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REGIONAL AIRCRAFT MARKET STABILIZING; LONG-TERM GROWTH PROJECTED
Sep 23, 2016
FORECAST INTERNATIONAL: INSATIABLE DEMAND FOR DATA AND CONNECTIVITY DRIVE COMMERCIAL SATELLITE MARKET
Sep 12, 2016
GLOBAL DEFENSE MARKET ON UPSWING AS ASIA SPEARHEADS GROWTH
Sep 08, 2016
FROM CIVIL DISOBEDIENCE TO TOTAL WAR – THE FLOW OF INFORMATION REMAINS PROFITABLE
Sep 01, 2016
FORECAST INTERNATIONAL: 15-YEAR WORLD AVIATION GAS TURBINE MARKET WORTH A STAGGERING $1.2 TRILLION
Aug 22, 2016
FORECAST INTERNATIONAL PROJECTS NAVAL RADAR MARKET WORTH MORE THAN $13 BILLION OVER 10 YEARS
Jul 18, 2016
SMALLSATS PLAY GROWING ROLE IN $29 BILLION REMOTE SENSING SATELLITE MARKET
Jul 13, 2016
FORECAST INTERNATIONAL: F-35 LIGHTNING II TO DOMINATE FIGHTER MARKET
Jul 12, 2016
FORECAST INTERNATIONAL PROJECTS $2.74 TRILLION LARGE JETLINER MARKET OVER NEXT 10 YEARS
Jul 11, 2016
FORECAST INTERNATIONAL EXPECTS AIRBUS AND BOEING BACKLOGS WILL DECLINE IN 2016
Jun 16, 2016
U.S. NAVY'S NEXT-GEN JAMMER TO LEAD 10-YEAR, $5 BILLION ELECTRONIC ATTACK MARKET
Jun 06, 2016
ELECTRONICS CONTINUE TO DOMINATE THE LANDSCAPE, WHILE SLEP LOOMS AS A PRIORITY FOR THE FIGHTER/ATTACK/TRAINER R&M MARKET
May 09, 2016
FORECAST INTERNATIONAL SEES SYRIAN CONFLICT DRIVING NEIGHBORS' SECURITY POSTURES
Mar 28, 2016
U.S. DEFENSE ELECTRONICS – SIGNS OF GROWTH AS BUDGETS REMAIN TIGHT
Mar 21, 2016
FORECAST INTERNATIONAL: CHANGES IN COMPETITIVE LANDSCAPE HIGHLIGHT MEDIUM/HEAVY MILITARY ROTORCRAFT MARKET
Feb 22, 2016
FORECAST INTERNATIONAL INTRODUCES DYNAMIC NEW SITE; SEES BRIGHT FUTURE FOR POWER & ENERGY MARKETS
Dec 08, 2015
BIZJET PROSPECTS BRIGHTEN AS U.S. CUSTOMERS RETURN TO THE MARKET
Nov 17, 2015
REGIONAL AIRCRAFT MARKET READY FOR TAKEOFF
Nov 09, 2015

Press Release

Contact: Shaun McDougall, International Military Markets Analyst
Phone: (203) 426-0800
Web site: www.forecastinternational.com
E-mail: shaun.mcdougall@forecast1.com
Forecast International, Inc.
22 Commerce Rd. Newtown, CT 06470 USA
 

FOR IMMEDIATE RELEASE

Department of Defense Fears the Budget Axe


NEWTOWN, Conn. [December 16, 2010] — According to Forecast International's latest analysis of the U.S. defense market, the DoD budget is facing mounting pressure from both sides of the aisle as lawmakers struggle to rein in trillion-dollar deficits. “The extent of the damage remains to be seen, however, as there is a fundamental disagreement over whether the Pentagon’s coffers should be subject to the same scrutiny and cuts as non-security budgets,” says Shaun McDougall, Forecast International's North America Military Markets Analyst and author of the report.

What is clear is that DoD spending will be constrained in the years ahead, especially when compared to the expansive budget growth over the past decade. The White House projected about 1.8 percent real growth in FY11; growth is then expected to fall to 1.1 percent in FY12 and to below 1 percent after that. Furthermore, war funding will taper off as the U.S. completes its mission in Iraq, though volatile conditions in Afghanistan leave some budgetary questions unanswered.

This top-line growth will be unable to support current DoD requirements, as Defense Secretary Robert Gates has claimed the Pentagon will require around 2 to 3 percent budget growth above inflation to sustain the military force structure. He has laid the groundwork for a budget savings initiative under which the DoD would make significant cuts to operations & maintenance, contract services, and overhead in order to transfer over $100 billion to force structure and modernization efforts. The plan is not absent shortcomings, such as the fact that the majority of savings have been pushed to the outyears. In addition, there is a growing concern that the services could lose some or all of their savings as the government attempts to pay down the deficit.

"What is clear for now is that the Pentagon has lowered its expectations and is adopting a planning construct that assumes minimal budget growth," says McDougall. The DoD also considers maintaining and modernizing its force structure a top priority. Although there is often little in terms of low hanging fruit when it comes to rising personnel costs, the DoD has shown that it at least intends to make sacrifices in order to prevent cuts to its acquisition budget, and indeed to provide substantial growth to support its wide-ranging weapons programs.

These fiscal uncertainties are especially troubling for a defense acquisition system that has been plagued with severe cost growth. Secretary Gates has said that affordability must be considered a key parameter throughout the acquisition cycle, which will inherently limit the DoD's ability to modify program requirements or take risks with technologies or schedules.

A number of major weapons programs are in the offing, including the SSBN(X) ballistic missile submarine, the Ground Combat Vehicle (GCV), long-range strike platforms, a presidential helicopter, and more. SSBN(X) will strain the Navy's shipbuilding accounts, the former presidential helicopter program was canceled because of high costs, and lawmakers have already expressed concerns about the affordability of the GCV. With each of these efforts, "Designing to affordability, and not just desire or appetite, is critical," says Secretary Gates. What remains to be seen is whether the Pentagon can live by this philosophy, and whether it will be willing to walk away from programs that fail to meet these standards.

Forecast International, Inc. (http://www.forecastinternational.com) is a leading provider of Market Intelligence and Analysis in the areas of aerospace, defense, power systems and military electronics. Based in Newtown, Conn., USA, Forecast International specializes in long-range industry forecasts and market assessments used by strategic planners, marketing professionals, military organizations, and governments worldwide. To arrange an interview with Forecast International’s editors, please contact Ray Peterson, Vice President, Research & Editorial Services (203) 426-0800, ray.peterson@forecast1.com. Proprietary Special Research is also available. Contact Jonathan Watson, Managing Director, The Forecast Consulting Group (j.watson@forecast1.com). Questions regarding Sales may be directed to sales@forecast1.com.



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