Logistics

Aerospace and defence industry charged up on growth prospects: KPMG study

V Rishi Kumar Hyderabad | Updated on January 17, 2018 Published on July 14, 2016

plac





The future looks promising for the global aerospace & defence (A&D) industry and executives see long-term growth opportunities, according to KPMG International.

In a report ‘Global Aerospace and Defence Outlook: The dawn of a new day,’ the consultancy firm said about two-thirds of the senior executives who participated in the survey said they are confident or very confident about their companies’ growth prospects over the next two years.

Aircraft OEMs and major defence contractors are particularly upbeat about their growth strategy with 100 per cent of the respondents from larger organisations (those with global annual revenues of more than $10 billion) feeling optimistic about their growth prospects.

According to the survey of 76 senior A&D executives from around the world, 41 per cent believe that growth will be an extremely high priority over the next two years. This is up from just 13 per cent last year.

Doug Gates, KPMG International Global Chair, Industrial Manufacturing and Global Lead, A&D, said: “A&D organisations will need to think about how they drive profitable growth in new segments while simultaneously managing costs within slower-growth segments. Executives are going to need to stretch their organisations outside of their comfort zone to explore new approaches and team up with new partners that can help to rapidly and cost-effectively exploit these emerging opportunities.”

Amber Dubey, Head of Aerospace & Defence at KPMG in India, said: “Given the pro-reform approach of the Indian government and recent changes in policies related to defence procurement and FDI, India is the place to be. The large orders placed by leading commercial carriers will lead to increased pressure from the Indian government on global.”

With economies remaining sluggish and defence budgets flat in the mature markets, many A&D organisations are now looking to new foreign markets to generate new revenue. In fact, more than nine-in-ten of the A&D respondents said they plan to expand into new geographic markets over the next two years.

Apart from the quest for revenue growth, lower manufacturing costs are a major driver behind the non-domestic investments for half of the respondents. Additionally, almost three-in-ten said that their foreign investment strategies are driven primarily by their desire to move closer to customers and to gain access to new markets.

The rapid adoption of sensors and Internet of Things (IoT) technology is capturing significant attention and investment from supply chain leaders.

Published on July 14, 2016
This article is closed for comments.
Please Email the Editor