New York, N.Y. − Although overall revenue growth in the aerospace and defense (A&D) industry is projected to grow five percent in 2014, global revenues for defense companies is on a downward trend, falling 1.3 percent in 2012 and 1.9 percent in 2011, according to Deloitte Touche Tohmatsu Limited (DTTL). The good news: Commercial aerospace demand continues to grow.
While global defense spending is shrinking due to reduced armed conflict in Iraq and Afghanistan and cost concerns, according to DDTL, defense spending is increasing in several regions including the Middle East, India, China, Russia, South Korea, Brazil, and Japan. DDTL’s report 2014 Global Aerospace and Defense Outlook also reveals that global revenues for defense companies in 2013 will fall about 2.5 percent. Analysts believe the continued decline in military spending will result in new revenue streams for the military/aerospace industry in the areas of intelligence, precision strike technologies and cyber security. The report also noted potential opportunities in adjacent markets, new commercial ventures, and acquisitions of synergistic businesses.
“It is anticipated that global revenues for the defense sector will track to similar levels as in the past two years, particularly in the U.S. and Europe,” said Tom Captain, DTTL Global Aerospace and Defense Sector Leader, in a statement.
Still, the report finds there is significant demand for new commercial aircraft. DTTL projects high single to double-digit growth rates in the commercial aerospace subsector in 2014.
The commercial aerospace sector is expected to set records for aircraft production, driven by the “accelerated replacement cycle of obsolete aircraft with next generation fuel-efficient aircraft, and growing passenger travel demand, especially in the Middle East and the Asia Pacific regions,” said DDTL.
This demand also is expected to drive improvements in several areas: engineering design, manufacturing, and supply chain management capabilities.
“2014 and the rest of the decade promises to deliver even more exciting technology innovations that will focus on the way consumers travel by commercial aircraft, communicate via satellites, shop over the internet, conduct armed conflict when necessary, and assist with humanitarian missions to far reaches of the globe,” stated Captain.