With the usual tools for stimulating a weak economy largely exhausted, the Obama Administration may be belatedly considering how weapons spending by the Pentagon contributes to growth. It appears that weapons outlays have a sizable impact on job creation, export performance, and economic competitiveness. However, defense spending is a double-edged sword, because what the Pentagon giveth can also be taken away, and it is not shy about making demands on its suppliers. Oshkosh Corporation’s recent experiences with military contracting are a case study in how the Pentagon customer can rescue a company from insolvency one year only to deliver it into the corporate equivalent of purgatory two years later. I have written a commentary on the larger meaning of Oshkosh’s roller-coaster ride, which can be found here.
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