Key facts
- Honeywell Aerospace is increasing its development of defense products free from U.S. export restrictions.
- This strategy aims to circumvent potential roadblocks related to U.S. International Traffic in Arms Regulations (ITAR).
- European nations are boosting defense spending due to geopolitical tensions and the war in Ukraine.
- Honeywell has tasked 1,000 engineers in Poland and the Czech Republic to design ITAR-free technologies.
- International sales accounted for about 30% of Honeywell's defense business last year, up from 18% in 2020.
Honeywell Aerospace is strategically increasing its development of defense products designed without restricted U.S. technologies to meet growing demand from European nations. This move is driven by mounting European defense spending and concerns over potential U.S. export roadblocks, particularly related to International Traffic in Arms Regulations (ITAR).
NATO leaders have recently unveiled significant arms deals, underscoring the increased focus on defense expenditure amid the ongoing conflict in Ukraine and pressure from Russia. This geopolitical climate is fueling demand for defense components that are not subject to U.S. ITAR restrictions, which could potentially block the re-export of sensitive U.S. parts embedded in foreign weapons systems.
Honeywell Aerospace plans to announce a new ITAR-free product at the upcoming Farnborough Airshow. The company has assigned approximately 1,000 engineers across its European subsidiaries in Poland and the Czech Republic the specific task of designing non-ITAR technologies. CEO Jim Currier stated that the company aims to "look, act, feel and speak like a European company" to better serve the market.
The company's defense business, which accounts for about 40% of its total revenue and includes navigation systems and missile actuators, has seen its international exposure grow. Last year, international sales represented approximately 30% of this segment's revenue, a notable increase from around 18% in 2020. Honeywell is leveraging its global presence and recent acquisitions, such as Italy's Civitanavi, to scale its ITAR-free navigational technology offerings for partners in the EU and the Asia-Pacific region.
Other North American suppliers are also experiencing this shift. Michael Iacovelli, CEO of Canadian supplier Ben Machine Products, reported that over half of its current work is now required to be ITAR-free, a significant change from 2018 when none of its work had this requirement. The Canadian government has also noted increased demand from European defense firms for North American suppliers free from U.S. ITAR restrictions, prompting efforts to integrate further into European supply chains.