Change is Coming Fast to the Aerospace and Defense Industries: Our 2019 Predictions
There has never been a more dynamic, exciting time to work and do business in the aerospace and defense industries. The snail-like pace of business cycles is a thing of the past. Improving speed-to-market, embracing new technologies and redefining the experience from
assembly line to end-user passenger are all characteristic of the transformative trends underway. Change is coming fast, and if you’re doing business with OEMs in 2019, you’ll need to keep pace.
As part of our report,
The State of
Aerospace and Defense: Welcome to the Acceleration Economy” Celestica offers predictions for 2019 in the report’s concluding page based on the key events, transactions, trends and challenges we’ve observed or participated in over the past year.
- Fewer Niche Suppliers: Niche suppliers still have an important role, but their ranks will thin in 2019. OEMs fighting to maintain margin and reduce costs know it’s inefficient to place more reliance on niche suppliers. Who wins? Suppliers who can
innovate at scale and provide more flexibility across their supply chains. Remember, change is coming at these industries fast, so suppliers need to bring their A-game.
- More Investments Supporting the Full
Product Lifecycle: M&A activity was robust in 2018. Major players like L3 and Harris came together in the largest defense-ever defense merger. Mergers are not short-term plays. Players behind these recent events are looking to support the full product lifecycle. To this end, Celestica
also expanded its portfolio, acquiring
Atrenne Integrated Solutions. Expect more consolidation in the new year. Suppliers are taking note and will look to put more investments in solutions that span the entire product lifecycle. Such investments and activity will stand out to OEMs eager to see how suppliers are
evolving to support their growth objectives.
- Automation Grading Starts Now: To achieve greater end-to-end efficiency in the supply chain, more automated processes are essential. Look for OEMs to keep raising the bar on their automation litmus tests with its suppliers. What will this require of suppliers? A demonstrated ability to
bring more automation to their own operations that generates significant value for the OEM. We’ll also see a big uptick in the deployment of predictive analytics to enhance suppliers’ ability to manage inventory processes, particularly with parts scarcity a challenge facing
both industries.
- OEMs will Face Major Challenges Navigating
Materials Constraints: As the industry continues to experience materials constraints, OEMs need to lean on their ‘trusted partners’ in the supply chain. All ‘trusted partners’ are suppliers but not all suppliers can be labeled ‘trusted partners.’ A ‘trusted partner’ who is nimble, adaptive and innovative to
navigate the near-term challenges such as materials constraints while helping OEMs take a long-term view of their supply chain and implement strategies to evolve and address future challenges, will be in high demand.
More change will spark more transformation on the part of OEMs, suppliers and other entities that have a stake in supporting Aerospace and Defense firms. Maintaining the status quo is no longer an option.
We will be monitoring the industries closely and plan to share updates on our predictions and the impact they have had on both at the halfway point next year. Until then, please keep visiting