ABSTRACT
This chapter investigates the practical diversification opportunities for defense firms entering civilian/commercial markets. The reuse of defense industrial plants and equipment to produce new civilian products must take place in an environment where there are strong market opportunities. The analysis of civilian market opportunities for defense industrial firms reveals another important reason why the economic conversion approach has not been successful. There is a national glut and indeed a worldwide productive capacity surplus for shipbuilding, aircraft assembly, tank-automotive equipment, and many other heavy defense industries. Civilian plants in similar industries have been difficult to adapt to producing new products, as witnessed by the large number of abandoned industrial plants throughout the nation. The ability of a firm to transition to new products or industries often depends critically on specialized expertise in distinctive market niches within the new industrial sector. Defense industry has few characteristics which make it easier or more difficult than a civilian plant to convert to new uses.
