Posted by Jennifer Read | Sep 23, 2022 | EMS, Feature, Mil/Aero, OEM, skilled labor shortage, Smart Factory

Despite the setbacks and operational challenges brought on by the pandemic and ongoing turbulence in global economies, analysts are very optimistic on the aerospace and defense (A&D) industry, expecting annual earnings growth of 12% over the next 5 years.

According to the Aerospace & Defense Global Market Report 2022, the A&D market is expected to grow from $700.30 billion in 2021 to $755.24 billion in 2022 at a compound annual growth rate (CAGR) of 7.8%. The market is expected to reach $1047.07 billion in 2026 at a CAGR of 8.5%.

These optimistic outlooks are being driven in part by the trends in commercial air travel and customer order activity being more robust than earlier post-COVID expectations, and by the fact that the defense industry was more insulated from the global impact of COVID-19 than the commercial aerospace industry. This momentum is helping bring more focus to new technologies and evolving business models and the push for more digital and operational efficiencies.

In its 2022 Aerospace and Defense Industry Outlook report, Deloitte explored seven industry trends to watch. Following are highlights of those trends:

As mentioned above, the space market promises to be a growing trend over the foreseeable future. An analysis by McKinsey & Company found the total commercial space economy today to be greater than $350 billion. This figure includes commercial satellite-based services (data), satellite manufacturing, and space tourism.

McKinsey released a 2022 report, the role of space in driving sustainability, security, and development on Earth, that interviewed c-suite executives and national space agency directors, plus other luminaries from the worlds of government, academia, and the investor community. The report found that rapid technological progress is unlocking new capabilities, encouraging more commercial funding in space, and making space more accessible for nations and the private sector. These developments are sparking more competition as space becomes crowded, and public and private players scramble to claim finite resources such as orbits and spectrum.

The A&D industry was not immune to the effects of COVID on the workforce. As Ernst & Young stated in its 2021 A&D Workforce Study, workforce and talent concerns rank high in A&D companies. Business innovation requires a flexible, dynamic workforce composed of many types of workers, both remote and on-site, one with enhanced digital skills and continued focus on the development of engineering knowledge. It’s more important than ever to consider how to retain talent, and keep teams engaged, developed, and motivated.

Will these aforementioned trends be major factors five years from now? Will the growth predictions turn out to be accurate? Only time will tell. But for the here and now, A&D companies need to focus on innovation and agility to meet customer needs and position themselves for success for many years to come.

Spartronics has advanced capabilities for the manufacturing of commercial Aerospace & Defense applications to help A&D original equipment manufacturers (OEMs) adapt to an ever-changing world.

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