U.S. Defense Industry Flees The Country -- Gordon Adams, Foreign Policy
In search of greener pastures, Lockheed and friends venture abroad. But competition is stiff.
The defense drawdown is now well underway, and the defense industry is starting to pack up, if one is to believe what is being said this week at the Paris Air Show.
Defense budgets peaked in FY 2010, including war funding, and have been down about 10 percent in constant dollars. Factor in the budget sequester for this year, which looks like it will hang on through the rest of the fiscal year (and maybe make a repeat appearance next January), and the defense budget will have fallen 24 percent in constant dollars from their height.
The future does not look different. If the sequester remains, one can expect another roughly $500 billion to disappear from projected defense budgets over the next nine years.
Oddly, defense contractors seem to be doing OK, so far. Sales had declined a bit even before sequestration set in, but profit margins are holding strong for the big guys -- Lockheed Martin, General Dynamics, Raytheon, Boeing, Northrop Grumman, L3.
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My Comment: Bottom line .... the U.S. is running out of money to fund it's defense budgets.
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