ARLINGTON, VA, July 8, 2014 -- How should the defense industry adjust to greater economic globalization, with novel regional and functional challenges? How is the private sector going to manage decreasing national defense budgets while maintaining high levels of innovation, research, and development?
Those were just some of the topics which CEO Bill Lynn discussed at the Atlantic Council's Captains of Industry event, titled "The Globalization of the Defense Industry," on July 8, 2014. The speaking series provides a platform for senior defense industry executives to address the public interests their companies serve and the public policies that shape their markets.
The United States still maintains an extremely strong defense industrial base and is the leader in developing defense capabilities. However, budgetary restraints, technological shifts, and rising competitors will challenge that leadership going forward, Lynn said. Furthermore, other emerging threats, such as the increased presence of asymmetric weapons and the emergence of cyber as the fifth domain of warfare, underscores the national security imperative to maintain a high level of innovation.
As such, investing in research and development, promoting competition among contractors, and developing more successful management strategies are crucial.
Lynn also emphasized that a more global defense industry will lead to great benefits. For instance, enhanced competition will promote better products and prices; broader avenues for technology will be possible; and growing international markets will be accessible. Through a comparison to the development of the auto industry in the 1980's, Lynn showcased the advantages of globalization. Despite apparent differences – security requirements and concerns, as well as the need to protect certain technologies, are important aspects in the defense industry – a similar path could be taken. He argued that the Department of Defense must be able to adapt and move away from a "Cold War, export controlled policy" – and a world divided between the West and the East. "We are entering the fourth defense industrial base era," Lynn said, marked by globalization, increased use of commercial technology, shifting industrial structures, and integration of emerging technologies.
See Lynn’s slide presentation here.