On the Challenges and Opportunities We See in the Defense Industry

The Pentagon was declared the big winner of the massive federal budget bill that Congress passed for fiscal year 2014. The spending bill approves $497 billion for the Defense Department, or about the same as in 2013. The Pentagon gets an additional $85.2 billion for war expenses — about $5 billion more than it requested.

Weapons manufacturers are not celebrating, though. Industry sees long-term decline, global trends that could upend the arms business, and a Pentagon customer that is becoming consumed by internal budget battles and is reluctant to commit to big-ticket programs.

The industry is indeed entering a period of change, and defense companies’ fortunes are tied to broader market shifts and government policies that could have lasting impact, more….

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