WASHINGTON – Despite belt-tightening at the Pentagon, defense contractors can count on the military’s continuing need for advanced technology and personnel training as well as expanded opportunities for exports to allies, Northrop Grumman CEO Wes Bush said Thursday.
Bush was interviewed by The Economics Club of Washington D.C. President David Rubenstein before an audience of business leaders to talk about the impact the Department of Defense’s budget cuts will have on the defense industry. DOD has proposed a $495 billion budget for fiscal 2015, which is $113 billion less than the 2014’s proposal.
Bush said Northrop Grumman’s strategy isn’t just to chase growth, which is something other companies in the defense industry tend to do.
“I think it’s far more important to stay focused on what we do well,” Bush said. “That really has been driving our people the last few years, maintaining our focus and make sure we are doing the right things to create value for all of our stakeholders.”
Last year, the Department of Defense awarded $313.4 billion, including $9.7 billion to Northrop Grumman, in contracts, grants and other funding.
About 86% of Northrop Grumman’s sales last year were to the U.S., government, but the company’s international business, which accounted for about 10% of sales, is expected to increase this year, Bush said.
“In part, its growing because the administration and those in the Department of Defense that are involved in the security strategy for how we support our allies are taking, I think, the right approach to encouraging a broader view of what we should be exporting to our allies,” Bush said. “That’s creating a nice opportunity for us to better support our allies around the globe and we’re stepping up to that and making our company more global.”
He said contractors should focus on both the U.S. and allies because both continue to face threats.
“I really haven’t met anyone, either in congress or clearly in national security who would say that today the threat profile to our country or our allies is less than it was just a few years ago,” he said.
Bush sees two fundamental underpinnings in the U.S. national security strategy, one of which means despite cuts, business won’t be drying up.
“We have the best trained service men and women around the world, that is the core underpinning of our national security strategy,” Bush said. “But secondly, we equip those men and women with the very best technology and our strategy fundamentally relies on technological superiority.”
On Tuesday, the National Aeronautic Association awarded its 2013 Collier Trophy to Northrop Grumman for its role in helping develop an unmanned aircraft that last year landed on the deck of an aircraft carrier.
“It’s an example of the class of technology that I think is really in its infancy and has an opportunity to grow dramatically,” Bush said.
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