Offset Obligation Fufillment

GTS clients include many US and foreign companies that have offset or industrial cooperation obligations in one or more countries. These obligors might have their own obligations with the foreign government or they may be supporting their prime contractor customer, who has the commitment.

Generally obligations are concurrent with the delivery of the weapon system, but larger programs may extend out for 10 years. Each country has its own laws or guidelines that are supporting local government policies.

Direct vs. Indirect Obligations

Every country and obligor has their own definitions of these terms. Strictly defined “Direct” offset obligations consist of the local foreign supplier producing or servicing the actual products being sold into the country. Some countries support a broader definition that covers aerospace and defense related production opportunities. This might also include technology transfer and training that supports the country’s military requirements.

Generally speaking one may define “Indirect” offsets as everything else that a governmental offset authority may decide to credit. Some specific examples are manufacturing opportunities offerred by the obligor from other seller’s business units, suppliers, and global partners. These exports need to be high technology oriented and show potential for job expansion and export growth. Technology transfer is acceptable as long as work (POs) are linked to such activities.

GTS Role

GTS is most helpful in assisting obligors to satisfy indirect obligations, leaving the oblgor to source their work themselves. Having said that several GTS clients are looking to find new sources for their aerospaceand defense products.

GTS works with all the players; obligors, local companies, third party implementers as well a the offset authorities to identify and develop successful offset projects. GTS often visits the country to survey local companies and start a dialogue with the offset authorities to determine the local needs and capabilities. GTS matches local capabilities to our clients that are looking for international low cost, competitive suppliers. GTS then prepares a project summary that the obligor submits for pre-approval. We work with the local suppliers to insure that they have the desire and the tools to be successful. Lastly GTS works with all the parties to implement the project and earn the offset credits for the designated obligors.

GTS can help you qualify for more international business opportunities.
Would your company like to expand its operations internationally at a discounted start-up investment? Assist an obligor to meet his “offset obligation” and build up your international presence at less cost to you.
GTS can help you find offset obligors who will invest in your overseas operations.

Example of the Offset Process

Let’s assume that a manufacturer of tanks (seller) just won a order from France. As part of the transaction, the seller has accepted an offset obligation from the French government (buyer) of $50 Million. The French government will have specific offset guidelines for the implementation and completion of the obligation. (Each country’s strategy and offset objectives are unique.) Usually the tank supplier (seller) is granted seven to ten years to fulfill the obligation and will rely upon its internal corporate activities, supplier base and other business relationships.

The Challenge and Opportunity

Often the obligation exceeds what the seller can accomplish. Third parties then work with the seller (and government buyer) to supplement the sellers efforts by introducing third party opportunities.

The GTS Advantage

GTS, through its wide range of commercial contacts and knowledge of pending/existing offset agreements, can help your company leverage offset obligations most effectively.
Why have GTS represent you when you might deal directly?
Our exclusive focus is on what you want to accomplish.
We are able to optimally place your project with one of many obligors, thereby ensuring a more favorable outcome, tailored to your specific needs.

A Related Service: GTS Business & Competitive Intelligence Consulting

Global Trade Solutions offers unique services that enable clients to gain knowledge about the current and future marketplace.
The ability to understand the competition, forecast possible outcomes through scenario development, review industry relationships, and forecast the impact of new technologies on your company is essential for success in today’s environment.
GTS can provide the information required for continued growth, specifically tailored to your needs.

GTS expands its client base during 2008 Most GTS consulting engagements involve multiple partners and so the list of companies below represent a small proportion of the professional network Mr. Johnson has established worldwide.

Past and present partners are: Kollmorgen Electro Optic Atlantic Marine Shipyards Boeing Commercial Aircraft Lucent Kvaerner Philadelphia Shipyard Rockwell Collins EDO DRS General Dynamics Lockheed Martin Pratt & Whitney Calzoni Global Majic Software

Obligors GTS has executed international transactions for a number of primary obligors.Currently GTS is in the final vetting stages to third party provider for two major aerospace companies.Once completed, GTS will be in a position to support these clients under a blanket agreement relationship.GTS is also now participating with six other obligors to implement offset projects in support of their offset commitments.

Worldwide Offset Authorities. Over the past 20 years, GTS has developed an extensive network and relationships that include offset authorities in over 15 countries and business knowledge in another 8 countries.By doing transactions in these countries GTS has also gained insight and relationships into local industries and cultures.For a more complete overview of Mr. Johnson’s international connections and experience, consult the Current Opportunities page of our web site.

Third Party Companies

GTS has introduced the concept of offsets to over 150 US and foreign companies. We are currently actively working with 11 companies that are exploring international opportunities and are considering leveraging offset in the process. The typical company is a small startup, high technology company. GTS also supports a couple of larger corporations that see the value of assisting an offset obligor in the course of doing international business.GTS maintains relationships with a number of other consultants, research organizations, venture capital firms, and not for profit foundations.