|Uncertain Times for Defense
|By Barry Manz
Suffice it to say that the last 18 months have not been the best of times for the defense industry, as partisan politics played havoc with the industry's future funding. As this is written, less than two months remain to the presidential election and sequestration of funds to the tune of $1.2 trillion remains in limbo. Half of that amount is scheduled to be automatically hacked from the defense budget over a period of 10 years. These two events will together play a major role in determining the future of the defense industry not just in the next few years but for a decade or more.
Not surprisingly, prime contractors have been preparing for the worst, especially those responsible for programs that are low hanging fruit for the chopper. However, the good news is that Intelligence, Surveillance, and Reconnaissance (ISR) may have a better chance of surviving in this environment than more contentious programs whose viability is more easily questioned. Electronic warfare and radar in particular are generally recognized as essential for all services including the Army for the first time in many years.
Nevertheless, with Republicans and Democrats eyeing each other across the aisle with nary a moderate among them, virtually anything is possible regardless of who wins the election. On the face of it, the Republicans have staunchly defended defense spending and have effectively removed it from any potential cuts. But talk is cheap in electioneering and when it comes time to make decisions, even they may waver.
If President Obama is elected to a second term, prospects for the defense industry are a lot less certain, and defense cuts are certainly not “off the table” in the mindset of the Democratic Party. Obama has not thus far demonstrated any zeal for gutting the country's defenses and doing so would be both politically unsavory as companies throughout the country provide either hardware, software, or services to DoD -- and most polls indicate most people want a robust military.
In any event, the country’s massive debt and budget deficits will require politically unpopular decisions. Equally important is the fact that until there is some level of certainty among defense prime contractors about the future of defense, they are likely to delay any major decisions. That certainly does not bode well for the RF and microwave industry, which counts on a reasonable level of consistency to remain healthy. With any luck, after the dust settles somewhat in February 2012, there may be some level of relief.
Barry Manz is a contributing editor to Microwave Product Digesting can be reached at email@example.com.