North American expansion for EADS has seemed driven for nearly a decade by a single, bitterly contested contract to build 179 tankers for the US Air Force.
Amid the twists and turns of the KC-X deal, EADS has quietly developed a solid business foundation in the USA that is designed to continue growing even if the company loses KC-X, a contract even North American chairman Ralph Crosby calls "the defence acquisition for the remainder of the century".
A North American growth strategy for a European aerospace and defence contractor is a no-brainer. The US Department of Defense buys almost as much weapons and technology as the rest of the world's militaries combined. The DoD's open-minded acquisition process - although a sore point for Boeing's political supporters on the KC-X contract - practically invites European companies to compete on US soil.
EADS, meanwhile, needs no external motivation. Its portfolio is currently dominated by the spending cycles of Airbus's commercial customers, which often rise and fall in opposite relation to military spending. Achieving a greater balance between commercial and military revenues is therefore a priority.
In August 2002, EADS made its first strategic move. The company appointed Ralph Crosby, a former top Northrop Grumman executive, to head its North American operations. Eight months later, the company combined nine existing operating units with about $500 million in annual revenues to form the EADS North America subsidiary.
From that start, EADS planned to grow the Arlington, Virginia-based subsidiary by a factor of 20 to sales of $10 billion a year by 2020.
Winning the KC-X contract is factored into the $10 billion figure, but company officials emphasise that losing the contract would not change the fundamental imperative to keep growing in the US market. Indeed, even if EADS wins the KC-X deal, it is likely to account for only 25% of objective revenue total.
Even as the tanker competition dragged out over the past eight years, EADS NA's annual revenues have more than tripled to $1.7 billion. Growth has been achieved through a series of small acquisitions and key contract victories, most notably among them the light utility helicopter (LUH) contract.
The US Army order for 345 UH-72 Lakotas - a slightly modified version of the Eurocopter EC145 - is the break-out achievement for EADS NA in the US market. The order secured a manufacturing presence on US soil and gave the company confidence to compete for KC-X as a prime after former partner Northrop withdrew from the race in March.
It also buoyed the unit's activity despite setbacks in other attempts to win contracts. A partnership with Raytheon to offer the C-295 to the army was defeated by the C-27J, which was offered by L-3 Communications and Alenia Aeronautica. The company also responded to a request for information by the air force for an Air Force One replacement. But EADS NA withdrew after its proposal to offer the Airbus A380 sent shockwaves around the US political establishment.
Despite these setbacks, real opportunities for growth continue to exist outside a KC-X contract victory. EADS NA, for example, has proposed selling 118 Airbus Military A400Ms to the USAF using costs savings from retiring most of its Lockheed Martin C-130Hs and C-5As. EADS also has teamed up with Lockheed to convert the UH-72 in an armed replacement for the OH-58D Kiowa Warrior.
At the same time, previously identified opportunities for growth have not worked out. In 2008, Crosby listed the NH90 helicopter as a possible attempt to replace air force UH-1Ns. Air force requirements have all but ruled out any helicopter except the Sikorsky UH-60. Another rejected proposal is a bid to offer the Airbus A321 as a rival to the Boeing 737 to replace the navy's EP-3Es.
EADS NA still hopes to grow by a factor of more than five over the next decade, even as US military budget growth is expected to shrink. The company may yet fall short, especially in the event the air force rejects its bid.
If organic growth falls short, however, the company still has other options. BAE Systems, another European defence contractor, has become one of the US military's largest contractors by simply buying other companies. EADS may face greater political constraints than a British-owned company, but opportunities in the US market abound.