When Defense News first hit the street in 1986, the Cold War was edging towards a close and thoughts here in Britain and elsewhere would soon be turning to how we could go about spending the surplus cash generated by the peace dividend.

Well, the Soviet Union did collapse, and the Berlin Wall with it, and governments pretty much across the West started to cash in by cutting back on military capabilities. It was a seemingly inauspicious time to launch a weekly defense newspaper aimed primarily at a Western industry about to be hit by a decade long decline in demand for their products.

But the industry has survived, as it always does, and Defense News, has survived along with it. The former survived in part, through a massive post-Cold War consolidation, while Defense News has thrived on smart reporting.

It has been a tough ride for some though, and it's been tough to report about jobs being lost and factories closing. Consider one General Accounting Office statistic I found on the internet: In the US alone tactical missile suppliers plummeted from 13 to three between 1990 and 1998. Other sectors have similar tales to tell.

Consolidation has been a key industry trend over the last 30 years and that’s continuing, albeit at a slower pace in the US where fears of reduced competition spur a more cautious approach to mergers. It’s been a similar story this side of the Atlantic, although in Europe the process has been slower, complicated not by competition concerns but the fact that many merger plans cross national borders.  That was vividly illustrated by the attempted Airbus-BAE tie-up, which was eventually sunk primarily by German government objections. (Some key BAE shareholders were not overjoyed at the prospect either.)

There have been success stories though. Missile maker MBDA wasmerged from four national industry leaders, and the recent tie-up of German armored vehicle builder Krauss Maffei Wegmann with the French state-owned land systems supplier Nexter shows what is possible.

Only the other day I was reminded that the case for consolidation in Europe remains strong when Italian warship building bosses at Fincantieri called for an Airbus-type solution to pull together a tie-up with French naval supplier DCNS and eventually others from  Europe’s fragmented, industry.

That might be a long time coming, but other possible tie-ups in Europe are probably being discussed right now. History proves as much. My contact book used to be filled with European companies I, and probably other reporters, didn’t think would merge. TGEC, DASA, CASA, Alvis , Plessey, Racal, Shorts, Kockums, DASA and Aerospatiale-Matra and many more  companies are history, having been  merged or acquired by the likes of BAE Systems, Airbus, Saab, Thales and others.

Increasing competition for export markets and too much capacity chasing too little demand from defense ministry’s across Europe continues to help make the case for consolidation; although for BAE it’s purchase of GEC Electronics also opened a window to the US market that it’s European rivals have never been able to match.

All the while, as companies combined and tried to find their place in this market, my colleagues and I have reported on a 25 year decline in military capabilities that is only now showing signs of being arrested by the threat emerging again from Moscow.

Defense spending is at last on the rise here, or at least stabilizing. But whether the increases can be sustained and are anywhere near enough to restore security levels to where they need to be to remains to be seen. A US analyst warned me earlier this year against getting too carried away over rising spending levels in the region. The first sign of renewed economic crisis in Europe could quickly see the Europeans revert to type and reverse the trend, he cautioned.

It’s consolidation of another kind, but we’ll have to wait and see whether calls by the Italians, Germans and French for closer military co-operation across the European Union amounts to anything, particularly with the departure of the British. This comes as most of Europe falls short of NATO’s modest target of spending 2 percent of gross domestic product on defense, so remarks about forming a credible European Union force best be taken with a grain of salt.

Whether it’s through NATO or the EU, or both, it’s not just about building European capabilities.Having  the political will to use the forces available will remain a difficult issue for most. I exclude particularly the French, probably the British and certainly a couple of Europe’s smaller nations from any criticism here.

What I will say, based in London, it has been a painful business reporting the British military decline since Defense News started reporting from here. Combat aircraft, destroyers and frigates, main battle tanks and most noticeably personnel numbers have all been cut sharply, with a modest effort to restore some capabilities in the 2015 defense review at least.

Now we have the possible fallout from Brexit to consider. The immediate impact is difficult to call. But as a remainer ( and, for the record, someone who voted to stay in the EU) I still have a nasty feeling that a continued collapse in the value of the pound against the dollar combined with a possible slow down in economic growth will translate into slowed defense procurement sooner rather than later. Next year was going to be a tough year for defense spending anyway. If sterling remains adrift it could get more challenging still.

Trevor Taylor, the defense management analyst at the Royal United Services Institute think tank in London, sent me some rough calculations recently: if the British currency nosed dived from $1.50 to $1.30, that would reduce the purchasing power of the defense budget by about 2 percent overall and double that for the equipment and support element of the budget. As this article was being written, the pound was trading at $1.21.

But hey, I’ll leave the final word on Brexit and defense to the reporter writing for the  50

th

Anniversary special of Defense News in 2036.

This article is part of a larger Defense News 30-year anniversary project, showcasing the people, programs and innovations from the last three decades that most shaped the global security arena. Go to defensenews.com/30th to see all of our coverage.

Andrew Chuter is the United Kingdom correspondent for Defense News.

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