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Aerospace / Defense

Today’s Aerospace and Defense sector represents something of a dichotomy.  At a macro level, we see revenues in the Aerospace industry (one largely comprised of the production, sale, and service of commercial aircraft) continuing to project strong growth over those of recent record levels.  The Defense sector, on the other hand, will likely experience a declining trend in the sale of military weaponry / systems in the U.S. and Europe as governments curtail spending.  Also included in this broad business sector is the production of space vehicles, mainly satellites, for both military and commercial use.

The largest segment of the Aerospace industry is that of airlines.  Consolidation will continue to be a central theme over the next few years as international carriers plot a course to greater profitability.  Mergers / acquisitions will reshape the U.S. domestic market and have a ripple effect globally.  Western and Gulf partnerships that can demonstrate profitable advantages could find themselves leading the race to grab market share in the Middle Eastern and Asia Pacific regions.  The industry consensus is that these routes will drive the majority of consumption on the medium / long-term horizon.

Senior executives are hoping their strategies will increase their competitiveness against others and better insulate their companies against volatile fuel prices.  Increasing fuel costs will continue to drive production and development of next-generation aircraft programs to replace aging fleets.  Airlines will also consider redeploying fleet assets and network expansion, optimizing operations with better infrastructures, and improving on-time performance to further enhance customer engagement.

A recent report was commissioned by the Aerospace Industries Association (AIA) to assess the contribution and financial impact the U.S. Aerospace and Defense industry has had on the American economy.  The industry’s effect is enormous, accounting for 2.3% of the nation’s GDP.  It is estimated that the total direct and indirect employment associated with the U.S. A&D industry is 3.53 million jobs.  And this figure does not include industry skilled workers employed by the Federal government or airlines.  The industry itself is responsible for countless advances in technology, communication, intelligence gathering, internet security, travel, and in general how we live our lives.

Current economic challenges resulting in defense budget cuts will impact overall employment, ability to conduct research and development, and wages and taxes paid.  As an offset, the current up-cycle in commercial aircraft production, thus employment, may lead to years of future growth potential.  Synergetics has the ability and insight to help many sector businesses tackle economic challenges, coupled with revenue gaps and cost pressures resulting in margin contraction.  Our scope of expertise is wide ranging and typically covers addressing revenue leakage, enhancing organizational effectiveness, streamlining cost structures, divestiture of non-core assets, and delivering step-change in operational efficiency.

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