BECOMING MORE RESILIENT IN A MORE CHALLENGING WORLD
How to respond
In the next 20 years, forecasts suggest a need for over 39,000 new passenger and freighter aircraft, with around 15,000 being replacements for older, less fuel-efficient models. As manufacturers rush to meet these demands, the drive for sustainability is changing the very nature of plane designs (and perhaps, aviation business models).
Defense had been reducing spend for years and discontinued many products, but must now restock and reinvent, as new threats arise and its support for Ukraine depletes supplies. Defense must also become more dynamic, so that militaries are ready to meet more operational challenges – yet some military plane manufacturers currently quote 80-month lead times from order to fulfilment!
There are two immediate challenges for A&D companies to address: the first is scale up, the second is the reconfiguration towards sovereignty and resilience. Reducing dependences on less friendly states is now a matter of growing importance - giving rise to ‘onshoring’ (bringing sourcing and manufacturing back to the country) and ‘friendshoring’ (bringing these back to allied countries).
The space domain is continuing its rapid growth also, with a growing number of space-based services and satellite launches - as the industry moves from individual satellite launches to satellite constellations. Like with other industries, space is scaling to a more efficient mass production model, which has implications for standardization and industrial organization. This will be important, as the demand for satellites continues to grow.
In this demanding, rapidly changing world, aerospace and defense companies must become more adaptive and resilient. That will mean changes to their manufacturing and supply chains. Manufacturing facilities built around churning out single product lines must become more adaptive, switching as changing demands filter through into new designs. Many will need to become much more efficient.
To deliver more flexible manufacturing, the massive global supply chains on which manufacturing relies must become more adaptive and more resilient. Supply chains are complicated, vulnerable to shocks, and hard to redirect. Yet, they face ever greater risks from material bottlenecks, geopolitics, war, inflation affecting supplier solvency, and disruptive events (from pandemics to boats getting stuck in the Suez Canal). The majority of products in aerospace and defense come from the external supply chain – this represents a big risk to ability to deliver products over the coming decade.
To face the challenges of scaling and diversifying production, meet the need for a more distributed supply chains and industrial systems, and overcome geographical constraints (ie. achieving DAMASA: “design anywhere, manufacture anywhere, supply anywhere”) - two things must change.
The first is for supply chains to become more resilient, and the second is for manufacturing to become more flexible. We will look at each in turn.
