In the years since the Cold War ended, the number of system integrators in many segments of the defense industry has declined significantly. A dozen missile producers became four, six naval shipbuilders became two, and the ranks of military aircraft manufacturers were reduced by half. However, the military electronics sector remains overcrowded with competitors. Five separate teams are bidding for the Army’s Common Infrared Countermeasures program and four are chasing the Navy’s Next Generation Jammer. If major new program starts such as these were occurring regularly, maybe all the current participants in the military electronics market could survive the coming downturn. But new starts are growing rare, so sector consolidation is likely to begin in earnest this year. I have written an assessment of the challenges facing military electronics players for Forbes that can be found here.
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