In the News

August 3, 2014

Grundman: “Companies [Should] Look for Ways to Diversify”

By Steven Grundman

Defense News quotes M.A. and George Lund Fellow for Emerging Defense Challenges Steven Grundman on the increasingly blurred lines between commercial and defense businesses: 

Those who watch the industry agree: Change is coming, and companies that don’t react appropriately could get left behind.

“As a generalization, the defense industry and the defense industrial base would be well served by an industry whose structure had more exposure to commercial markets and commercial technologies than our mostly pure-play [defense] companies that comprise the top tier of the industrial structure today have,” said Steven Grundman, a former Pentagon industrial policy chief now with the Atlantic Council.

He warns that the days of pure defense firms are endangered.

“Being a pure-play defense company works great when the defense budget is growing at 6 to 8 percent a year, but the other side of that coin is that when growth stops, you’re fully exposed to a flat market,” Grundman said. “I don’t think there is as much room in the healthy defense industrial structure for pure-play defense companies as we have today.

“As a matter of corporate strategy … I think all the companies ought to be looking for smart ways of diversifying,” he said.

Read the full article here.

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