Shrinking Fast and Smart in the Defense Industry

The U.S. defense industry is struggling to reorganize itself for growth, if not for survival. The disappearance of the communist threat and the desperate need to revive the U.S. economy have taken the defense industry for a wild pendulum ride, from the unprecedented Reagan administration buildup to deep cuts in the Defense Department budget. There have been downturns in the past, but this time the industry faces the most profound shift it has seen since the end of World War II. Despite the plunge in procurement spending, a large market will remain for those who survive. The question is what strategies will enable companies to prosper in a reduced and reshaped marketplace.