Next decade to see healthy spending for defense electronics

Military and aerospace companies over the next decade will see "a frenzy of electronic equipment procurement, upgrades, and modernization," says a top U.S. defense electronics analyst.

Apr 1st, 2001

By John Keller

NEWTOWN, Conn. — Military and aerospace companies over the next decade will see "a frenzy of electronic equipment procurement, upgrades, and modernization," says a top U.S. defense electronics analyst.

"The next 10 years are definitely the decade of production and procurement for the U.S. defense electronics market," says Richard Sterk, senior military electronics analyst for Forecast International/DMS in Newtown, Conn.

"Based on current production alone, defense electronics is predicted to generate nearly $128 billion in forecast sales, averaging about $12 billion a year," Sterk says.

The study points out that many of the so-called "next-generation" defense electronics systems developed in the late 1990s are now being built and deployed. This latest production run is expected to continue until at least 2015, making the U.S. defense electronics market the healthiest and most profitable segment within the overall U.S. defense industry — especially compared to the platform and weapons segments.

Procurement is to surge in 2005 to $13.9 billion as the newest versions of military electronics equipment begin to take to the field, the study says. The following two years (2006 and 2007) appear to be the peak.

From 2008 onward, a slight drop will culminate in a predicted market of about $10.9 billion in 2010. For the next 10 years, production lines will be running at full speed, producing the latest high-tech (and beyond) equipment.

However, at the end of this particular 10-year forecast period, this market should begin to decrease as money is once again pumped back into research and development for even newer "future technology" systems. Such an up and down cycle is a way of life in the defense industry.

"To be successful, defense electronics products in the next 10 years must satisfy a number of requirements, not the least of which will be high performance at a good cost," Sterk says. "The U.S. Department of Defense will require systems that can be tailored to its own particular needs and environment, making COTS technology important for quick development but by no means a 'get rich quick' scheme for companies.

"Systems and products will need to be modular and easily adapted to different wants and changing requirements, and upgrades a matter of months, not years," Sterk says, adding that these products will not be so sophisticated that training military personnel in their use is expensive, time consuming, or requires too high a level of education. In this respect, simulation technology will be increasingly important as a way of keeping training costs down.

In their annual "Overview of the U.S. Defense Electronics Market," Forecast International/DMS analysts overview the U.S. defense electronics market and its major segments. The overview examines lead products and systems in each field and identifies market trends.

It is designed to be used by market planners to gain insight into how the U.S. defense electronics market has been developing in recent years, and what factors will play important roles in the coming years.

For more information contact Forecast International/DMS by phone 203-426-0800, by e-mail at sales@forecast1.com, or on the World Wide Web at http://www.forecast1.com/.

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