Airways Limited, provides through-life support for the Royal Australian Air Force (RAAF) multi-role tanker transport fleet, turnkey operational logistics services for the Australian government’s VIP aircraft and engine overhaul services for the Orion P-3 and Hawk lead-in fighter. While not a large deal, Palmer said it’s an important deal because the company sees it as an important foothold in the Australian marketplace.