United States Defense Industry Slowdown to Continue

By Michael Foster, Big4.com Blogger

The United States defense industry will continue to face headwinds as defense spending continues to slow. This is the conclusion of an upcoming mid-year overview report of the industry, according to Deloitte Head of Aerospace and Defense Practice Tom Captain, who told AOL.com that more layoffs in the defense firms are coming. Adding together losses in 2011 and sequestration in 2012, “the defense industry will have shrunk by about 25 percent. One in four defense workers, gone,” Captain said.

While Captain noticed that companies “are feverishly working on” growth strategies, he suggested that foreign sales to companies with growing defense budgets–he names India, the UAE, Brazil, Singapore, South Korea, and Japan–the reality is that it remains “a buyer’s market,” according to Captain. “The reality is that foreign military sales [are] promising, but it’s very competitive.”

Captain said that the so-called fiscal cliff, which includes sequestering funds and a drastic cut to the defense industry, would be “a devastating blow” to an already struggling industry. Captain said that dollar revenue shrank by 5 per cent, adjusting for inflation, in 2011, and that a slight increase in revenue in 2012 will not be enough for the industry to recover.