This is not your father’s aerospace and defense industry. Chances are, soon it won’t be yours either.

The A&D sector is undergoing a once-in-a-generation change, a shift from one paradigm to another—or at least that is what practically every executive, analyst and consultant says, and more than a few government officials, too. What emerges and who inherits it are the great unknowns, but one thing seems certain: It is practically all up for grabs in a way not seen since after World War II.

“Things are changing and will change pretty fundamentally,” says Steven Grundman, Lund Fellow for Emerging Defense Challenges at the Atlantic Council.

Grundman should know. He was a Pentagon industrial affairs official during the Clinton administration when the last inflection happened, punctuated by the infamous “Last Supper” meeting between defense leaders and captains of industry that triggered the 1990s consolidation wave.

The next Last Supper moment has not occurred yet, says Pierre Chao, managing partner and cofounder of Renaissance Strategic Advisors. But it is coming: “We’re right on the edge of doing that,” he told an Aviation Week conference in November.

Capital Alpha Partners defense analyst Byron Callan echoes the sentiment. “It may be easy for investors to conclude that based on the last decade, defense is a stable, predictable sector,” he noted in October. “After all, with the exception of the spin-offs by Northrop Grumman of Huntington Ingalls and L-3 of Engilty, there really hasn’t been that much significant strategic movement by primes. But a deeper look suggests far more shifts in relative positions of defense primes, some of whom are no longer in business.”

Nor is the commercial side static. On the surface, record airliner orders stretching more than eight years at current production rates seem to promise growth, stability and predictability unseen in recent memory. But 2014 saw the beginning of the end-of-cycle debate in earnest, sparked by headline-grabbing cancellations by Emirates and others. Meanwhile, a years-long wave of acquisition roll-ups in aerostructures and maintenance sectors could be cresting as availability of bargain-level valuations and low-interest-rate borrowing wanes.

Where is the sector going? There are guideposts, starting with new technology that is well covered by this magazine. From the proliferation of composites to the adoption of additive manufacturing, they further include hypersonics, autonomy, unmanned and all things electronic.

But other factors also are increasingly affecting industry and the options afforded to customers. These include the evolution of companies as globalized and diversified conglomerates; the entrance of new players such as Google or SpaceX; the commercial side’s takeover of the research agenda; and the fact that publicly traded defense companies are as much or more beholden to Wall Street than to Washington (AW&ST Aug. 4, 2014, p. 52).

Washington is changing also, with so-called sequestration now a reality. The effects of the annual spending caps have pervaded beyond headline-grabbing showdowns on Capitol Hill and now are taking root in the Future Years Defense Program, the multiyear budget outlook from the Defense Department, and similar long-term budgets at the FAA, NASA and other agencies.

Even with new political leadership in 2017 and beyond, interest rates could begin rising significantly. When combined with baby boomers beginning to tap into Social Security and other perquisites, these costs will challenge any notion that moonshots or massive defense spending increases are around the corner, barring another Pearl Harbor or 9/11 event. But crises like Ukraine and the Islamic State, as well as the dawn of commercial space ventures and the economic growth underpinning airliner orders, suggest major cutbacks are unlikely, too.

Unable to wait for more clarity, companies continue shaping their portfolios, divesting businesses or “bolting-on” new units. All of these premises underpin this column, a new feature from Aviation Week, which celebrates its centennial in 2016. We don’t know where things are going, but we’ve seen it enough before to know we’re already on our way to somewhere new.

Please join us on the journey. 

A version of this article appears in the December 29, 2014/January 14, 2015 issue of Aviation Week & Space Technology.