/Top Trends Impacting the Defense Industry
Top Trends Impacting the Defense Industry

Top Trends Impacting the Defense Industry

In the early months of 2018, the industry continues to struggle due to tightening defense budgets around the world. This was a big factor in 2017and has led to defense contractors changing their sales territory planning strategies as a result.

Top Trends Impacting the Defense Industry

Weapons manufacturers are building their presences in regions like Japan and South Korea, instead of the more familiar U.S. and European territories. What does this mean for the industry, and what other trends are impacting the industry this year?

New Tech is an Emerging Defense Industry Trend

The most significant trend impacting the industry in 2018 is new technology. Things like 3D printing for spare parts, virtual reality for training equipment, augmented reality for enhanced accuracy, and other new tech are shaking up the game. This will impact the defense industry in two ways:

  • Contractors who embrace this technology and find ways to put themselves at the front of these trends will be very successful.
  • Contractors that rely on sales in spare parts or materials may need to branch out now. It won’t be long before militaries will produce much of their own equipment with 3D printing.

Higher Price of Entry

Due to the way defense contractors are moving into the global game, the price of entry is rising. It’s no longer enough to sell products. Those very lucrative contracts are now requiring commitments for more long-term services.

Technology and intellectual property transfer, local sourcing, skill training, and very extensive cooperation are nearly always required for large defense contracts these days. To succeed, defense contractors will need to:

  • Justify the expense of working with one client long-term.
  • Be prepared with local sources for materials and manufacturing.
  • Be sure they understand the political and economic history of any area they approach. Who you know is going to be even more critical than usual.
  • Decide now what intellectual property is okay to share, and what they are willing to sacrifice to secure lucrative contracts.
  • Determine where existing costs can be cut back to invest in new technology.

The Need to Control Costs

The last trend that is taking over the defense industry is the need to truly control costs in everything from sourcing materials to shipping products. Defense contractors can still find lucrative contracts, but they are fewer and farther between.

Additionally, the push to incorporate cutting-edge technology means costs must be cut elsewhere. This a focus more competitive bids, and that means lowering costs. The good news is that the push for localization in sourcing and manufacturing can often help with cost control.

The Bottom Line

Going forward, the defense industry will continue to become more competitive, and there will be a bigger push to find ways to incorporate new tech along with localization wherever possible. Investing in new tech and lowering costs elsewhere will help defense contractors meet these trends head-on and succeed in the current state of the market.

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