
Accenture, GIE Media
Story #1: The emergence of Europe as a key defense market
Europe is rapidly emerging as a key global defense market, driven by a combination of geopolitical shifts, increased defense spending, and a growing emphasis on technological innovation. This presents a significant opportunity for defense manufacturers but also requires strategic action to meet the new demand.
Germany, France, and the United Kingdom have all announced substantial increases in defense spending over the next few years. With increased budgets comes an opportunity for a greater variety of projects, from traditional defense systems to advanced technologies, as well as new tech-based alliances. We observe that procurement approaches of defense agencies are changing worldwide, and this change is led by Europe, with 86% of executives surveyed pointing to at least a moderate level of change in this region.
Defense companies, whether established suppliers or ambitious new market entrants, need to adapt to changing requirements, and our research shows the top answer to these changes is collaboration. Almost half of industry executives (49%) identified partnership building as essential for accessing the necessary products and technologies.
European defense companies are expanding their international partnerships and export opportunities, particularly with local companies in the Middle East, Asia, and Africa. The high-quality and advanced features of European defense systems, combined with strong economic ties, are driving the success of European defense exports.
We are also seeing defense companies work to quickly stake a claim in the digital and autonomous revolution through the adoption of artificial intelligence (AI), autonomous systems and advanced materials. Since 2022, more than half of the acquisitions made by major defense companies have focused on just three areas: AI, cyber defense, and machine-to-machine communications.
As European nations continue to invest in advanced defense capabilities and strengthen their regional and international partnerships, the continent is poised to play an increasingly important role in shaping the future of global defense. It will be important for defense manufacturers to develop strategies to enter and succeed in international markets, understand local regulations, and build local partnerships. By staying informed, investing in innovation and fostering collaborations, manufacturers can position themselves to thrive in the dynamic and evolving European defense market.
Story #2: Supply chain resilience: More important than ever before
The global supply chain for the aerospace and defense (A&D) industry will be a major focus at the Paris Air Show. Accenture research found that 61% of commercial aerospace executives expect revenue growth over the next six months and 76% see an increase over the next year – a sign of growing confidence in supply chain improvements and production scalability. However, the geopolitical landscape adds a layer of complexity to supply chain management. Trade tensions can disrupt the flow of critical components and materials or significantly increase production costs. Direct, indirect and systemic impacts include rising costs of supplies, destabilized supplier networks and decreasing sales.
Major players are rethinking their supplier base to mitigate risks associated with over-reliance on a single region or supplier. This diversification is not only about geographic spread but also about ensuring a broader range of suppliers with varying capabilities and technologies. Companies are also engaging in strategic partnerships and collaborations to ensure a stable and reliable supply chain. This includes monitoring and navigating the complex geopolitical environment and regulatory changes as they occur.
Building a resilient supply chain involves the implementation of advanced technologies to enhance visibility, agility, and collaboration. What should their guidance be? Autonomous supply chains that apply agentic AI, digital twins, and knowledge graphs to automate and delegate tasks and decision-making, where humans are supervising process milestones.
Our research shows that despite the critical importance of mapping supply networks and having visibility into dependencies across suppliers, less than half of executives (48%) report having completed this assessment. Added to that, more than half (55%) of aerospace organizations still rely heavily on manual methods for managing and overseeing their supply networks, as well as for executing risk management strategies.
Fostering strong collaborations with suppliers through digital platforms ensures better communication and coordination but must be based on trust and transparency. Technology offers significant benefits, but to implement it, companies need a technology capability that brings together key components such as cloud, data, AI, and security to drive reinvention and enable companies to adapt swiftly to change. By following this approach, A&D companies can streamline their supply chain operations and stay competitive in a rapidly evolving market.
Story #3: The evolution of manufacturing
Another key topic is the evolution of manufacturing, particularly the growing emphasis on AI and automation. Our research shows that manufacturers have a clear picture of what the hyper-automated factories of the future will look like. These facilities will feature autonomous operations, self-learning machines, smart connected manufacturing cells, autonomous mobile robots, and digitally connected crews. Surveys indicate that 65% of aerospace factory managers are now prioritizing technologies foundational to achieving hyper-automation, such as digital product, process and systems twins, together with basic IIoT and edge computing.
However, to fully leverage hyper-automation, the A&D industry must undergo a workforce transformation. Our research shows that more than two-thirds of aerospace factory managers recognize that while today's workers are mainly engaged in production, the future will see them working for production. This shift is not without challenges – significant investments in training programs, worker concerns about job loss and resistance to new roles, such as human-robot collaboration manager and autonomous logistics coordinator, are major hurdles. Workers will need to be proficient in collaborating with AI and operating autonomous systems.
The good news is that companies across the globe have a range of levers to build a more agile and resilient workforce. This involves aligning workforce structure and location strategy with evolving value and profit pools, resizing the organization to facilitate quicker decision-making and streamlining processes while integrating AI to enhance workforce capabilities. When combined with digital platforms for upskilling and continuous learning, these actions can help companies adapt to disruption while empowering employees to grow with the business
Compounding workforce challenges, a significant portion of the manufacturing sector is lagging in adopting a robust digital core. This lag could put many companies at a competitive disadvantage, especially as regional disparities in the adoption of hyper-automation technologies become more pronounced. This story will likely unfold as a contrast between companies that are leading the charge in AI and automation and those that are still catching up. Asian companies may showcase more advanced and automated manufacturing solutions, potentially setting new industry standards and influencing global trends.
This dynamic will be crucial to watch, as it could shape the future of the A&D industry and highlight the urgent need for companies to develop the necessary skills and digital capabilities.
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