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.