Examples of these products include weather satellites and air traffic control systems. In addition, the Government iscurrently supporting these diversification efforts with programs such as the Technology Reinvestment Project. Smaller companies that served as subcontractors on large defense projects are also facedwith transition into a peacetime economy. They are finding fewer opportunities because prime contractors are reducing the number of subcontractors and are now competing more often for small projects, business they would not have considered biddingfor in the past. Downsizing is not an option for these firms, because they are already small.
Diversification is their only choice if they want to survive.
Another group of companies gaining prominence as a result of defense downsizing are spin-offfirms. These are companies that got their start using new technologies developed by large companies that did not want to commercialize the new technologies. Examples include a company that took sonar technology developed by a large defense contractorand used it to develop equipment to monitor environmental pollution. It is too soon to tell howsuccessful overall defense contractors will be diversifying into new markets. Most of the information in this section came from Pages, 1993.