Deloitte releases 2011 Midyear outlook for the global aerospace and defense sector
Paris, 17 June 2011—A new report by Deloitte Touche Tohmatsu Limited’s (DTTL) Global Manufacturing Industry Group, 2011 Midyear outlook for the global aerospace and defense sector, indicates a sense of unease in defense and optimism in commercial aerospace.
According to the report, it is anticipated that there will be an upswing in sales and production in commercial aircraft, principally due to the popularity of single-aisle aircrafts, for which rate increases have been announced. With passenger and freight traffic expected to grow faster than global GDP for the next 20 years, the maturing economies of China, India, and the Middle East are expected to take a higher percentage of commercial aircraft sales and deliveries. In addition, with the introduction of new single-aisle manufacturers, as well as next generation twin-aisle commercial aircraft products, suppliers worldwide are expected to increase production.
Regarding the global defense market, defense budgets in traditional markets are under pressure with lower budgets anticipated for the next few years. However, the report outlines technology requirements to address new adversaries and market opportunities in remotely piloted vehicles, cyber security, intelligence, surveillance, reconnaissance, mission operations, system integration, data fusion, directed energy, precision strike, and energy security.
“Given the high cost of expeditionary campaigns, innovations that will be attractive include increasingly higher bandwidth, precision, and accuracy in multi-spectral sensing capabilities, as well as over-the-horizon strike platforms that keep war fighters out of harm’s way,” says General (USAF ret) Chuck Wald, Senior Advisor and Director, Deloitte Services LP in the United States. “Products that are more energy efficient as well as remotely piloted on land, sea, and in the air will have competitive advantage.”
Traditional global governments face pressure to reduce defense budgets. However, according to Tom Captain, Global Aerospace & Defense sector leader, DTTL, there is a bright side for the global defense segment, with some markets showing promise.
“As India, Saudi Arabia, Brazil, and the United Arab Emirates face security threats, and their economies allow affordability for improved defense capabilities, new market opportunities arise for global defense contractors,” says Captain.
India in particular represents a near-term opportunity for global defense contractors. “With increasing security requirements for more sophisticated weapons systems, overseas players could leverage programs within the Indian aerospace, defense, and security industries to gain a cost advantage. Also, the indigenous industry is set to grow and will look at building capabilities,” says Captain.
To access 2011 Midyear outlook for the global aerospace and defense sector, please visit www.deloitte.com/adoutlook or www.deloitte.com/manufacturing for other manufacturing reports.
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