Army and Air-Force will Record Increased Investments in the Next Five Years

Wednesday 27 February 2013, Amsterdam

The majority of respondents from the global defense industry identified ‘the economic crisis leading to defense budget cuts globally’ as the most important trend that is likely to affect the global defense industry in the next two years. Survey results show that 71% and 66% of respondents from defense organizations and defense contractor companies identify ‘defense budget pressures’ as the principal factor driving changes in their organization's business strategies respectively. Respondents from Europe and the Asia-Pacific region highlighted ‘the economic crisis leading to defense budget cuts globally’ and ‘China’s significant increase in defense expenditure leading to other Asian countries increasing their defense spending’ as the most important trends in the global defense industry.

Executives from defense organizations identified ‘higher customization of service packages from suppliers’ and ‘international supplier certifications and quality’ as the most important trends in the Aftermarket Service Support and MRO area. In comparison, 60%, 42%, and 40% of respondents from defense contract companies indicated ‘growth in PMA certifications and usage’, ‘performance based contracts’, and ‘industry consolidation’ as the most significant emerging trends in Aftermarket Service Support and MRO area respectively.

According to the survey results, in the next five years, buyer respondents require suppliers to ‘reduce prices’, ‘engage in partnerships to optimize working capital and reduce costs’, ‘offer more flexibility in delivery’, and to help buyers in ‘product innovation’. Survey results reveal that factors such as ‘engage in partnerships to optimize working capital and reduce costs’, ‘improve customer service’, and ‘reduce prices’ are highlighted by defense contractors as the key expectations from their suppliers in the next five years. Additionally, respondents from other service providers identified ‘engage in partnerships to optimize working capital and reduce costs’, ‘product innovation’, and ‘collaborating on R&D’ as the key expectations from their suppliers in the next five years.