The end of the Cold War may have warmed relations between the superpowers, but it has sent a chill into a vital sector of the United States economy. The military's procurement budget is expected to decline by 30 percent before the end of this century, says Avraham Shama, a management professor at the University of New Mexico in Albuquerque. Defense contractors, who provide the military with everything from blankets to ballistic missiles, now face the prospect of diminishing sales.
Total conversion is the most risky strategy, because it's like starting a new business.
Retrenchment may enable a company to survive in the long term, but this strategy often succeeds at the expense of workers who are let go. Incremental conversion, on the other hand, allows defense contractors to move more slowly into new markets with fewer job losses. The Clinton administration has favored incremental conversion over the other strategies. Shama acknowledges that the administration's initiatives have been impressive when compared to the efforts of previous administrations, but he concludes that they remain insufficient to meet the challenges posed by the downsizing of the military's procurement budget. The desire to beat swords into plowshares is as old as civilization, but conversion of military resources into peaceful pursuits is not always successful.