For nearly a decade now, diversification has been the “D” word in the defense industry — the strategy that dare not speak its name. But conditions have deteriorated so badly in military markets that companies are contemplating expansion into adjacent areas, and even further afield. It’s not just that all the major drivers of demand — threats, politics, the economy — are signaling tough times ahead, but policymakers are making contract terms so unappealing that companies are reluctant to bid on any new starts. Most big military contractors have begun pursuing new opportunities outside defense, outside government, and outside America. Rhode Island-based Textron offers a good model of what sector players may one day look like, with broad exposure to defense and commercial markets, both at home and abroad. I have written a commentary on diversification for Forbes, which you can read here.
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