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

Most Popular Articles

Related Products

XPedite7574 | 5th Generation Intel® Core™ i7 Broadwell-H Processor-Based Conduction- or Air-Cooled 3U VPX-REDI Module

The XPedite7574 is a high-performance, 3U VPX-REDI, single board computer based on the 5th genera...

XCalibur5090 | Dual Virtex-7 Based Digital Signal Processing 6U LRM FPGA with Quad 2500 MSPS DAC and 3200 MSPS ADC

The XCalibur5090 is a high-performance, reconfigurable, conduction-cooled 6U LRM module based on ...

XCalibur1645 | Freescale Eight-Core P4080 Processor-Based Conduction-Cooled 6U VPX Module

The XCalibur1645 is a high-performance, 6U VPX, single board computer supporting Freescale QorIQ ...

ScanFaker Radar Stimulation Board

The versatile ScanFaker Radar Display Stimulator Card can interface to virtually any radar displa...

PowerDNA-PPC5 Cube

5-layer, 100Base-T I/O, Data Acquisition and Control Cube with PowerPC CPU and SD slot. Has slots...

PowerDNA-MIL

Four-Slot, Military Style I/O Chassis with Military/Rugged 38999 connectivity, 100% COTS solution...

PCI Board PD2-AO-16/16

Is a 16-channel, 16-bit, 100 kS/s per channel PCI analog output board for PCI bus including 16 an...

FLATRACK™ Ethernet I/O DAQ Platform

FLATRACK™ Ethernet I/O DAQ Platform accommodates installation of up to four I/O boards, completes...

PowerDNR HalfRACK

Half-width 3U Gigabit Ethernet Data Acquisition and control chassis allows the installation of up...

PowerDNR-MIL Rack

12- slot, Military style I/O rack with Military/Rugged 38999 connectivity, 100% COTS solution, su...

Related Companies

LiquidCool Solutions

LiquidCool Solutions is a technology development firm with patents surrounding cooling electronics by total immersion...

TEN TECH LLC

Is a mechanical engineering consulting company headquartered in Los Angeles, CA with operations in Billerica, MA, pro...

Curtiss-Wright Defense Solutions

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

Dspnor AS

Offers radar signal processing and distribution. The products interface to virtually any radar system in use today. T...

Southwest Antennas

Southwest Antennas designs and manufactures high-performance RF & Microwave antennas and accessories designed for tod...

Innovative Integration

  Since 1988, Innovative Integration has grown to become one of the world's leading suppliers of DSP and data ac...

CORWIL Technology Corp

CORWIL Technology, the premier US based, IC assembly and test services subcontractor, offering full back-end assembly...

Master Bond

For over 35 years, Master Bond has been supplying aerospace and defense manufacturers with custom formulated compound...

IndustryARC

IndustryARC primarily focuses on Cutting Edge Technologies and Newer Applications of the Market. Our Custom Research ...

United Electronic Industries Inc

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

Webcasts

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...

New Design Tools That Help You Develop Radar That Sees the Un-seeable and Detects the Undetectable

Xilinx EW/ISR System Architect, Luke Miller, has new tricks and he’s going to tell you all about them in a new Xilinx Webinar—for free. His Webinar will cover new ways to implement Radar functions including ...
Sponsored by:

Press Releases

CURTISS-WRIGHT AWARDED CONTRACT BY SIERRA NEVADA CORPORATION

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...

METADATA SUPPORT ENHANCES INDUSTRY-LEADING HD VIDEO MANAGEMENT SYSTEM FROM CURTISS-WRIGHT

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
file

Download Our Apps



iPhone

iPad

Android

Follow Us On...



Newsletters

Military & Aerospace Electronics

Weekly newsletter covering technical content, breaking news and product information
SUBSCRIBE

Cyber Security

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

Defense Executive

Monthly newsletter covering business news and strategic insights for executive managers
SUBSCRIBE

Electronic Warfare

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

Embedded Computing Report

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

Unmanned Vehicles

Monthly newsletter covering news updates for designers of unmanned vehicles
SUBSCRIBE