• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • COMTECH banner

BATTLESPACE Updates

   +44 (0)77689 54766
   

  • Home
  • Features
  • News Updates
  • Defence Engage
  • Company Directory
  • About
  • Subscribe
  • Contact
  • Media Pack 2023

U.S. DEFENSE SPENDING TOPS OUT?

October 30, 2004 by

27 Oct 04. The FT reported that, “There never was a good war or a bad peace,” wrote Benjamin Franklin. Try telling that to US defence contractors. America’s military spending is running 50 per cent higher than in 2001. Not surprisingly, investors have pumped up the sector, especially since the start of the war in Iraq. Yet those same investors greeted last week’s mostly better-than-expected quarterly earnings from some defence companies with a distinct lack of enthusiasm. The biggest guns, including Lockheed Martin and Boeing, report this week.

One damper is that US defence spending may be topping out after three years of strong double-digit growth. The base budget for fiscal year 2005 (which began this month) is only about 5 per cent up on last year’s, although that may not be the final word. Defence is a priority in Washington and so unlikely to be a target for big cuts, whichever candidate wins the election. But both Republicans and Democrats are likely to try to keep a lid on increases in military spending which, at $437bn, made up about half of the amount the government classifies as discretionary outlays in fiscal 2004.

Uncertainty over the outcome of the election is another concern for investors – John Kerry has said he would spend more on troops and less on projects, such as missile defence, that directly benefit the big contractors.

With military revenues set to grow more slowly, some defence companies can look to civilian aviation as an alternative engine of growth. Honeywell, for example, reported third-quarter commercial aerospace sales up 17 per cent year-on-year, compared with just 3 per cent for defence aerospace. United Technologies also pointed to strengthening commercial aviation markets. Those two companies are active in upgrades and repairs to existing aircraft; stronger demand for new jets from the likes of Boeing could follow. Any business, though, is only as good as its customers. With many of the biggest US airlines in dire straits and high oil prices, there could be turbulence ahead in this market too.

Primary Sidebar

Advertisers

  • qioptiq.com
  • Exensor
  • TCI
  • Visit the Oxley website
  • Visit the Viasat website
  • Blighter
  • SPECTRA
  • Britbots logo
  • Faun Trackway
  • Systematic
  • CISION logo
  • ProTEK logo
  • businesswire logo
  • ProTEK logo
  • ssafa logo
  • AtkinsRealis logo
  • IEE
  • EXFOR logo
  • sibylline logo
  • Team Thunder logo
  • Commando Spirit - Blended Scoth Whisy
  • Comtech logo
  • GoExporting logo
  • ECHODYNE logo
  • Supercat logo
  • Galvion logo
  • Leonardo DRS logo
  • MTC logo
  • IDC logo
  • IDC logo
  • DVD2024 logo
Hilux Military Raceday Novemeber 2023 Chepstow

Contact Us

BATTLESPACE Publications
Old Charlock
Abthorpe Road
Silverstone
Towcester NN12 8TW

+44 (0)77689 54766

BATTLESPACE Technologies

An international defence electronics news service providing our readers with up to date developments in the defence electronics industry.

Recent News

  • EXHIBITIONS AND CONFERENCES

    September 21, 2023
    Read more
  • MANAGEMENT ON THE MOVE

    September 21, 2023
    Read more
  • CONTRACT NEWS IN BRIEF

    September 21, 2023
    Read more

Copyright BATTLESPACE Publications © 2002–2023.

This website uses cookies to improve your experience. If you continue to use the website, we'll assume you're ok with this.   Read More  Accept
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT