This Aussie contractor is optimistic about the defense market

To Washington contractors, this might seem like the period of great uncertainty in the business, what with congressional bickering, shifting budgets and heightened competition.

But to one of the region’s newest contractors, there couldn’t be a better time to enter the American defense market.

Varley Group, a 128-year-old Australian engineering company, has set up a U.S. subsidiary in the District. Founded by G.H. Varley, the family-owned business started out as a plumbing and boiler-making company for the ship repair market. Now, it manufactures everything from armored vehicles to fire engines for the Australian government and commercial clients, and rings up annual sales of $110 million.

Varley started out as a subcontractor for an American company in 2001, and now it works with major defense companies, including Lockheed Martin on the F-35 fighter jet and Northrop Grumman on its Global Hawk and Triton drones.

Jeff Phillips, Varley’s chief executive, said he’s often asked why the company chose to set up a U.S. operation at this time.

His answer is simple: The American defense budget dwarfs that of other countries, including Australia. The U.S. spent $640 billion on military expenditures in 2013, according to data from the Stockholm International Peace Research Institute. In comparison, Australia spent $24 billion.

Even with budget cuts, Varley “doesn’t see the market as negatively as the companies here,” he said. “This is still a very large market, with a lot of opportunity.”

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