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CEO 360 Degree Perspective: Aerospace & Defense- 2009


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A presentation giving perspective on the current Aerospace & Defense market, as well as possible future scenarios.

Published in: Business, News & Politics
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CEO 360 Degree Perspective: Aerospace & Defense- 2009

  1. 1. CEO 360 Degree Perspective Aerospace & Defense-2009 We Accelerate Growth
  2. 2. Take Aways for Participants Top 3 Take-Aways: 1. This is an A&D trough not a valley 2. There are no market segments that are immune to the economic conditions, but there are sectors and regions that are having fewer effects 3. Some very basic changes in market philosophy requires changes in market strategy 2 53 North Park Avenue Rockville Centre, NY 11570 Tel. (877) GO–FROST email:
  3. 3. Aerospace & Defense Markets Comprehensive Industry Coverage C4ISR C4ISR Homeland Homeland Military Aviation Military Aviation Security Security Aerospace Aerospace & & Defense Defense Federal Budgets Federal Budgets Commercial & Programs Industry Industry Commercial & Programs Participants & Aviation Aviation Participants & Competitors Competitors 3
  4. 4. The CEO’s Perspective of the Complex Business Universe 4
  5. 5. Economic Perspective: The Complex Business Universe Aerospace & Aerospace & Defense Industry Defense Industry Economic Economic Environment Environment Airline Travel off Significantly High, but not Historically High, Fuel Prices Credit Markets are in Shambles Shift in Military Procurement Continued Robust Defense Spending in the U.S Source: Frost & Sullivan 5
  6. 6. Economic Perspective: Primary Economic Challenges Impacting A&D Industry Growth Competing Competing National Primary National Budget Budget Challenges Priorities Impacting A&D Priorities Industry Growth Market Market Maturity Maturity U.S. market imbalance U.S. market imbalance Current Current Spending Spending Dominance of aafew large Restricts Restricts Dominance of few large firms firms Development Development Reduced government R&D Reduced government R&D Source: Frost & Sullivan 6
  7. 7. Global Perspective: The Complex Business Universe Demand for Engineering Skills ITAR Restrictions Offset Schemes Restricted Spending Aerospace & Defense Industry Aerospace & Defense Industry Global Environment Global Environment Source: Frost & Sullivan 7
  8. 8. Global Perspective: Technology and Services Continues to be a Challenge Limits flexibility International Traffic in Arms Regulations and markets Firms bear costs of R&D Spending Limited technology/ product development Projects delayed, Science & Engineering Funds Restricted cancelled and costs increase IT investments Global Production is Challenging Project helps mitigate Coordination effects 8
  9. 9. Integrated Industry Perspective: The Complex Business Universe Increased Use of COTS Need for Multiple Technologies Unrealistic Estimates and Immature Technologies IDIQ Contracting 9
  10. 10. Integrated Industry Perspective: Aerospace & Defense Industry Cross Pollination Testing & Measurement Aircraft and Health Care Automotive • Engines • Electronics • Trauma • Hybrid Power • Materials • Medical Evacuation • Stronger, Lighter • Fuels • Blood Clotting Materials • On Board Diagnostics • CBRN Protection • Stealth • Wound Care • Avionics and Displays COTS AND COMMERCIAL INNOVATORS MATURE PRIME BASIC RESEARCH PROVIDERS ANDVENDORS MANUFACTURERS CONTRACTORS • SDR • Vehicles • FPGAs • Communications • Materials • Embedded computers • Engine Parts Systems • Alternative Fuels and cryptography • Strategic Materials • IT Architectures • Electronic • Robotics • Language & Culture • Training & Components • Multi-Spectral • Explosives Simulation • Communications Imaging • Oils and Lubricants • Health Care • Optics • Super Computers • Ship Building • Construction • Self Healing Networks • Logistics Source: Frost & Sullivan 10
  11. 11. Competitive Perspective: The Complex Business Universe More European Congress may Asian/Middle Firms in Limit Acquisitions Eastern HLS the U.S. Airlines Market Off-shores 11
  12. 12. Competitive Perspective: Cooperation in the Market Partnering for Success Continued large Systems Integrators, but challenged by Sec. Gates Logistics, integration, maintenance, and training all growing Local firms overcome labor, tax, security, and use restrictions Governments want teams, including local investment/labor for major contracts 12
  13. 13. Technology Perspective: The Complex Business Universe Dependence on Small Innovative Firms Data Fusion, IPv6 and SDR driving improvements Legacy standards still required Few clear electronic standards Electronic Heat Generation Problems “Green” Initiatives Aerospace & Defense Industry: Aerospace & Defense Industry: Increasing adoption of Commercial Increasing adoption of Commercial Technology Standards Technology Standards Source: Frost & Sullivan 13
  14. 14. Technology Perspective: A&D Challenges Industry Wide Aerospace C4ISR Homeland Security • Alternative Fuels • Regional Carrier • Unmanned Vehicles • Communications • Increased Competition Expansion • COTM Interoperability • Legislative Scrutiny • Asian Competitors • Commercial SATCOM • Lack of Central Leadership • Political Change • Hazmat • Increasing Budgets but Fewer Programs • Unclear Budgets and • Training and Simulation • Parts Shortages Programs Advances • Supplier Alliances • LSI Changes • Poor Actual Spending • Navigation Technology • Expanded TEs • Immature Technologies Upgrades • Multi-level Access • Cap and Trade Programs • Embedded Crypto • New Procedural Solutions 14
  15. 15. Customer Perspective: The Complex Business Universe Acquisition Airline shifts from NCO key to recovery will “cost-plus” to fighting need “fixed-price terrorists improved incentive” will operating restrain efficiencies margins Contracts will be fewer, but more involved! U.S. Ground Forces Reset is Priority 1 15
  16. 16. Customer Perspective: Growth Opportunities Defence Market Commercial Aerospace Market Continued Demand for New Aircraft Focus on the Key Growth Markets in Asia and Middle East Growth Opportunities U.S., Eastern Europe, Mid East Will provide industry participants with opportunity Growth of the Key Markets Segments High Age of the U.S. Aircraft Fleet in Operation Tactical Communications, Intelligence, S&R Large investments by airline companies to support passenger traffic growth, eventually Major Technology Trends Growing Production of Aircraft in China COTS, Unmanned Systems, Embedded Crypto, Need for investments in modernization of Signal Processing production facilities and efficiency improvement Demand for Services Stable Growth of MRO Market Engineering, Integration, Project Management, Stable MRO market and increasing competition Maintenance, Training forces search for cost efficient solutions 16
  17. 17. Best Practices Perspective Best Practices in A&D Apply mature technology to new  Apply mature technology to new problems problems Apply new technology to old  problems technology to old Apply new problems Partner with established  Partner with established integrators integrators  Seek out small innovative firms Seek out small innovative firms Pool “services” skills for specific  Pool “services” skills for specific projects projects  Expand “services” portion of your business “services” portion of your Expand business  Focus on regional demand Focus on regional demand  Forward deploy with customers Forward deploy with customers  Take advantage of DoD Take advantage of DoD interoperability certification interoperability certification Source: Frost & Sullivan 17
  18. 18. Future Scenarios From Proprietary From Program Systems to Open Competition to Architectures Program Team Building A&D Industries: Effective Growth Strategies Integration, Providing End Training, and Users Practical Operational Solutions Services 18
  19. 19. Future Scenarios Sustainable Sustainable Aerospace deliveries down, but rebound in 2-3 years Aerospace deliveries down, but rebound in 2-3 years Growth Growth Poor Credit Market affects Aerospace, but signs of loosening Poor Credit Market affects Aerospace, but signs of loosening Defense firms limiting commercial forays, but future bright Defense firms limiting commercial forays, but future bright Focus on low-intensity warfare drives spending changes Focus on low-intensity warfare drives spending changes Ground forces funding share will increase the next few years Ground forces funding share will increase the next few years Stable funding for basic equipment and services Stable funding for basic equipment and services 19
  20. 20. Questions and Answers