Each year the Department of Defense issues a report to Congress analyzing the defense industrial base. Here is a link to the 2017 report, released in April 2018. What does the report tell us?
Workforce
61% of the aerospace/defense workforce is over the age of 45. About half the workforce is at traditional retirement age. However, “there is incredible competition to find qualified candidates with the required skills in engineering, manufacturing, and other STEM proficiencies in the market. A&D companies are being faced with a shortage of qualified workers to meet current demands as well as needing to integrate a younger workforce with the ‘right skills, aptitude, experience, and interest to step into the jobs vacated by senior-level engineers and skilled technicians’ as they exit the workforce.” Despite those challenges, the DoD continues to put unreasonable caps on the amount of compensation contractor employees may be paid.
Sector Analysis
The report addressed 10 industrial sectors. We summarize the report into a stoplight chart, based on our interpretation of the sector analyses.
Aircraft Primes: GREEN Lower-Tiers: YELLOW
C4 Primes: GREEN Lower-Tiers: GREEN
ElectronicsPrimes: GREEN Lower-Tiers: N/A
Ground VehiclesPrimes: YELLOW Lower-Tiers: YELLOW
MaterialsPrimes: GREEN Lower-Tiers: N/A
Munitions and MissilesPrimes: RED Lower-Tiers: RED
Radar and Electronic WarfarePrimes: YELLOW Lower-Tiers: RED
ShipbuildingPrimes: GREEN Lower-Tiers: GREEN
SpacePrimes: YELLOW Lower-Tiers: YELLOW
Organic IndustryPrimes: RED Lower-Tiers: N/A
Details can be found in the report (Section 8).
S2T2
We were interested (but not surprised) to note that the Sector-by-Sector, Tier-by-Tier (S2T2) analytical framework has been dropped from the annual report. Once touted as a breakthrough analytical approach, it appears that S2T2 has been relegated to the trash heap of failed bureaucratic initiatives.
Conclusion
If this annual report were not issued, would anything change? We think not.
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