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Bleak outlook for global defense industry

June 12, 2013 By ei2admin

Deloitte LLP’s 2013 “Global Defense Outlook,” released June 10, 2013, is basically all bad news. Even the silver linings turned to lead when we talked them over this morning with the chief of the defense practice at the giant consulting firm, retired Air Force Gen. Charles Wald.

As US defense spending staggers, there are some other places on the planet where military budgets are on the rise, from the usual suspects in East Asia and the Persian Gulf to unexpected players in Africa. The amounts, however, aren’t anywhere near big enough to offset US and European declines.

Defense ministries and contractors have gotten used to powerful growth since 9/11. Indeed, the Stockholm International Peace Research Institute calculates the boom began even before that, with worldwide military expenditure rising every year since 1998 – until 2012, when they finally started down again. Of the (roughly) 195 countries in the world, just 50 account for 97 percent of global defense spending, the Deloitte study calculates, and, said Wald, that “top 50,” taken as a group, “are going to reduce their spending.”

That may or may not be good news for global peace, but it’s tough news for the defense industry.

It’s not just that the pie is getting smaller: Traditional defense firms’ percentage slice of that pie is shrinking as well. That’s because what little growth is happening is increasingly moving away from old-fashioned heavy metal – tanks, ships, planes – to information technology, from sensors to communications to cybersecurity. An invasion of IT companies from the much larger and more dynamic civilian economy hardly bodes well for traditional defense firms.

Keep reading this article at: http://breakingdefense.com/2013/06/10/deloitte-details-bleak-outlook-for-global-defense-industry/

Top 50 Defense Spenders Worldwide
Top 50 Defense Spenders Worldwide
Source: Deloitte LLP’s 2013 “Global Defense Outlook,” released June 10, 2013

Filed Under: Contracting News Tagged With: budget cuts, defense contractors, DoD, federal contracting, industrial base, spending

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