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Domestic Manufacturers to Gain on Building Pacific Cold War

Company News Thursday, July 18, 2013: Tech Steel & Materials

As tensions continue to build between China and Japan over the sovereignty of the Senaku (as known in Japan) or Diaoyu (as known in China) islands, US manufacturers are poised to make the most impact from any long term conflict. Rumi Aoyama, a professor at Waseda University in Tokyo, was quoted by Bloomberg as saying that relations between China and Japan were so bad that “At this point, it’s about maintaining lines of communication to make sure things don’t get worse.” With Japan being a key regional ally, many politicians believe that the United States will be called to help in some way.

After two long wars and a focus on budget cutting, it is unlikely that the United States will be drawn into direct military conflict with China. However many analysts believe that the United States may become a key supplier in any arms race that may begin between the two powerful Pacific nations.

Recently the United States Secretary of Defense Chuck Hagel has made trips to the Middle East, a region that faces similar political tensions, to sell American made military hardware to Israel, Saudi Arabia and the United Arab Emirates. The success off that mission has led to the first export of Bell Helicopter’s tilt-rotor V-22 Osprey. If things in the Pacific continue to dissolve it is highly likely that the United States will being making similar offers to other ally powers. Companies like General Dynamics, Raytheon, Lockheed Martin and Northrop Grumman will all be in line to fulfill any of the military needs of our allies and increased sales can only mean long term investor growth for those companies.