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Drones lead the way to tighter defense budgets

Facing nearly half a trillion dollars in mandated budget cuts over the next 10 years, the U.S. Defense Department will spend more on technology like robots and drones -- and less on soldiers, ships, fighter planes and other conventional weapons. Here, a U.S. Marine-operated Raven surveillance drone prepares to land outside a Marine base on March 21, 2009 near the remote village of Baqwa, Afghanistan after flying a mission.

Kai Ryssdal: Today, Defense Secretary Leon Panetta explained how he's going to cut half a trillion dollars out of the Pentagon's budget over the next 10 years -- fewer soldiers, fewer big weapons systems and more technology. Robots, drones, and cyber-defense.

Our Washington bureau chief John Dimsdale explains the defense industry's going to have to change as well.


John Dimsdale: Secretary Panetta said the mandate to cut more than 8 percent from the budget required difficult choices.

Leon Panetta: The military will be smaller and leaner but it will be agile, flexible, rapidly deployable and technologically advanced.

The army and marines will lose 90,000 troops over the next five years, but still be larger than they were before 9/11. The Navy and Air Force will gain significant new investments in technologies. Sophisticated surveillance and attack drones will make up more of the military arsenal. That's a big change for makers of traditional military aircraft.

William Hartung: In an ideal world, a company would want to be in both lines of work.

William Hartung with the Center for International Policy says big contractors like Lockheed Martin and Northrop Grumman already make both. But drones cost one-fifth, or less, than fighter planes.

Hartung: If you're going to have significant slashes in a fighter plane program, you're probably going to lose more contracting money than you're going to gain in short-term, at least by building drones.

Plus, there's more competition in the drone-building business. A small California firm, called AeroVironment is making a bird-size drone that can be carried in a backpack, allowing soldiers to look over the next hill or building. Each cost about $120,000. Not the kind of multi-billion-dollar scale most big defense contractors are used to.

Hartung: It's a serious adjustment, because the companies thought the budgets were going to go up and up indefinitely and now they've had sort of a rude awakening.

In Washington, I'm John Dimsdale for Marketplace.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.

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