Defence future in the balance as commercial aerospace thrives claims PwC

 
Meanwhile commercial aerospace firms are back on track, according to the PwC Aerospace & Defence 2010 year in review and 2011 forecast , but the report warns, defence firms face a much more uncertain future.

The A&D sector as a whole achieved record financial results in 2010, with the top 100 companies reporting $645,329 million in revenue and $58,338million in operating profit. Most of the top six global firms, Boeing, EADS, Lockheed Martin, Northrop Grumman, BAE Systems and General Dynamics, enjoyed a revenue and profit increase.

PwC’s global report highlights the existing and projected difficulties the defence sector is facing, with strategic business advice on how to deal with them.

One key area, it says, must be the preservation of the defence industry’s precious skill set which could be in danger of being lost.

“Policy makers need to recognise the value of innovation, research, and development, and invest in retention of specialised expertise so that critical knowledge and skills are not lost as one generation of workers retires and the next takes its place,” the report states.

Production of the F35 Joint Strike Fighter series, which is manufactured at plants globally, will cease operation in a few years leaving no military fighter aircraft in development for the first time in the history of flight.  Though any subsequent threat is likely to be years away, the report adds.

PwC assistant director Anna Sargeant, said:  “The sector has a whole has enjoyed improved business and financial success in the review period which is excellent news. Commercial aerospace is full of optimism, bringing with it large new aircraft orders despite pressures on airline profitability such as fuel price and regulation.

“The outlook for defence is uncertain but the industry should remember it has a proud tradition of innovation, skills and expertise which must be protected. The challenge for the sector now is to become more efficient, leaner and more productive within its new environment.”  

Neil Hampson the firm's global head of aerospace and defence said: “The A&D industry has helped stabilise a struggling economy through disciplined management during the up cycle and better preparation for both the economic downturn and inevitable decline in defence spending.  The steady growth and increased earnings among the majority of the top 100 A&D companies should be viewed as a barometer for the resiliency of the industry has a whole.”