Boom decade seen for U.S. electronic warfare business

WASHINGTON —The U.S. electronic warfare market is expected to grow rapidly over the next decade. Market analysts expect the Pentagon to sign multi-billion dollar contracts for systems. Foreign sales are also expected to increase.

The Forecast International/DMS predicts that the EW market will be fueled by upgrades of land, air and sea systems. The Newtown, Conn. firm said that platforms are becoming too expensive to replace.

"The next 10 years are definitely the decade of production and procurement for the U.S. defense electronics market," Forecast International/DMS analyst Richard Sterk said. "Based on current production alone, defense electronics is predicted to generate nearly $128 billion in forecast sales, averaging about $12 billion a year."

In its annual review of the U.S. defense electronics market, Forecast International/DMS said many of the next-generation defense electronics systems developed in the late 1990s are now being produced and deployed.

This latest production run is expected to continue until at least 2015. The result is that the EW market will become the healthiest and most profitable segment within the overall U.S. defense industry, the report said. The firm said procurement will surge in 2005 to $13.9 billion as the newest versions of military electronics equipment begin deployment. The following two years will be the peak and from 2008 a slight drop is expected.

"Over the next 10-year period a frenzy of electronic equipment procurement, upgrades, and modernization is forecast," Sterk said.

By 2010, the report said, the U.S. defense market will level off at $10.9 billion. For the next decade, production lines will be running at full speed, producing the latest high-tech equipment.

At that point, the market will decrease as money is pumped into research and development for more advanced systems. The firm said U.S. contractors must keep their systems affordable with advanced capabilities and off-the-shelf components.

"Systems and products will need to be modular and easily adapted to different wants and changing requirements, and upgrades a matter of months, not years," Sterk said.