General Dynamics 2013 Annual Report Download - page 13

U.S. COMMERCIAL
Our U.S. commercial revenues were $3.8 billion in 2011, $4.2 billion
in 2012 and $5.6 billion in 2013. This represented approximately 12
percent of our consolidated revenues in 2011, 13 percent in 2012 and
18 percent in 2013. The majority of these revenues are for business-
jet aircraft and services where our customer base consists of
individuals and public and privately held companies representing a
wide range of industries.
INTERNATIONAL
Our direct revenues from non-U.S. government and commercial
customers were $6.3 billion in 2011, $6.5 billion in 2012 and $6.4
billion in 2013. This represented approximately 19 percent of our
consolidated revenues in 2011, 21 percent in 2012 and 20 percent in
2013.
We conduct business with government customers around the world
with operations in Australia, Brazil, Canada, France, Germany, Mexico,
Spain, Switzerland and the United Kingdom. Our non-U.S. defense
subsidiaries are committed to maintaining long-term relationships with
their respective governments and have distinguished themselves as
principal regional suppliers and employers.
Our international commercial business consists primarily of
business-jet aircraft exports and worldwide aircraft services. The
market for business-jet aircraft and related services outside North
America has expanded significantly in recent years. While the installed
base of aircraft is concentrated in North America, orders from
international customers represent a significant segment of our aircraft
business with approximately 65 percent of total backlog on
December 31, 2013.
For a discussion of the risks associated with conducting business in
international locations, see Risk Factors contained herein. For
information regarding revenues and assets by geographic region, see
Note Q to the Consolidated Financial Statements in Item 8.
COMPETITION
Several factors determine our ability to compete successfully in the
defense and business-aviation markets. While customers’ evaluation
criteria vary, the principal competitive elements include:
•the technical excellence, reliability and cost competitiveness of our
products and services;
•our ability to innovate and develop new products and technologies
that improve mission performance and adapt to dynamic threats;
•successful program execution and on-time delivery of complex,
integrated systems;
•our global footprint and accessibility to customers;
•our presence in the countries of several key customers;
•the reputation and customer confidence derived from our past
performance; and
•the successful management of customer relationships.
DEFENSE MARKET COMPETITION
The U.S. government contracts with numerous domestic and foreign
companies for products and services. We compete against other large-
platform and system-integration contractors as well as smaller
companies that specialize in a particular technology or capability.
Internationally, we compete with global defense contractors’ exports and
the offerings of private and state-owned defense manufacturers based in
the countries where we operate. Our Combat Systems group competes
with a large number of domestic and foreign businesses. Our Marine
Systems group has one primary competitor with which it also partners on
the Virginia-class submarine program. Our Information Systems and
Technology group competes with many companies, from large defense
companies to small niche competitors with specialized technologies or
expertise. The operating cycle of many of our major platform programs
can result in sustained periods of program continuity when we perform
successfully.
We are involved in teaming and subcontracting relationships with
some of our competitors. Competitions for major defense programs often
require companies to form teams to bring together broad capabilities to
meet the customer’s requirements. Opportunities associated with these
programs include roles as the program’s integrator, overseeing and
coordinating the efforts of all participants on the team, or as a provider of
a specific component or subsystem.
BUSINESS-JET AIRCRAFT MARKET COMPETITION
The Aerospace group has several competitors for each of its Gulfstream
products. Key competitive factors include aircraft safety, reliability and
performance; comfort and in-flight productivity; service quality, global
footprint and responsiveness; technological and new-product innovation;
and price. We believe that Gulfstream competes effectively in all of these
areas.
The Aerospace group competes worldwide in its business-jet aircraft
services business primarily on the basis of price, quality and timeliness.
In its maintenance, repair and FBO businesses, the group competes with
several other large companies as well as a number of smaller
companies, particularly in the maintenance business. In its completions
business, the group competes with other OEMs, as well as several third-
party providers.
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