As peace takes its toll on defence equipment sales worldwide, two sectors promise to resist the slide. The Stockholm International Peace Research Institute reports that despite a 30% tumble in international transfers of major weapons systems in just one year, two markets appear to be holding up: second-hand equipment and components. The heavy sellers of second-hand equipment, unsurprisingly, are Eastern Europe and the disintegrated USSR, with the Third World a major buyer. More industrialised, but still budget-conscious, nations like Indonesia and Argentina have, in turn, taken to upgrading their existing kit, rather than replacing it. For example, the Northrop F5 fighter aircraft is now being upgraded in eight countries - all using different suppliers. The result can be an aircraft with 80% of the latest capability, at half the cost. Unfortunately, the SIPRA overview pertains only to international sales, and plunging orders at home are still taking the toll on parts makers. Kleinwort Benson analysts Chris Tarry reports that in time the fresh overseas demand for components should come through, and Britain and France, as diversified producers, will be well placed to win orders in the intensifying cross-border market. The winning firms, Tarry predicts, will be those with size, a low cost base, joint ventures and, of course, the right products. "It will be very difficult for the smaller companies."
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