Deloitte report: Projects 5 percent growth in aerospace and defense industry, technology innovations to dominate in 2014

Report outlines declines in defense spending, recording setting commercial aerospace production

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Jan 02, 2014, 09:00 ET

NEW YORK, Jan. 2, 2014 /PRNewswire/ -- The continued decline of defense spending into 2014 will likely force new revenue streams for the aerospace and defense (A&D) industry that may include innovations in intelligence, precision strike technologies, and cyber security. This is according to the Deloitte Touche Tohmatsu Limited (DTTL) 2014 Global Aerospace and Defense Outlook, which also projects the industry to repeat a modest growth of 5 percent, mirroring the growth rate of the past two years.

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"It is anticipated that global revenues for the defense sector will track to similar levels as in the past two years, particularly in the U.S. and Europe," said Tom Captain, DTTL Global Aerospace and Defense Sector Leader.

The commercial aerospace sector is expected to again set records for production of aircraft, due to the accelerated replacement cycle of obsolete aircraft with next generation fuel-efficient aircraft, and growing passenger travel demand, especially in the Middle East and the Asia Pacific regions.

The decline in defense spending will challenge the industry to find new sources of revenue. These may include innovations in next generation intelligence surveillance, reconnaissance and precision strike technologies, cyber-security, opportunities in adjacent markets, potential new commercial ventures, and also acquisitions of synergistic businesses. On the other hand, the significant demand for new commercial aircraft will pressure supplier networks to continuously improve its engineering design, manufacturing and supply chain management capabilities, all the while being able to cost effectively meet tougher price concession requirements from customers.

"As we celebrate the 110^th anniversary of the Wright Brothers' first powered flight, we are reminded that the industry is still young, yet it has contributed much, with technology innovation at the heart of advancements in the industry," adds Captain. "2014 and the rest of the decade promises to deliver even more exciting technology innovations that will focus on the way consumers travel by commercial aircraft, communicate via satellites, shop over the internet, conduct armed conflict when necessary, and assist with humanitarian missions to far reaches of the globe."

View the report at: www.deloitte.com/us/2014ADoutlook

About Deloitte

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Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 200,000 professionals, all committed to becoming the standard of excellence.

DTTL Global Manufacturing Industry group

The DTTL Global Manufacturing Industry group is comprised of around 2,000 member firm partners and over 13,000 industry professionals in over 45 countries. The group's deep industry knowledge, service line experience, and thought leadership allows them to solve complex business issues with member firm clients in every corner of the globe. Deloitte member firms attract, develop, and retain the very best professionals and instill a set of shared values centered on integrity, value to clients, and commitment to each other and strength from diversity. Deloitte member firms provide professional services to 80 percent of the manufacturing industry companies on the Fortune Global 500®. For more information about the Global Manufacturing Industry group, please visit www.deloitte.com/manufacturing.

SOURCE Deloitte