New Emerging Technologies Continue to Drive the Transformation of the Global Aerospace & Defense Industry
The global Aerospace & Defense Industry is forecast to reach US$2.5 trillion by 2024, driven by a medley of factors encompassing recovery in global defense spending; healthy commercial aviation revenue potential; and myriad technology trends which are transforming the supply chain, lifecycle dynamics of A&D products and services and operating & business models of A&D companies.
The Aerospace & Defense (A&D) industry is currently in the midst of a major transformation spurred on evolving technologies like smart wearable military technologies, 3D manufacturing/additive manufacturing, innovative battery technologies and cloud computing. Players in the industry currently operate in a market environment made challenging by factors such as taut economic climate that does not favor resource inefficiencies and wastages, rising competition, financial and budgetary constraints, growing burden of regulatory compliance, threat of disruption posed by digitization and globalization to information and operational management.
Manufacturers and service providers in the industry feel the competitive heat to innovate engineering and manufacturing processes and optimize supply chain to reduce costs, optimize production cycle and enhance efficiencies. IT agility aided by cloud computing, digital manufacturing, smart factory and internet of things (IoT), automation, and artificial intelligence (AI) and analytics for predictive insights and data for faster and accurate decision making are important technologies geared to help companies secure their future. The convergence of myriad disruptive factors will fundamentally change the structure and competitive dynamics of the A&D industry necessitating changes in business models for survival in a rapidly transforming landscape.
The industry has and will continue to witness increase in cross-border joint ventures (JVs) as companies struggle to navigate the complex technology and market terrain and create value. The opening up of international growth opportunities in India, China, and the Middle East is encouraging manufacturers from the mature North American and European markets to foray into these markets via collaborations, partnerships and geopolitical alliances. India will remain the leading market for JVs given the Indian’s government’s decision to relax foreign direct investment (FDI) rules in the defense sector.
Technology innovations and research and development activity also remains critical to the growth of the A&D industry. Innovation in defense technologies especially remains vibrant given its importance in influencing the future of military capabilities. A trend in this regard poised to benefit the industry is the emergence of multi-dimensional innovation. Unlike earlier, innovation in military-centric technologies no longer comes only from the defense communities, rather commercial firms, research institutes and academia are increasingly contributing to the innovation pool.
Continued recovery in global GDP promises an encouraging outlook for the A&D industry. In the commercial aerospace sector, the favorable economic climate lays the foundation for increased spending on travel and tourism and rise in air passenger numbers; recovery in global trade and increase in air cargo traffic; strong gains in airline profitability and new aircraft orders in line with the rise in fleet expansion plans as new cities served by airlines continues to grow. In the military sector, growth will be supported by growing defense spending among emerging Asian, Latin American and Middle Eastern countries and recovering budgets in developed countries like the U.S. where defense spending bottomed out during the years 2012 through 2016.
The United States represents the largest market worldwide. Asia-Pacific ranks as the fastest growing market with a CAGR of 8.2% over the analysis period led by factors such as the region’s potential to emerge as the world’s largest travel market led by China; escalating border tensions in South China Sea and among the Asian countries and the ensuing dedicated increase in defense and military budgets; growing role of electronic warfare systems; increased focus on missile development projects; rising investments in UAVs and drones armed with combat capabilities; and growing focus on C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance) as the backbone of modern military operations; and growing spending on smart aerospace electronics/avionics.
Major players in the industry include AAR CORP., Delta TechOps, Rockwell Collins, Inc., Textron Inc., L3 Link Training & Simulation, CAE, FlightSafety International Inc., Orbital ATK, Inc., Space Exploration Technologies Corp, Dassault Aviation SA, Msp Aviation, Inc., Esterline Technologies Corporation, General Dynamics Corporation, L3 Technologies, Inc., Planet Labs Inc., DigitalGlobe , Arianespace SA, Applied Radar, Inc., BAE Systems Plc, Ball Aerospace & Technologies Corporation, Bombardier, Inc., CFM International Inc., Airbus Group, Embraer SA, Leonardo S.p.A., GE Aviation, Honeywell International, Inc., Indra Sistemas, S.A., Israel Aerospace Industries Ltd, Kaman Corporation, Lockheed Martin Corporation, MBDA Missile Systems, Northrop Grumman Corporation, Raytheon Company, Rolls-Royce Plc, RUAG AG, Safran S.A., Thales Group, The Boeing Company, United Technologies Corporation, UTC Aerospace Systems and Pratt & Whitney among others.
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