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Boeing, Lockheed Martin lose Indian defense deal

Guests exit a Boeing 787 Dreamliner aircraft at the Farnborough Airshow in Hampshire, U.K. -- July 18, 2010.

UPDATED INTERVIEW

JEREMY HOBSON: If you're a big company in 2011 and you want to make some big money it's all about selling to the developing world, specifically China and India.

So this morning's news that India's army will not be buying U.S. fighter jets is gonna be particularly tough to swallow for Boeing and Lockheed Martin.

Marketplace's Eve Troeh joins us live now with the details. Good morning, Eve.

EVE TROEH: Good morning.

HOBSON: So how important was this contract to these big U.S. defense companies?

TROEH: Well, the U.S. Ambassador said he was deeply disappointed by this. India's one of the fastest growing militaries. That goes along with being a fast growing economy. With a global recession on, defense companies around the world want these contracts. This was a particularly big one -- $11 billion for 126 fighters. But the competition over fighter jets is also symbolic.

That's what Pierre Tran with Defense News told me this morning.

PIERRE TRAN: The fighter competitions are really in a class of their own. They're more expensive and it's the face that they're the leading edge, the most sophisticated, the most advanced combat materiel you can get.

TROEH: So, India tested the planes that the U.S. offered and they found they were just not as advanced as some European jets on the market.

HOBSON: See that seems surprising to me because I would think that the amount of money that we are spending on defense here in the U.S. would make our fighter jets the ones on the cutting edge.

TROEH: Well, actually they are. So, Lockheed Martin's F-22 is called the most advanced fighter jet on earth. But India was only offered older place -- F-16 and F-18s. And that's because Congress reserves the best jet for its really really close allies. So it wouldn't even let the F-22 go to India's airshow this year for example. And since that's the case, India will use this fighter jet contract to make some better friends somewhere else.

HOBSON: Marketplace's Eve Troeh, thanks Eve.

TROEH: Thank you.


ORIGINAL REPORT

STACEY VANEK SMITH: Chevron reports quarterly earnings later this morning. Yesterday Shell reported first quarter profits up 40 percent. It earned more than $3 million an hour. Exxon saw quarterly profits climb nearly 70 percent to more than $10 billion.

Boeing reports earnings later today. But it got some not so great news this morning. One of the world's fastest growing armies will not be using its fighter jets. Boeing and Lockheed Martin lost their bid for an $11 billion contract in India.

Marketplace's Eve Troeh reports.


EVE TROEH: As India's grown its economy, it's also grown its military. The U.S. has gained from that, with contracts for things like patrol planes. But Boeing and Lockheed Martin are now out of the running to provide India with 126 new fighter jets. It's the most exclusive, and expensive, military contract, says Pierre Tran with Defense News.

PIERRE TRAN: Fighter competitions are really in a class of their own. They're the leading edge, the flagship of the nation's defense industry.

The big reason the U.S. didn't make the short list is that it didn't offer India it's leading edge jet, the F-22. Tran says Congress tightly restricts who gets the latest U.S. military gear, and it didn't choose India.

TRAN: That's a bit of a blow to a country's pride. They say, "What, we're not good enough for the best?"

Tran says fighter jet deals are about more than equipment. The India chooses will provide it with military training, and the chance to learn about the latest technology firsthand. It's a relationship that lasts decades, that India won't be having with the U.S.

I'm Eve Troeh for Marketplace.

About the author

Eve Troeh is News Director at WWNO-FM in New Orleans, La., helping build the first public radio news department in the station’s 40-year history. She reported for the Marketplace Sustainability Desk from 2010 to 2013.
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