Aerospace & Defense Industry Needs to Adapt to a
‘New Normal’ of Slow Post-Recession Economic
Growth, Reduced Defense Spending and Brutal
Competition, According to AlixPartners Study
l Keys to Competitiveness Include More Disciplined Program Management, Supply-Chain
Optimization, ‘Lean Engineering’ and Overhead Cost Control
l Pace of M&A Likely to Accelerate, with Aerostructures, Electrical Systems, Airframe MRO Seen as
Offering the Greatest Opportunities
July 06, 2010 10:38 AM Eastern Daylight Time
NEW YORK--(EON: Enhanced Online News)--Confronting a post-recession “new normal” environment likely to
be characterized by prolonged anemic demand, shrinking defense budgets and resulting brutal competition for
market shares, companies in the aerospace and defense industry need to move quicker and more decisively to
master disciplined program management, supply-chain optimization, “lean engineering” and overhead cost control.
That’s according to a study released today by AlixPartners LLP, the global business-advisory firm.
The AlixPartners 2010 Global Aerospace & Defense Review finds that although original equipment manufacturers
(OEMs) and suppliers globally performed surprisingly well in 2009, posting overall industry growth of 2%,
companies (and their investors) should not expect the same conditions to continue. The study, in fact, highlights
several major headwinds, including:
l Aircraft deliveries down globally, while aircraft orders, which dropped 70% in 2009, have only partially
l The European debt crisis and a sluggish U.S. economy hampering both passenger and cargo demand.
l All signs pointing to big defense-spending cuts ahead, as both the Pentagon and defense ministries
around the world face the fallout from the recent financial crises and sputtering local economies.
l Continued weak business-jet demand, due to still-fragile corporate profits and a “politically incorrect”
image forged during the auto-bailout hearings of 2009.
l Ongoing operational issues,