Defense Spending Growth Lures Odebrecht, EADS: Corporate

Raymond Colitt

The unmanned aircraft soaring above Brazil’s Paraiba valley looks like a toy plane. In fact, it is the newest means of monitoring drug and arms traffickers, and the latest result of a military buildup that is attracting companies from Boeing Co. (BA) to Odebrecht to Thales SA.

The suppliers, facing possible reductions in defense spending in the U.S., U.K. and countries worldwide, are jockeying to take a bigger share of Brazil’s defense contracts. The industry has expanded 236 percent in the past four years to 12 billion reais ($5.9 billion) in annual spending, according to the Defense Ministry.

Brazil is replacing aging military equipment to develop its own technology and create jobs, industry executives say. The nation of more than 210 million people has avoided armed conflicts with its 10 neighbors for 142 years and hasn’t been involved in a war since 1945.

“It’s a very promising market, everybody knows Brazil’s importance is growing in the global arena,” said Ramiro Brasil, administrative manager at Sao Jose dos Campos, Brazil-based Flight Technologies, which delivered three prototype drone aircraft to the army last year and is testing its smaller, hand- launched model. “Finally there are public policies that sustain the defense industry.”

http://www.businessweek.com/news/2012-08-15/defense-spending-growth-lures-odebrecht-eads-corporate