Shrinking budgets have defense suppliers looking in other directions

Bleak prospects for U.S. defense spending are sending companies that traditionally have supplied electronic components and subsystems for aerospace and defense applications in an interesting, yet predictable new direction.

Rather than be hurt by shrinking defense spending, these companies are looking in different directions to boost revenue streams. Instead of waiting for defense spending to come back, suppliers of embedded computing, software, and complex digital signal processing are looking to the automotive and medical technology industries for future growth. This is a good thing for the continued health of the electronics industry, but may not be best for the military.

In some ways, Pentagon officials have themselves to blame. The long-term military emphasis on commercial off-the-shelf (COTS) technology, begun in the 1990s, means component and subsystem suppliers no longer are at the mercy of fluctuations in the defense market. Heavy military reliance on COTS electronics has created a true "dual-use" supplier base. We no longer need to fantasize about Lockheed Martin making transit buses and Raytheon designing washing machines to talk about dual-use technologies.

What does this mean for the defense supplier base? It might not be good news. When companies leave the defense business, they often leave it for good. If companies let their defense segments go dormant, connections go cold, knowledge of Byzantine military regulations becomes dated, and long-term relationships with defense systems integrators starts to atrophy.

Those who have been defense technology suppliers understand the high price of entry to this business. Once out, re-entry is time-consuming, expensive, and sometimes just not worth it. Starting from scratch oftentimes is just impossible.

I've seen this phenomenon before, and much of what I see now feels eerily similar. Let's go back 20 years: The first Gulf War was over, the Berlin Wall was in rubble, the Cold War was history, and Bill Clinton was headed to the White House. Among the first things Clinton did was reduce defense spending; it was a good time to do so. Military forces were well stocked after the Reagan defense buildup of the 1980s, and the Cold War's end meant that continued big defense budgets to counter the Soviet military threat were no longer necessary.

What we saw then was the beginning of a long decline in military spending that lasted into the next decade. Mitigating factors, however, were at work around the same time-namely, the rise of the Internet and the telecommunications boom that demand for Internet bandwidth created. During that lull in defense spending, we saw plenty of long-term military technology suppliers drop their government activities and run headlong toward the emerging and lucrative telecom market. Many of those companies never returned to the defense business, and more than a few of them disappeared altogether when the telecom boom went bust.

As the telecom boom subsided, new things happened to refocus attention on military technology, most importantly the terrorist attacks of 9/11 and the second Gulf War. Now we're starting the see the cycle repeat, as another likely long-term dip in defense spending begins-whether or not it's an opportune time. Today, it's not telecom that's capturing the attention of traditional military suppliers; it is the promise of automotive and medical electronics markets.

Like it or not, this is where many companies are headed. Whether they end up neglecting their military segments remains to be seen. What is clear, however, is the defense electronics industry is in a major period of transition.

Get All the Military Aerospace Electronics News Delivered to Your Inbox or Your Mailbox

Subscribe to Military Aerospace Electronics Magazine or email newsletter today at no cost and receive the latest information on:

  • C4ISR
  • Cyber Security
  • Embedded Computing
  • Unmanned Vehicles

Get All the Military Aerospace Electronics News Delivered to Your Inbox or Your Mailbox

Subscribe to Military Aerospace Electronics Magazine or email newsletter today at no cost and receive the latest information on:

  • C4ISR
  • Cyber Security
  • Embedded Computing
  • Unmanned Vehicles

Military & Aerospace Photos


The Intel Xeon-D processor and its role in high-performance embedded computing (HPEC)

The rugged Intel Xeon-D server-class multicore microprocessor is set to revolutionize high-performance embedded computing. By itself, the processor will bring unprecedented power to embedded computing applic...

Harsh Environment Protection for Advanced Electronics and Components

This webinar will offer an opportunity to learn more about ultra-thin Parylene conformal coatings – how they are applied, applications they protect today, and the properties and benefits they offer, includin...

Related Products

Nano-D Bi-Lobes® Connectors Dual Row Horizontal SMT (Type AA)

Horizontal SMT Bi-Lobe® nanos offer an extremely low profile package that is well suited to pick ...

Latching Micro-D Connectors

Omnetics high reliability Micro-D connectors are available with Quick Latch System. For applicati...

Nano-D BiLobe® Connectors -(COTS)

Sizes are 9, 15, 21, 25, 31, 37 , 51 & 65 pin, at .025 Mil. Pitch(Currently Available), mating pi...

Omnetics Nano-D Bi-Lobe® Latching Connectors

Bi-Lobe® connectors utilize rugged and reliable flex pin contact system. Spaced on 25 mil (.64mm)...

Micro-D Connectors

Highly rugged and compact designs in shell styles from 9 to 51 contacts. The Micro-D connectors i...

Hybrid Micro-D Connectors

Omnetics high reliability Micro-D connectors are available withmixed power/signal contact layouts...

XTend7103 | COM Express® Carrier for COM Express® Type 10 Mezzanine Modules

The XTend7103 is a COM Express® carrier card designed to provide a low-cost and compact platform ...

XPedite7575 | 5th Generation Intel® Core™ i7 Broadwell-H Processor-Based Conduction- or Air-Cooled 3U VPX-REDI Module

The XPedite7575 is a high-performance, 3U VPX-REDI, single board computer based on the 5th genera...

XPort6173 | 3U VPX Carrier for Two 2.5 in. Solid-State Drives (SSDs)

The XPort6173 supports two, standard, 2.5 in. Solid-State Drives (SSDs) in a single 0.8 in. or 1....

XCalibur1840 | Freescale Twelve-Core T4240 Processor-Based Conduction- or Air-Cooled 6U VPX Module

The XCalibur1840 is a high-performance, 6U VPX, single board computer supporting Freescale QorIQ ...

Related Companies

Interface Displays & Controls Inc

Certified ISO-9001/AS9100, veteran-owned, small business. Interface specializes in designing, reverse-engineering and...

Southwest Antennas

Designs and manufactures high-performance RF and Microwave antennas and accessories designed for today’s communicatio...

Curtiss-Wright Defense Solutions

About Curtiss-Wright Defense Solutions Curtiss-Wright Defense Solutions (CWDS) is a long established techno...

United Electronic Industries Inc

UEI is a leader in the PC/Ethernet data acquisition and control, Data Logger/Recorder and Programmable Automation Con...

Astronics Ballard Technology

Manufactures avionics databus interfaces, embedded computers, and software for aerospace, military and commercial use...

Cornet Technology Inc

Designs, engineers, and manufactures a wide range of advanced voice, video and data communications solutions for defe...

Henniker Plasma

Plasma Treatment Equipment - Plasma Cleaners, Plasma Etchers, Plasma Coating & Plasma Surface ModificationWe are the ...

TLC International

Manufactures Gen-3 TLC Phoenix-600 and Gen-5 TLC Summit high-accuracy glass cutting machines that utilize carbide/dia...

NOVA Power Solutions Inc

Provides mission-critical rugged uninterruptable power supplies (UPS), power conditioners, and battery backup modules...

Press Releases


Curtiss-Wright Corporation today announced that its Defense Solutions division has received a contract from Sierra Nevada Corporation (SNC) to supply its small form factor ...

Innovative Integration Announces the FMC-Servo

Camarillo, CA June 19, 2015, Innovative Integration, a trusted supplier of signal processing and data acquisition hardware and software solutions, today announced the FMC-S...


Curtiss-Wright Corporation today announced that its Defense Solutions division has further enhanced its innovative VRD1 high definition (HD) video management system (VMS) w...

All Access Sponsors

Mil & Aero Magazine

August 2015
Volume 26, Issue 8

Download Our Apps




Follow Us On...


Military & Aerospace Electronics

Weekly newsletter covering technical content, breaking news and product information

Cyber Security

Monthly newsletter covering cyber warfare, cyber security, information warfare, and information security technologies, products, contracts, and procurement opportunities

Defense Executive

Monthly newsletter covering business news and strategic insights for executive managers

Electronic Warfare

Quarterly newsletter covering technologies and applications in electronic warfare, cyber warfare, optical warfare, and spectrum warfare.

Embedded Computing Report

Monthly newsletter covering news on embedded computing in aerospace, defense and industrial-rugged applications

Unmanned Vehicles

Monthly newsletter covering news updates for designers of unmanned vehicles