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Mid-size Contractors are Adapting to New Demands If Washington remains in gridlock and sequestration be- comes a reality in 2013, the Department of Defense will see a $500-billion budget cut over the next 10 years. Even if sequestration is avoided, the defense industry is poised to experience large budgets cuts. Active troop size is being reduced as the armed forces transition from combat mis-sions to peacekeeping and anti-terrorism activities. With this pending strategic shift, it is reasonable to assume that budgets will be similarly affected. Altogether, this spells an uncertain future from the conning tower to the manufactur- ing ß oor. Challenging Þ nancial times provide the opportunity to broaden our market outlook and solve problems creative- ly. Mid-size companies, like Channel Technologies Group (CTG), can be more nimble than large contractors and can refocus their strategic vision to respond quickly to change. We already have the tools for success: expertise, affordabil- ity and quality control. The threat of sequestration is a re- minder to go back to business basics and look for ways to do better. Find efÞ ciencies, streamline operations, anticipate needs of the end user and identify new business opportuni- ties. Companies need to weather these near-term budget un- certainties, but amid all the headlines, this is how we should be doing business all the time. Changing Naval Needs TodayÕs naval military landscape is vastly different from that of the previous two decades. Previous naval operations targeting threats from global superpowers were executed in blue ocean space. Current missions in counter-terrorism and peacekeeping require a strong naval presence near coast- lines. This means the majority of todayÕs operations take place in shallow, littoral waters. This shift in strategy demands a shift in technology. Clut- tered by high levels of ambient noise and reverberation from activities such as commercial shipping, littoral waters un- dermine the strength of legacy naval technology optimized www.seadiscovery.com MTR #8 (1-17).indd 15MTR #8 (1-17).indd 1510/5/2012 9:21:12 AM10/5/2012 9:21:12 AM