Critical Read

Commercial aerospace up, defense down

question mark made of dollar

What: Deloitte's 2014 Global Aerospace and Defense Outlook

Why: The annual report analyzes key trends and makes predictions in the aerospace and defense markets, including commercial airline and space travel, investment in aircraft and military equipment, the global supply chain and market competition.

In this year's report, Deloitte predicts revenue growth in the 5 percent range for 2014, similar to the previous two years. In all three years, the growth is attributed "to the rising fortunes of the commercial aerospace sector." Defense declines are attributed to the drawdown in Iraq and Afghanistan, as well as concerns about the affordability of the traditional military. Some growth will trickle from defense spending in other countries, including India, China, Russia, South Korea, Brazil and Japan, where governments are boosting military spending, but it likely won't be enough to reverse the overall decline.

Verbatim: "Over the next decade...commercial aircraft annual production levels are anticipated to increase significantly by an estimated 25 percent. With such growth expected, there are two significant trends and challenges to consider: the entrance of new global competitors to the existing duopoly,  and the impact on the supply chain."

"The government customers of global defense companies continue to be challenged with affordability and competing domestic priorities. ... The global defense industry in 2014 and beyond will be challenged in two major ways: how to grow profitability in a declining market and what actions are necessary to cut costs to maintain acceptable financial performance."

About the Author

Amber Corrin is a former staff writer for FCW and Defense Systems.

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