Breaking Defense Publishes Grundman Opinion, “Bellwethers Of The Post-Afghan Defense-Industrial Base”

15 July 2014 • 0 Comments

Writing as part of a series on Reaping the Benefits of a Global Defense Industry, Steve Grundman observes that “After three years of the ‘age of austerity’ in Western military spending, investors’ imperatives and corporate strategies indication of how the defense-industrial base will evolve over the next decade. Investors want public companies that demonstrate an attractive risk-adjusted total return, not just M&A-fueled arbitrage plays. In response, companies are husbanding or harvesting their financial strength by making cautious choices about the strategic direction and capital deployments of their companies. But the customers — the Defense Department and Intelligence Community — want offerings that reflect more commercial-styled innovation, not just simple cost-reduction.” Consequently, says Grundman, “key segments of the market are witnessing the entry of competitors who differentiate by a ‘better-quicker-cheaper’ proposition that is taking share from incumbents still indulging the mantra ‘higher-faster-farther’. A decade from now, he concludes, “the defense industry will comprise more varied companies and competition dynamics than those that arose from the post-cold-war restructuring. Among the forces driving this will be the success of entrants employing commercial technologies and using private capital to address the still-challenging problems of defense, space, and security.”


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