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.