Army cuts pose threat to makers of tanks, guns as ground wars recede

http://www.adn.com/article/20150708/army-cuts-pose-threat-makers-tanks-guns-ground-wars-recede

Army cuts pose threat to makers of tanks, guns as ground wars recede
Benjamin Katz
Bloomberg News
July 8, 2015

LONDON -- Western suppliers of armaments spanning battle tanks to ammunition and soldiers' ground kits face the risk of collapse if consolidation doesn't accelerate in the shrinking land-warfare market, military chiefs said.

The U.S. is examining how funds can be stretched to sustain manufacturing capabilities, though without mergers to rescue smaller players the supply-chain's ability to ramp up output in response to any new ground threat may be harmed, officials said. General Dynamics Corp. and BAE Systems Plc may be among buyers.

Land warfare has become less of a priority for the U.S. and its allies following the withdrawal of forces from wars in Iraq and Afghanistan that were heavily weighted toward armored vehicles and ground troops. That's led U.S. spending on land capabilities and services to tumble $10 billion since 2010 to $21 billion last year, according to defense analysts IHS Jane's.

"We have some instances where you have very small second- and third-tier vendors who, because they no longer have that work, go out of the business," Michael Williamson, the U.S. Army's principal deputy for acquisition, said in an interview at a Royal United Services Institute conference on land warfare. "The challenge for us is understanding the supply chain well enough to know where you have that kind of vulnerability. Cuts are going to happen: understand where you should not cut."