Business Council Delivers Webinar on Saudi Defense and Security Market
On July 24, 2012, David Callahan, Vice President of Business Development at the U.S.-Saudi Arabian Business Council (USSABC) delivered a webinar presentation on Saudi Arabia’s defense industry. The webinar, “Doing Business in Saudi Arabia: Opportunities for Companies in the Defense Sector,” was hosted by the Pacific Northwest Defense Coalition (PNDC), a membership-based organization with offices in Portland, OR and Seattle, WA. “With a flourishing economy, Saudi Arabia has a precious infrastructure that must be safeguarded, requiring sophisticated security systems,” said Mr. Callahan. In addition to major downstream facilities and desalination plants, the Kingdom must secure eight major seaports, four international airports, and more than 20 domestic airports. “Saudi Arabia is by far the largest spender for military expenditures in the Gulf Cooperation Council (GCC),” said Mr. Callahan. “Industry experts estimate that Saudi defense expenses reached $55.2 billion (SR207 billion) last year, and are forecast to increase to $83.5 billion (SR313.13 billion) in 2015. He said that with the exception of Oman, the GCC states have all accelerated defense expenditure since 2006. Most increases in spending are related to maritime defense, cyber security, intelligence, and missile defense systems, as well as kits to upgrade and support air capabilities. Mr. Callahan discussed the U.S. and Saudi Arabia’s long-standing commercial and military ties, which date to the early 1930s. He noted that in the area of defense, Saudi Arabia is the largest arms importer of military aircraft in the Gulf area and enjoys strong security alliances with the U.S. and other Western countries. In particular, he highlighted the $60 billion (SR225 billion) U.S. arms sale to Saudi Arabia, which includes 84 new F-15SA fighters from Boeing, with upgrades, 70 Apaches, 36 Little Birds by Boeing, and 72 Black Hawks by Sikorsky. He said the package represents a considerable improvement in the Saudi offensive capability, and will result in increased interoperability with U.S. forces. “It should also be noted that the arms package is expected – either directly or indirectly – to create 77,000 jobs in 44 U.S. States,” said Mr. Callahan. “With the increase in military aircraft purchases comes an increase in demand for this equipment maintenance, repair and overhaul (MRO) services,” he said. “To this extent, the proposed $60 billion (SR225 billion) U.S.-Saudi arms deal should have a large and long-term effect on related industries in the U.S.” Focusing on opportunities in the security sector, Mr. Callahan noted that Saudi Arabia is one of the world’s fastest growing markets for safety and security solutions and equipment. A large segment of the market for U.S. products is centered in the Eastern Province, which is the headquarters of Saudi Aramco and 70 percent of the country’s major industries. The effort to effectively safeguard its energy infrastructure has led to high demand for products such as security vehicles, perimeter protection, access control, and monitoring systems. With participating companies having products and services applicable in the commercial area, the webinar also focused on commercial opportunities in aviation, clean technologies, and manufacturing and advanced materials. Mr. Callahan spoke about the Saudi Government’s National Industrial Clusters Development Program, which seeks to increase the country’s manufacturing contribution to GDP from 11 percent to 20 percent by 2020. He also discussed the Kingdom’s efforts to meet 20 percent of its domestic energy demand through alternative energies such as solar and nuclear. “We have seen a number of U.S. companies that range from major defense contractors to small and medium-sized enterprises participate in the Kingdom’s defense and security industry.” Mr. Callahan highlighted recent contracts with select USSABC members, including Raytheon Company, General Dynamics, and VSD, LLC.