Aerospace and defense electronics industry consolidation proceeding at a rapid pace

Posted by John Keller

Don't look now, but we're in the throes of a fairly substantial business consolidation in the aerospace and defense electronics industry. I know company executives have been nervous for a while now, what with threatened cuts in the U.S. Department of Defense budget, leaving few with any clear idea of where the cuts will come.

It's a fair bet that big new military programs will be hit the hardest from the defense cuts we know are coming. Less clear is how defense cuts will influence electronic component and subsystem suppliers, who as we speak are re-inventing themselves as key enablers for electronic systems upgrades that will keep existing platforms in the field for as long as possible to save money.

Another result of gathering defense cuts, as well as the continued sluggish economy, is a defense electronics industry consolidation. I don't have scientific evidence for this, but I know what I've been seeing for about the last three months in announced company mergers and acquisitions.

At Military & Aerospace Electronics we try to cover the most substantial company mergers and acquisitions that are relevant to our industry. I am not, however, claiming that we cover ALL relevant mergers and acquisitions, but we do our best.

Having said that, I counted nine mergers and acquisitions in September, four mergers and acquisitions in August, and eight more in July. That's 21 mergers and acquisitions in the last quarter, and that's also only counting what we have covered at Military & Aerospace Electronics. The actual number is mostly like higher.

When's the last time anyone in our industry has seen industry consolidation happening at this pace? I can't remember when, myself. I just know it's going on, and I see few factors that cold slow the process down. The real question is what will our industry look like when mergers and acquisitions finally slow down.

I wish I knew, because it's starting to look scary out there.