ABSTRACT
The defence industry has undergone significant restructuring since the end of the Cold
War. As NATO’s main threat has largely disappeared, the Western defence industry
found itself without a strategic competitor and hence without a need for continuous
innovation and rearmament. With the decrease of national defence budgets,
procurement of new weapons plummeted as well. The defence industry quickly
recovered after significant downsizing and major defence contractors on both sides
of the Atlantic are producing good revenues again because of the American and (to
lesser degree) European commitment to an RMA. A direct effect of the RMA is that
it makes warfare more capital intensive, as high-tech weapons and particularly the
necessary R&D connected to them, is much more expensive. This has led, according
to Ann Markusen and Sean Costigan, to ‘a more recent trend toward privatization of
defense research, services, and depots’, which is expected to continue (Markusen and
Costigan 1999, 9). From a Western defence industry perspective, the RMA first and
foremost means a different mode of doing business. Instead of manufacturing great
numbers of sophisticated platforms, which are no longer needed in high quantities
because of the doctrinal shift from platform-centric to network-centric operations
(Dombrowski, Gholz and Ross 2003), the new emphasis is on software and services
rather than on manufacturing. This might help the industry to remain healthy in the
long term and will further change the defence business, which is no longer the sole
domain of the traditional weapons manufacturers. The remaining defence companies
will increasingly move away from a manufacturing-based business concept to a more
service-based one. It will also become much more globally interconnected than it
already is and will have to change even more radically in order to survive.
