30 September 2017
Teal Group’s overall, cumulative forecasts indicate the military electronics market available to U.S. manufacturers will continue to rise slowly, while platform hardware procurements will decline. The shrinkage of new-platform hardware procurements began as long ago as the 1990s (remember the Cold War? The Peace Dividend? Backfire bombers, SS-20 MIRVs and Nuclear Winter?), and has shrunk again more recently after a hardware procurement surge for Iraq and Afghanistan war buys and then after-action refits (ground systems, especially, such as armored vehicles, MRAPS, base security, etc.).
The lull in new armor, ship, and aircraft buys may continue through this decade, as the Trump administration has not yet realized many of its campaign promises. In any case, increased defense budgets will likely still mean more upgrades before substantially increased new procurement programs. Recently, only the massively over-budget (and more delayed every year) Joint Strike Fighter (JSF) continues to lend health – or at least government money – to a weakened traditional defense industry, with nearly all other combat aircraft production for the U.S. ended. Naval ship and submarine builds continue at a slow pace, with even the Littoral Combat Ship (LCS) program now further truncated and new hulls kicked down the road for yet another “new concept” idea. Many new ground vehicle procurement programs, already stretched out post-Afghanistan, will see indefinite delays.
However, electronics funding will likely not decrease at all, and our cumulative funding forecast shows slow growth every year for nearly a decade, for several reasons. Five-year funding plans in recent budgets have continued substantial electronics increases. The April 2013 DoD budget cut a number of small electronics programs, but by the FY15 budget released in March 2014, most major and moderate electronics programs – even new and previously uncertain programs such as the U.S. Air Force finally beginning legacy fighter EW upgrades – survived with full funding. The FY16 and FY17 budgets continued most electronics programs as is.