2012 Global aerospace and defense industry outlook:
A tale of two industries
A new report by the Deloitte Touche Tohmatsu Limited (DTTL) Global Manufacturing Industry group entitled 2012 Global aerospace and defense industry outlook: A tale of two industries. This report indicates optimism for commercial aircraft sector/caution for defense, and flat financial performance in 2012 of the top global aerospace and defense companies. Despite the challenging environment, the aerospace and defense (A&D) industry is likely to continue to develop game changing technology innovations.
The commercial aircraft sector is likely to enter a prolonged up cycle in production in 2012 as a result of increasing demand for leisure and business travel, particularly in the Asia Pacific region, while the global defense market is expected to experience flat or declining growth due to anticipated decreases in military spending, principally in the United States and Europe. Continued global economic challenges coupled with revenue gaps and cost pressures may result in margin contraction for global defense players. As a result, the defense sector is likely to undergo more streamlining of its cost structure, divestiture of non-core assets, and additions of gap filling, as well as transformation acquisitions.
Overall, the financial performance of the top global A&D companies in 2012 is expected to be similar to 2011 performance, with the decline in defense revenues offset by cost-cutting and aggressive growth actions. In 2012, the A&D industry is likely to continue to develop game-changing technology innovations in areas such as cyber-security, directed energy, high-powered microwave weapons, hypersonic missiles, long-range and high-altitude unmanned aerial systems, and extraordinary software that can trace financial transactions of known terrorists.