U.S. Weapons Makers Prepare for Decade-Long Downturn
July 10, 2012
U.S. defense companies are trying to get creative as they gird for a decade of flat or declining military spending in Europe and the United States, eyeing more cooperation across borders, joint ventures, foreign sales and adjacent markets.
Dennis Muilenburg, president and chief executive of Boeing Co's defense division, said his company is trying to preserve current spending on research and development - and possibly increase it - by cutting jobs and closing facilities as it seeks to slash overhead costs by $2 billion to $3 billion.
He said the defense division had already cut 8,000 jobs and reduced its facilities by 10 percent. More cuts were likely in the future, he added, even if Congress manages to avert $500 billion in defense cuts that are due to begin in January, on top of $487 billion in cuts already on the books.
"We're anticipating that the defense budget downturn in both the United States and Europe is a longer-term downturn, so we expect that to be a relatively flat market for us over the next decade," Muilenburg told Reuters Insider in an interview.