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July 26, 1990

US DEFENCE CONTRACTORS TREAD ON TOES OF CONTRACT MANUFACTURERS IN BID FOR WORK

By CBR Staff Writer

Not surprisingly, the easing of the Cold War and subsequent cutting of military budgets is taking its toll on defence manufacturers. But attempts to boost falling revenues are having a domino effect, and other sectors of the computer industry have noticed that defence manufacturers are becoming more prominent in the world of contract manufacturing. Yet, as Electronic News points out, if Department of Defense companies are to diversify successfully, they will have to adjust to a culture that doesn’t endorse overruns and escalating costs. Another factor that could hinder defence contractors is the rapid rate of turnaround in the industrial market, something they are not accustomed to. Some newcomers acknowledge the question mark over their competitiveness, and admit that they probably couldn’t match established players in producing high-volume commercial boards. Nonetheless, there are opportunities to win contracts that require design and engineering expertise, especially from firms that want to reduce in-house efforts. Companies willing to turn a hand to contract manufacturing include Norden Systems, Martin Marietta, and IBM’s Federal Sector division. All have spare capacity and claim to have keen design and engineering skills that could be applied outside the military.

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