In 2017, examining the dynamics of the aerospace and defense (A&D) sector, we emphasized the need for global companies to focus on building relationships with defense agencies around the world. We said they should seek entrées into new lucrative markets even as their U.S. and E.U. business remains flat.
That assessment is still pertinent in 2018, even in the face of expanded U.S. defense budgets. There are many uncertainties surrounding how that money will be spent. For example, will the Pentagon return to the days of traditional long-term weapons development programs? Or will it take the more likely course of pursuing new partners — either legacy players or nontraditional entrants — that can invest in creative technology solutions and deliver them faster and cheaper? Another uncertainty involves the European Ministers of Defense, who are joining together as a bloc to increase investments in military equipment. Digitizing the armed forces and lowering procurement expenditures on big ticket items are priorities for them. Will this change leave A&D companies following traditional paths of product development out in the cold?