According to AlixPartners' new global industry report, the global aerospace and defense (A&D) industry has been profitable in recent years, with a decade of outstanding stock market performance, and the global aerospace and defense (A&D) industry is not complacent in the face of an increasingly active business environment.
The global A&D industry needs to successfully address a range of unfavorable factors, including uncertainty in international trade relations, rising oil prices, significant pressures in the supply chain, and continued aggressive product growth, as well as overcapacity in certain industries, and global defense spending. Wholesale changes.
AlixPartners has identified three key themes that will shape the industry in the face of these challenges in the coming years.
New Era
A new era has arrived, centered on service, new business models and partnerships. The four leading companies (Airbus, Boeing, Bombardier, Embraer) hope to increase service revenue from today's $20 billion to US dollars in the next 10 years, and more than triple the service revenue. 66 billion.
A key driver of this revenue goal will be an increasing focus on internal and partner programs, which will reshape many existing customer and supplier relationships. Target areas will include continued investment in the growing manufacturing, repair and operations (MRO) sector as well as new product development, training and data management.
Promote continued mergers and acquisitions
The company reports that these ambitious initiatives will drive continued acquisitions across the industry. Last year was a record year for A&D industry mergers and acquisitions, and this momentum will continue as companies across the industry want to cut costs and find new ways to grow. The total corporate value of the top ten M&A transactions in 2017 was approximately $63 billion. Almost three times the $24 billion in 2016. M&A activity will continue to increase significantly due to strong demand from companies and private equity firms and continued capital gains.
Digital transformation
Finally, digital transformation will be a key driver of success. Companies that adopt a full digital transformation throughout their business – from inbound logistics to product development and marketing – can achieve up to 20% efficiency gains in three years while creating new revenue opportunities for those who are the fastest transition.
A&D is currently saving 1% to 3% of its costs due to the failure to properly utilize existing data. These quick wins don't require a lot of IT investment, but because numbers are still not the top priority for many people, they are lost.
“The industry is welcoming a new era, a focus on new business models, changes in the industrial steps of services, partnerships and digital transformation. Players in the industry have moved at maximum speed, but they cannot fall behind in any of these areas. The advantage is critical to success," said Eric Bernardini, global head of aerospace and defense operations at AlixPartners.
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