At the start of the 1990s, the post-Cold War world looked very different. The nature of warfare had prompted a move away from large arsenals of traditional weapons to new innovative weapon systems promoting rapid deployment and extreme precision. At the same time, new shared risk and reward agreements and strategic alliances were becoming increasingly popular to reduce the risk associated with major procurement programmes.
The defence industry has evolved dramatically as a result. Twenty-four of the 100 largest defence companies in 1990 had left the industry by 1998.
What now? In 2006, defence spending is being adjusted to focus on more flexible, responsive and mobile force structures with an increasing focus on logistics and lifecycle support. New methods are being used to develop, acquire, finance and support defence equipment, including a determined effort to make wider use of cheaper, non-specialised Commercial, Off-The Shelf (“COTS”) technology wherever possible.
Aerospace & defence challenges
The implications of these changes for contractors are set out below and should be the five main elements of any defence contractor’s business strategy:
Civil aerospace is also undergoing significant changes. With a plethora of new aircraft launches —
ranging from the Airbus A380 and the A350 to the Boeing 787, from the Embraer ERJ 170/175 and forthcoming ERJ 190/195 to the Bombardier ‘C’ Series —
suppliers are emerging from recession to face a major surge in activity.
However, suppliers are now being asked to accept more risk, to take on wider responsibility for managing the supply chain and to globalise their operations. A major question arises: Has the civil aerospace supply chain the capacity, the capabilities, the responsiveness and the financial viability to respond?
How PricewaterhouseCoopers can help you
Our aerospace and defence industry professionals can assist you in maximising the opportunities and meeting the challenges inherent in today's civil and defence industries.
