Defense News quotes M.A. and George Lund Fellow for Emerging Defense Challenges Steven Grundman on whether United Technologies will divest its Sikorsky unit and what this says about the shrinking profit margins across the defense sector:
Steve Grundman, principal of Grundman Advisory and Lund Fellow at the Atlantic Council, sees another potential trend, one that could have negative consequences for the defense industry.
“While it’s not yet the rule, UTC’s announcement appears to repeat a template of multi-industrials exiting or curtailing their exposure to defense,” Grundman said. “It’s a playbook for the industry as a whole that I would regard as a regressive, unwelcome trend — the retreat from the defense market of multi-industrials — because I regard the participation of strong multi-industrial companies in the defense sector as improving its stability and propensity to innovate.”