The defense industry is involved in the research and development, design, and production of military materials, equipment, and facilities. The industry can be divided into two major segments: defense contractors and the arms industry.
Defense contractors are the organizations that provide products and services to military departments and governments. The arms industry produces guns, ammunition, military aircraft, and associated products.
Ongoing budget cuts and funding constraints are expected to be a major challenge for the defense industry over the next couple of years. Several major defense programs have been cancelled and new platforms lack funding support from customers.
Global revenues in the defense sector will likely continue to decrease in 2015 at an estimated rate of 1.3%. This will be offset by greater defense spending in the United Arab Emirates, India, Russia, Japan, and South Korea, as these countries work to equip their militaries with modern defense platforms and technologies.
The world’s biggest defense contractors include BAE Systems, Boeing Defense, General Dynamics, Lockheed Martin, Northrop Grumman, and Raytheon.