Download - Global Aerospace and Defense Outlook 2015
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 1
Global Aerospace and Defense Outlook 2015
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 2
Executive summary
With the mature defense markets of the US and Europe continuing to stagnate, aerospace and defense (A&D) organizations are highly focused on two overriding priorities: driving growth and managing costs.
KPMG International’s Global Aerospace and Defense Outlook provides a comprehensive overview of current trends, issues and opportunities in the global A&D sector. It includes forward-thinking advice, practical insights and valuable benchmarks from KPMG partners, industry experts and A&D leaders.
Driving growth and managing costs
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 3
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 4
say sales growth is a top priority
Sales growth tops the agenda for A&D organizations globally.
say they will focus on growing after-market sales and service offerings as a top priority this year
53% 1/10
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 5
47% cite reducing their cost structure as
a top priority
A&D organizations are continuing to strive for greater efficiency and cost management.
Keeping the businessmodel competitive
38%
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 6
5
10
15
20
25
30
of respondents say they will enter into new geographic markets to drive growth
1/4
say they will rebalance their global footprint as a top priority
13%
Overseas expansion and portfolio shaping will create new growth opportunities.
More than
Innovation and advanced technologies
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 7
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 8
A&D investment into new technologies and services will increase growth.
of all respondents say they expect new manufacturing technologies to drive future growth and innovation
50%say they will increase R&D spend to drive new growth and innovation
46%
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 9
The majority of A&D organizations are now looking to form new partnerships and collaborative relationships with suppliers and customers to improve speed to market.
say they have already adopted more
collaborative business models with suppliers
and customers
say they expect partnerships, rather than in-house efforts, to characterize the future of innovation
72%3/4More than
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 10
A&D organizations are recognizing that they need to exponentially increase their investment levels in order to maintain the pace of their innovation cycle.
Doug GatesKPMG Global Head of Aerospace and Defense
Global Head of Aerospace and Defense KPMG
Supply chain
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 11
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 12
A&D organizations are reorganizing their supply chains to drive future growth.
of all A&D respondents say that restructuring the supply chain to support growth is a top priority this year
say their supply chain is challenged to effectively support new product launches
31%
will segment and tailor their supply chain assets and processes to respond to specific product needs and demand profiles
32%1/3
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 13
Costs continue to come under pressure as A&D organizations look to achieve profitable growth.
say they are focused on lowering costs and working capital levels across the supply chain
54% 29%think their supply chain cost structure may be
impacting their competitiveness
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 14
Supplier capacity and risk are high on the A&D agenda, but visibility remains low.
Concerns related to supplier performance and capacity were cited as the second and third greatest supply chain challenges
of A&D respondents said they had ‘complete’ visibility
Just
10%admitted they only had ‘limited’ visibility
and
40%
Key take-aways for Aerospace and Defense manufacturers
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 15
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 16
A&D organizations are highly focused on two overriding priorities:
Growth will not come easily. New markets will need to be penetrated; new innovations will need to be commercialized; and new business models will need to be established.
driving growth
managing costs
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 17
R&D spend is on the rise as organizations focus on driving incremental innovation as a way to gain a competitive edge and adapt their existing products to adjacent markets.
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 18
To achieve growth objectives, companies have recognized that partnering will continue to increase in importance as they work to innovate products and services, execute on market-entry strategies and adapt and develop new business models.
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 19
A&D organizations are continuing to look for opportunities to sustainably reduce costs.
This includes rightsizing the product and business portfolio in order to prepare their organizations to take advantage of future growth opportunities.
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 20
Supply chain reorganization is high on the agenda as A&D organizations look to drive future growth and reduce working capital. Particular importance should be placed on improved supply chain visibility, more reliable delivery performance and available capacity to meet current and emerging demands globally.
About the survey
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 21
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 22
The Global Aerospace and Defense Outlook 2015 is based on a survey of nearly 70 senior A&D executives
(director level or above). The survey was conducted by Forbes on behalf of KPMG International and was completed in early 2015.
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 23
All respondents in this year’s Global Aerospace and Defense Outlook survey represented organizations with global annual revenues of more than US$1 billion
represent organizations with revenues of more than US$25 billion24%
More than a third represent organizations with revenues of between US$10 billion and US$25 billion
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 24
KPMG Global Aerospace and Defense key contacts
Doug Gates
Global Head of Aerospace and Defense
+1 404 222 [email protected]
Jeff Dobbs
Global Sector Chair, Industrial Manufacturing
+1 313 230 [email protected]
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 25
Additional KPMG Global Aerospace and Defense country contacts
Amie Ahanchian Managing Director, Tax KPMG in the US +1 202 533 3247 [email protected]
Kai C. Andrejewski Aerospace and Defense Sector Leader KPMG in Germany +49 211 475 7900 [email protected]
Glynn Bellamy Partner KPMG in the UK +44 7766 442407 [email protected]
Luis Alejandro Bravo Aerospace and Defense Sector Leader KPMG in Mexico +52 55 52468360 [email protected]
Bernard Brown Partner, Sector Lead for Defence and Business Services KPMG in the UK +44 20 7311 6605 [email protected]
Robert Browne UK Strategy Practice Leader
KPMG in the UK +44 20 73118962 [email protected]
Stephen Cooper Partner, UK Head of Industrial Manufacturing and Automotive KPMG in the UK +44 20 73118838 [email protected]
Ryan Donley Director, Advisory Services
KPMG in the US +1 512 905 5851 [email protected]
Ken Drover Lead Partner, Defense Center of Excellence KPMG in Australia +613 92 88 6623 [email protected]
Amber Dubey Partner and Head of Aerospace and Defense KPMG in India +91 987 1933711 [email protected]
Jarib Fogaça Aerospace and Defense Sector Leader KPMG in Brazil +55 19 2129 8700 [email protected]
Jonathon Gill Director KPMG in the UK +44 20 7311 1369 [email protected]
Erich Gampenrieder Head of KPMG’s Global Supply Chain Center of Excellence +49 89 9282 1700 [email protected]
Jean-Luc Guitera Partner, Aerospace and Defense sector KPMG in France +33 155 686962 [email protected]
Fred Hensel Advisory Managing Director KPMG in the US +1 412 232 1568 [email protected]
Andrew Jackson Partner KPMG in the UK +44 20 7694 1923 [email protected]
Ja Young Jo Aerospace and Defense Sector Leader KPMG in Korea +82 2 2112 0640 [email protected]
Mike Judd Managing Director KPMG in the US +1 704 905 3485 [email protected]
Adil Khan Principal, Advisory KPMG in the US +1 312 665 2525 [email protected]
Tom Mayor Principal, Strategy practice Industrial Manufacturing KPMG in the US +1 216 875 8061 [email protected]
Donna Meshaka Advisory Managing Director KPMG in the US +1 703 286 8868 [email protected]
Grant McDonald National Sector Leader, Aerospace and Defense KPMG in Canada +1 613 212 3613 [email protected]
Laurent Des Places Partner, Aerospace and Defense sector KPMG in France +33 1 55 68 68 77 [email protected]
Matt Richards Managing Director, Advisory KPMG in the US +1 817 437 5474 [email protected]
Mark Savage Managing Director, Joint Venture Advisor KPMG in the UK +44 20 73112106 [email protected]
James Scalise Partner, Advisory KPMG in the US +1 919 664 7344 [email protected]
Alex Shum Head of Industrial Manufacturing KPMG in China +86 212 2122508 [email protected]
Marc van Grondelle Global Leader of KPMG’s Joint Venture Advisory Practice KPMG in the UK +44 20 76944603 [email protected]
Michele Hendricks Global Executive for Industrial Manufacturing KPMG in the US +1 203 406 8071 [email protected]
Leona Mickelson Senior Marketing Manager KPMG in Canada +1 416 777 8822 [email protected]
Download the full report at kpmg.com/aerospaceanddefense
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International.
KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Publication date: June 2015
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