European Aerospace & Defence industry suffering increasing cost pressure
A newly published European A&D industry survey from Roland Berger Strategy Consultants shows that the global economic crisis is still impacting the industry significantly. In light of reduced sales volume and price pressure, disciplined programme management to manage costs effectively is the most important focus area for senior management. The expected cuts in defence spending by the UK and other large European nations have accentuated the importance of programme management in the minds of senior managers. Careful monitoring of the supply chain, sourcing to a greater degree from abroad and accessing new, high-growth markets are also key concerns of top management in the industry.
The annual survey was conducted in March and April 2010 to understand how the global economic crisis has impacted the European A&D industry and what further needs to be done to recover sustainably. The survey drew responses from more than 100 senior managers in the industry representing a broad range of business segments and positions in the industry value chain. In addition to the UK, A&D companies in Germany, France, Italy, Spain and Belgium were covered by the survey.
"For the European A&D industry, the crisis is not yet over," said Robert Thomson, co-author of the study and Partner leading Roland Berger's A&D Practice in London. "More than half of the top managers interviewed do not expect the industry to return to sustainable growth for at least two years. However once the crisis is over, companies mainly concentrated on defence equipment will suffer further on account of cuts in defence spending. Whilst this is true of Europe in general, the effects will be particularly severe in the UK where the Treasury has already embarked on a review of large procurement projects. Counterbalancing this effect, companies expect to see increased outsourcing by defence ministries, more collaborative multi-national projects, and more cross-border M&A that will benefit industry leaders. The defence industry will be watching the UK Strategic Defence Review closely, hoping to identify future opportunities as well as to identify projects that may be at risk."
The annual survey was conducted in March and April 2010 to understand how the global economic crisis has impacted the European A&D industry and what further needs to be done to recover sustainably. The survey drew responses from more than 100 senior managers in the industry representing a broad range of business segments and positions in the industry value chain. In addition to the UK, A&D companies in Germany, France, Italy, Spain and Belgium were covered by the survey.
"For the European A&D industry, the crisis is not yet over," said Robert Thomson, co-author of the study and Partner leading Roland Berger's A&D Practice in London. "More than half of the top managers interviewed do not expect the industry to return to sustainable growth for at least two years. However once the crisis is over, companies mainly concentrated on defence equipment will suffer further on account of cuts in defence spending. Whilst this is true of Europe in general, the effects will be particularly severe in the UK where the Treasury has already embarked on a review of large procurement projects. Counterbalancing this effect, companies expect to see increased outsourcing by defence ministries, more collaborative multi-national projects, and more cross-border M&A that will benefit industry leaders. The defence industry will be watching the UK Strategic Defence Review closely, hoping to identify future opportunities as well as to identify projects that may be at risk."
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