US firms scale back operations

17 September 2004
US defence equipment manufacturers are quietly scaling back operations in Saudi Arabia, say Western defence contractors based in the kingdom, amid continuing concerns over the domestic security situation and an anticipated decline in major orders of military hardware. Riyadh's annual budgeted expenditure on defence and security fell by 12.5 per cent between 2001-03.

Several companies are understood to be moving non-Saudi staff out of the country, including US firms The Boeing Company and Lockheed Martin Corporation, which has been active in the kingdom since 1965. Two Lockheed engineers, Paul Johnson and Kenneth Scroggs, who were both working under contract with the local Advanced Electronics Company (AEC), were killed by insurgents in June.

'Increasingly, operations are being handed over to Saudi partners, while the main company continues to provide technical support services from the outside,' says a Jeddah-based contractor. 'It is essentially what Boeing has been doing by phases for a while, pulling out all American staff.'

The companies in question have declined to give details of the restructuring of their local operations. 'While our mix of personnel and the nature of work continue to evolve based on contract awards in place at any given time, our commitment to supporting US government-approved services and programmes in the kingdom remains unwavering,' says a Lockheed spokesperson.

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