Aerospace and defence trends 2019

Defence contractors face the shadow of technology, part of PwC’s 22nd CEO Survey trends series

The disrupted doctrines

Defence companies are now facing a real crisis that they cannot afford to ignore. In every region of the world, defence ministries are revising their military capabilities and doctrines for the twenty first century — and focusing on new technologies for complex weapons platforms and cybersecurity protection. Innovation, driven by artificial intelligence, connected devices, novel power systems, autonomous platforms, virtual reality and synthetics, and robotics, is increasingly attractive to defence departments.

And many of these latest breakthroughs and the most adaptable advances in these technologies are driven by and available from non-aerospace and defence (A&D) companies, coming instead from the innovation clusters that are expanding their influence in virtually every large global seat of power.

A&D companies can regain their lead with the right plan of action.

Partner with technology startups

To open up access to technology advances, A&D companies should:

• Explore strategic partnership agreements or venture investments with startup tech firms

• Overcome resistance to long-term investment cycles 

• Take risks on projects that may never pay off

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Pursue merger and acquisition opportunities

A&D firms should close deals that:

• Build their technology scale and scope

• Enhance their ability to compete in electronics, software and security systems—key components to the digital transformation of warfare capabilities

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Play to your strengths

Defense contractors need to decide where they can best compete and:

• Focus investments on differentiated capabilities, including in dual-use technologies

• Adopt a more dynamic approach to making investment choices

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Re-examine make/buy decisions

A&D firms should look to partnerships that can better round out their capabilities. Considerations include:

• Build a suite of strategic suppliers

• Outsource product development to suppliers with unique technology capabilities 

• Establish suppliers that can produce and design parts and components more affordably

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Recruit the right talent

To get ahead in the war for talent, A&D companies need to:

• Develop strategies to compete with other industries for talent

• Focus workforce training in data science, automation, cyber and advanced manufacturing

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Strategy made real

With a history of innovation on their side, A&D firms are just a strategic move or two away from fending off the competition and controlling the destiny of their industry. Retaining market dominance simply requires finding the right combination of internal improvements and external partnerships.

Read the article on Strategy&

Contact us

Miguel Smart

Principal, PwC United States

Tel: +1-703-283-7737

John Niehaus

Managing Director, PwC United States

Tel: +1-415-498-6886

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