History Repeats (We Hope) Print E-mail
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Written by Mike Buetow   
Wednesday, 01 April 2009 17:30

Caveat Lector

Many industry business leaders are a bit shaken over the idea of a Democrat in the White House, and the notion that President Obama may lead broad and deep cuts to the country’s Defense Department budget is unsavory to the new president’s advocates within our industry, and downright unsettling to the most cynical.

For some time, military electronics has made up roughly 15% of the national defense budget. The US defense budget last year was around $715 billion – which is coincidentally in the neighborhood with the just-signed (and somewhat dubiously named) Recovery Bill ($787 billion). (For the record, I’m using figures from the National Defense Budget Estimates for Fiscal Year 2008 Greenbook, supplemented with additional US outlays for the Global War on Terror. The URL is defenselink.mil/comptroller/defbudget/fy2008/fy2008_greenbook.pdf.) That’s a pretty impressive neighborhood. Moreover, military spending has, to no small degree, rescued many US-based OEMs and assemblers from the telecom debacle of 2001-02.

Back in my standards-writing days, the task groups for soldering and workmanship were filled with DoD primes and subcontractors. (To large degree, they still are.) The rooms reverberated with complaints aimed with Tomahawk missile-like precision at the government procurement agencies over how onerous they were supposedly making the processes and related documentation. The rare consumer OEM who would wander in would inevitably get scared off, and a not-insignificant number of companies determined the (lower) margins and concurrent paperwork that went with supplying the Pentagon were hardly worth the trouble, especially when the computer and telecom markets were exploding in growth.

But as an old friend of mine who at the time was in a sensitive procurement role would confide, those who stuck it out did so because supplying to the government meant two things: cash flow even in bad economic times, and the promise of future business.

Fast-forward to 2009, and company after company is aggressively seeking ITAR registration and going after military contracts like US Rangers with Osama Bin Laden in their sights. For many executives, Defense programs are the difference between running a high-tech company and managing a McDonald’s. So it is understandable that even to the least skeptical of the Obama administration, the prospect of the military buffet line suddenly being yanked away is jarring.

But I would offer this: At a minimum, we’ve learned President Obama is a student of history. Much of his presidential campaign and post-election strategy has echoes of great visionaries who preceded him, like Lincoln and Kennedy. Although Obama is tied for obvious historical reasons to the former, insofar as our industry is concerned, the latter may be more instructive. For it was Kennedy who recognized that the Soviet Union represented a clear and present danger to the US, and that future battles would be fought not necessarily with boots on the ground but in the skies, and even in space. He impressed on the nation the idea that putting a man on the moon would be the single feat that could catapult America into the lead in the technology race.

But clearly the race was never about planting a US flag on the moon. It was about conceiving and building the instruments needed to ensure military superiority. To do that, Kennedy first had to inspire a somewhat trepid citizenry toward the pursuit of engineering and basic science research. He did so by wisely making space – not Europe – the next battleground.

You need not be a student of history to know we still revel in the advancements of that time. One of the best-selling items during the past holiday season was the Garmin GPS. That novel idea dates to the 1950s, when a Raytheon scientist proposed it for a missile guidance system. And it’s hard to board a plane without seeing an array of passengers outfitted with noise-canceling headphones, another NASA development. I have confidence, given President Obama’s previous nods to history and his penchant for listening to his advisors, that he will recognize these facts.

This time, the financial disaster facing many companies in electronics is not of our making. Nevertheless, like Major Kong’s long trip to Earth on the atomic bomb in Dr. Strangelove, we are in for a bumpy ride. It says here, the new president won’t make it worse – let alone irreparable – by cutting the very funding that makes our nation secure and our technology the most advanced in the history of the world.

Last Updated on Wednesday, 01 April 2009 11:50


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