The defense industry is notorious for its boom and bust cycles. Almost anything can affect it, including public policy, global affairs, technology, and funding. For some local economies that are heavy into the industry, this can, at times, cause economic uncertainty. Employment goes up and down, talent disperses, and the robustness of the local economy is at the mercy of the next congressional budget cycle.

Defense-based economies can find success and stability by diversifying vertically and horizontally through the industry. What do I mean by this? Every economic sector overlaps with others. Defense is a great example of this as it touches on everything, and that creates economic opportunities for communities.

To diversify vertically, look at what areas of defense your local businesses are currently serving. Also look at areas of the defense sector that could be served by the current assets in your community but are not. Try to attract growth opportunities that can take advantage of these assets as well as support the existing defense businesses. The goal would be to build a defense sector economy that is diversified on the supply chain front, from top to bottom.

Additionally, the workforce and other regional assets may be useful to other sectors/industries. Remember, defense doesn’t operate in a silo. It is a sector of the economy that cuts across multiple industries. Thus, understanding the full spectrum of industries in your area could yield non-defense related growth. The goal should be to have businesses with similar labor and other asset demands but do not depend solely on the defense industry. This would allow for workforce absorption during the bust cycles and add resiliency to the area’s economy.

Defense will always be an appealing target for many companies. But that target is often not as stable as many would like. By diversifying vertically within the industry and horizontally into industries with similar asset demands, a community can help shield itself against the pitfalls of defense spending cycles.

For more about defense community growth strategies or to learn about Ady Advantage and the services we offer, visit our website at or email us at [email protected]. I or a member of my team would be happy to speak with you.