http://worldcat.org/entity/work/id/30426926

A method for industrial base analysis : an aerospace case study

Declining DoD procurement outlays will cause a loss of business by defense contractors that may affect the future capability of the defense industrial base to build advanced weapon systems in the quantities required and at a reasonable price. A particular concern is the health of the subcontractor industrial base, which provides critical parts and technologies to prime contractors and is less visible than major prime contractors. This report presents a method to assess the impact of DoD budget cuts on both prime contractors and their first-tier subcontractors. The method considers supplier- contractor relationships, by weapon system, and builds a time profile of revenue for each prime contractor and subcontractor depending on the outlook for each program in which they participate. This report illustrates that method for the aircraft sector. However, the model could be extended to include the majority of programs in all commodity sectors. The model could then be used to assess the impact of its budget decisions on any particular sector and/or on the entire industrial base. For the major aircraft systems we studied, our model indicates significant economic turmoil underlying what, in the aggregate, is a relatively stable defense industry sector. Almost certainly, this turmoil contains a mix of normal market shifts that DoD need not be concerned about, as well as potentially critical resource losses of production plants or labor skills that DoD should monitor. While the various findings we present are not conclusive for all defense industries (because of the limited data available to our model), they illustrate the usefulness of our model as an analytical tool and do warn of a significant realignment in the aircraft industry.

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