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The Shrinking Defense Industry

August 18, 2011

I meant to do a more comprehensive post on this but may never get around to it. If you look at the major military industry companies from about WWII and onward you’ll notice a trend. The companies merged time and again to the point where 20 major companies do almost all contracting for US and European defense. Lockheed Martin is a prime example of a company that came out of several mergers. In 1995 when Lockheed merged with Martin Marrieta, L3 Communications ended up being a left over pool of divisions that didn’t fit in with the new merged company and went off to form its own defense company. These leftover divisions still rank in the top 10 of US defense contractors at something like 13 billion in sales to the US government.

Even crazier, in 1998 Lockheed tried merge with Northrop Grumman. That would have been a serious power house of US defense industry. Pretty much our entire air fleet is built by Boeing, Northrop and Lockheed minus a few older aircraft that are still in operation. Our entire ship fleet is built by Northrop and Newport News. A lot of employees from Raytheon and L3 and many other defense contractors actually staff our bases as the hidden employees working for the government. Even in cases where it would be cheaper to hire a direct civilian employee it’s not been the trend. Eisenhower’s warning was no joke. I think even Secretary Gates worried about these behemoths and their dominance. It’s harder to demand on schedule and under budget results when you are a hair’s width away from a monopoly.

2 Comments leave one →
  1. August 24, 2011 4:58 pm

    So what was Eisenhower’s warning?

  2. frautech permalink*
    August 24, 2011 8:09 pm

    Beware the growth of the military industrial complex.

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