Military And Defense Markets: Adjustments, Opportunities, And The Future

There’s really no need to beat a dead horse here — we all know military spending is down significantly. Anyone whose bottom line is tied to defense spending is feeling some level of pain right now. Those of us who made the trip to SPIE’s Defense, Security, and Sensing (DSS) show saw firsthand the significant impact of sequestration, mainly in the form of travel restrictions placed on U.S. government employees. The usual suspects from White Sands Missile Range, Lawrence Livermore National Labs, the Naval Research Laboratory, and other facilities were nowhere to be found on the exhibit floor. Everyone I spoke with was still satisfied that they made the trip, but a little less optimistic about the future of the defense space. I had a chance to sit down with several defense supplier executives to see what their thoughts were on the recent DoD budget cuts, possible areas of opportunity within the space, and an outlook on its future.

How have the recent budget cuts within the DoD affected your business?

Bob Struthers, executive VP of business development, PD-LD: As a component supplier, most times several levels removed from the primes, cuts in defense spending on systems have significant effects across all aspects of our business. Any reduction in system production means uncertainty in vital supply chain communications from customers regarding actual quantities needed and, most crucially, when they are needed. Forecasts constantly shifting to the right for the prime can put forecasts at the end of the supply line into the next year. All of this can delay or put off key purchasing, production scheduling, and hiring decisions. While the defense budget cuts to the large primes make more of the headlines, commercially oriented instrument manufacturers can still take a revenue hit if their defense segment sales of COTS equipment for R&D do not materialize in a given fiscal year. This obviously has a negative impact across the supply chain for innovative next generation components/instrumentation developments.

Joe LaChapelle, VP of business development, Voxtel: We’ve seen three things, primarily. First, schedules for funded programs have been delayed or pushed out — in some cases, it would appear, indefinitely. For the programs whose funding hasn’t been pushed out, there has been a drastic increase in competition for those ever-important R&D dollars. Lastly, we’ve noticed that a lot of people are moving around. Longtime points of contact within organizations seem to be changing almost on a weekly basis.

What adjustments have you had to make with the recent cuts within the DoD’s budget?

Dan Adams, director, Exelis Precision Optics: From a business development perspective in the optics arena, we are working to find business opportunities that are not impacted by the DoD budget cuts, and we are especially keen on finding commercial opportunities. While those opportunities do exist, we have had to be a bit more aggressive in seeking and securing them.

What are the emerging areas of opportunity in the military/defense market?

Adams: We have identified a number of opportunities with high-strength windows. High strength windows are created from ceramic spinel material and polished using optical finishing. When polished and incorporated into transparent armor systems, curved spinel is the only scalable material that can reduce armor weight and thickness by 50% to 60% and maintain ballistic protection compared to today’s traditional glass-based armor. This technology has applications in military vehicles, aircraft, maritime, and space platforms.

Vincent Farley, business development manager, Telops: We have seen the best growth with the LWIR hyperspectral imager as a multi-application tool. Customers show a growing interest in LWIR as the number of problems efficiently solved by the technology is growing, making the investment increasingly valuable.

Struthers: Emitters and detector products are used in several secure communication systems required in ever-increasing ISR (intelligence, surveillance, and reconnaissance) focused defense system deployments. Optical communication gear is more important now to the network centric battleground than ever. In addition, threat detection, explosive residue, chemical agents, and other hazmats require highly sensitive and portable spectral instruments containing laser sources.

LaChappelle: 3D imaging seems to have made an impact, and with that, the need for active and passive sensors has increased. The benefits of SWIR 3D imaging have gotten louder over the years as well, so we’re seeing more in that arena. SWaPc (size, weight, power, and cost) seems to be the top driving factor in almost every facet of emerging products for this market.

Michael Allen, director of marketing and product development, Ocean Optics: Non-invasive methods of detection like Raman and fluorescence spectroscopy offer a tremendous benefit to the threat identification market and homeland security applications. In the past, instruments that service these markets have been large and complicated; they need to be small and flexible. I see the greatest opportunity for growth in miniaturization and simplification of these technologies. Smaller/faster/better seems to be the driving force right now for this group of customers.

How do you see the market changing over the next 10 years?

Allen: Like any other organization, I am sure the military and defense markets will be looking to do more with less — less people and less funding. I can see the need to make our technologies fit these demands. Multi-purpose and multi-measurement systems will be important. As optical technologies move from the lab to the field, careful consideration has to be given to the customer experience and how the design can impact the performance and flexibility.

Struthers: Truly, with growing uncertainty in available funding and which platforms or products will make the cut, forecasting the next 10 weeks is as much a challenge as looking ahead 10 years. But that aside, ISR and more secure ways to communicate the ISR will minimize escalation of hostile events in the future. Spectroscopic and imaging systems capable of better feature detection over longer distances and made with best practices to advance all SWaP-C (size, weight, power, and cost) requirements will be in high demand for the foreseeable future.