One of the best ways to see innovation in the manufacturing industry is to attend the Farnborough Airshow. This year, the public airshow, which rotates between Paris and Farnborough each year, showcased aircraft innovation and technology from every decade in the last century. I had the privilege to once again attend this premier event and met with many senior executives from leading Aerospace & Defense (A&D) sector companies. For the A&D industry, this airshow is where deals are made. The show organizers estimated $201 billion in contracts were committed during the week and media reported the top aircraft makers signed around $115 billion in jet deals.
During the airshow, Deloitte released a new thought leadership report, 2014 Global aerospace and defense sector financial performance study. The report indicates that the overall global A&D sector growth is slowing – the revenue growth rate declined from 5.9 percent in 2012 to 3.1 percent in 2013. While growth continues in the commercial aerospace segment, contraction in defense spending continues to be impacting the pace of revenue growth. I encourage you all to have a look at this report which is recognized by many as a scorecard for the industry.
As I listened to executives across the industry, I heard a sense of optimism at a higher level than in 2013. Many of the companies appear to be looking to grow through acquisition. For suppliers, this may be necessary; in part to gain scale to help them better manage the demand for pricing targets set by the original equipment manufacturers (OEMs). Interestingly this year, the defense companies seemed to have a much more positive view of the landscape, as they continue to navigate the realities of tight defense spending.
One of the high points of our week was a reception that Deloitte co-hosted with Skadden Arps, a leading law firm serving the A&D industry. General Wald, Federal Practice Senior Advisor with the Deloitte U.S. firm (Deloitte Services LP), shared a few of his insights on the growing importance of technology to the U.S. military today, and also offered a few examples from his distinguished years of service.
Finally, please read some of the perspectives shared with the media about developments in the industry by Tom Captain, Deloitte Touche Tohmatsu Limited Global A&D Sector Leader: Airbus Deliveries Rise but Trail Boeing; Company Delivered 303 Planes in First Half (Wall Street Journal) and Weapons-makers The case for defence (The Economist).
Have questions or comments? Share your thoughts with me @TimPHanley.
Tim Hanley is the Global Leader of the Manufacturing Industry group of Deloitte Touche Tohmatsu Limited (DTTL). In his global industry leadership role, he directs strategic initiatives and investments to grow Deloitte member firm market share within the manufacturing industry. During his distinguished 35-year career, Hanley has led teams serving all business aspects, including consulting with top management regarding organizational financial strategy development and execution, acquisitions, and market development.