Aerospace and Defence
The nationally strategic and political nature of the aerospace and defence industries are in part, a function of the long life cycle of each product which can last over 50 years from concept to end-of-life, and will rely on constant MRO and upgrades through its operational life. The competitiveness of the aerospace and defence industries are characterised by the following factors that strongly influence the structure and evolution of the production organisation, the localisation of activities and last but not leas, the relation between governments and industry:
- High technological level
- Technological complexity
- High and increasing development costs
- Long break even periods and small markets
- High interdependencies between civil and defence markets
- Strategic industry
- Problematic cash flow
Cost reduction, ability to focus on core business and increased speed to market are the main factors driving the globalisation/outsourcing in the aerospace manufacturing sector. Furthermore, OEM integrators such as Airbus and Boeing are shifting their production to low cost China, India, Malaysia, Singapore and other Asian countries. As original equipment manufacturers (OEMs) have started to focus more on their core competencies (aircraft overall design, architecture, integration, final assembly and delivery to end customers), and with technology becoming more complicated, it requires specialised services to manage Maintenance, Repair & Overhaul (MRO) requests efficiently.
OEMs are searching for avenues to reduce manufacturing costs by outsourcing more to Tier 1 OEMs; “design to build” packages rather than just “build to print”. This passing forward of responsibility to suppliers has reduced procurement costs, with the resultant cost savings invested in new products, services and capital equipment.