U.S. Defence Industry Outlook

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U.S. Defense Industry Outlook
Weak, Less Competitive

by Anthony L. Velocci Jr.

04/14/00 06:27:41 PM U.S. EDT

The U.S. defense industry likely will be less competitive and financially viable in 5-10 years unless action is taken soon, according to a Defense Science Board study scheduled for release in mid-April.

An independent task force studying the health of the industry based its warning on several conditions currently afflicting many companies. They include, among others, the loss of experienced technical and management people and the difficulty in attracting new hires and experienced staff, the difficulty defense companies will continue to face in raising debt or equity capital, and the possibility that industry consolidation and vertical integration will put small companies at risk.

While the core technology base serving the Defense Dept. is sound now, its future viability is at risk, the panel also concluded. Some difficulties facing companies are the result of corporate miscalculations and program mismanagement, the study concluded. "At the same time," the study points out, "Pentagon policies and practices clearly exacerbate some problems and inhibit solutions for others."

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