Australia Holds a Garage Sale

"You gotta spend money to make money," goes the saying up here north of the equator. But everything's different Down Under. In Australia, the equivalent quip appears to be "we need to raise cash, to spend more." And that's great news for defense contractors.

According to yesterday's Sydney Morning Herald, the Australian Defence Force (ADF) is setting out on its "biggest disposal of [military] surplus" since the end of WWII: 24 frigates, minesweepers, and other naval vessels, 70 fighter jets, 110 other aircraft, 120 helicopters, 600 tanks, and 12,000 other military vehicles are all going up for auction in perhaps the biggest garage sale the world has ever seen.

Everything must go!
It's all part of a major retooling of the ADF, as Australia embarks on a project to replace and upgrade 85% of its military hardware over the next 15 years. Lockheed Martin (NYSE: LMT  ) F-35 fighter jets don't come cheap, you know, and buying Force Protection's (Nasdaq: FRPT  ) Ocelot armored cars would cost a pretty Australian penny (if Australia still minted pennies). So before beginning its buying spree, the Aussies are looking to raise all the cash they can.

That's good news for bargain hunters, who will find a buyer's market in Oz. But it's even better news for the companies who will be helping the ADF build back up after it sells its weapons stockpiles down.

I mean 85%?! That's a huge amount of pent-up weapons-buying demand that's coming on the market Down Under. As U.S. defense contractors like General Dynamics (NYSE: GD  ) , Textron (NYSE: TXT  ) , and even Boeing (NYSE: BA  ) come under the Pentagon hammer in budget negotiations, they're going to be looking more and more abroad for customers with cash to spend. As I mentioned earlier this month, Raytheon (NYSE: RTN  ) in particular has been looking hard at making international sales a big part of its business.

Foolish takeaway
My guess: Australia will become an important market for these companies' wares. After all, it's got an expansionist, and increasingly technologically advanced, China sitting right on its doorstep. Its shipping suffers from a perpetual piracy problem in the Indian Ocean.

Today, the talk is all about Australia's national garage sale. Once it's over, expect Australia to go shopping for a few new battleships -- and expect U.S. defense contractors to line up to make the sale.