Aerospace majors look east
February 12, 2018
The economic growth has slowed in mature markets and, as a result, their defense budgets do not show robust growth as they used to formerly. This has led many aerospace manufacturers to look for new foreign markets to drive growth. In fact, many major A&D manufacturers have been gradually making inroads into emerging geographic markets such as India. This has resulted in partnerships and joint ventures between established aerospace players and non-traditional suppliers. Another notable consequence of this globalization is that established A&D players are reshaping their portfolio of products and markets to align to new growth opportunities.
In other words, what we have is a shift towards a demand-driven business model that encourages greater involvement of subcontracted suppliers and outsourced partners. OEMs are increasingly relocating their supply chain and assemblies eastwards to capitalize on new markets and opportunities. They have become more open-minded, when it comes to assessing their foreign supply requirements and evaluating the capabilities and quality of new foreign suppliers.
The global A&D industry is entering an era of boundless possibilities and the outlook is positive for all stakeholders involved. As OEMs and Tier 1 suppliers look to reduce costs and move closer to customers, emerging markets can leverage the same to bring in investments, create quality employment opportunities and meet the needs of their domestic aviation and defence sectors. Government and industry representatives in emerging markets would benefit greatly from identifying this trend and responding actively to it.