Global Opportunities and Challenges for Aerospace, Defense and - - PDF document

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Global Opportunities and Challenges for Aerospace, Defense and Government Services Companies Tuesday, October 14 th , 2014 FY15 DOD Presidents Budget Request $556B Total $496B in Base Budget (consistent with Bipartisan Budget

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Global Opportunities and Challenges for Aerospace, Defense and Government Services Companies

Tuesday, October 14th, 2014

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$556B Total
$496B in Base Budget (consistent with Bipartisan Budget Agreement
f 2013)
$60B for Overseas Contingency Operations
Deltas from FY14 by Budget Title
Personnel: - 2%
Operations and Maintenance: + 1.3%
Procurement: - 3.9%
RDT&E: - .05%
Opportunity, Growth and Security Initiative - $26B
Deputy Secretary Work - “$70B hole”

FY15 DOD President’s Budget Request

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FY15 President’s Budget assumes sequester relief for

FY16 and beyond

FYDP is $116B over BCA and $168B over the 10-year

period

FY16 PB would be reduced by $36B
Procurement and RDT&E: - $20B
O & M: - $12B

Sequester

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Exporters (2009-2013) Importers (2009-2013) 1 US 29% 1 India 14% 2 Russia 27% 2 China 5% 3 Germany 7% 3 Pakistan 5% 4 China 6% 4 UAE 4% 5 France 5% 5 Saudi Arabia 4% 6 UK 4% 6 Australia 4% 7 Spain 3% 7 South Korea 4% 8 Ukraine 3% 8 Singapore 3% 9 Italy 3% 9 Algeria 3% 10 Israel 3% Others 50% Others 10%

Global Competitors in a Global Marketplace

(Source: SIPRI)

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Export Controls
Sanctions
Embargoes

Geopolitical Constraints on US Companies

PRIVATE & CONFIDENTIAL PRIVATE & CONFIDENTIAL

Global Opportunities and Challenges for Aerospace, Defense and Government Services Companies

Presented by:

Jon Barney Managing Director

October 14, 2014 October 14, 2014

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PRIVATE & CONFIDENTIAL | AVASCENT | 7

Aerospace & Defense companies – expand globally

Q: Will foreign markets be of greater importance to your company in the coming years?

YES! (93%) YES! (93%)

March 2013 Avascent survey of senior A&D leaders on international markets

$80B ‐ $100B in annual opportunity space for A&D companies outside US

Source: Avascent Analytics

PRIVATE & CONFIDENTIAL | AVASCENT | 8

350 senior participants
11 countries led by US
18 questions

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PRIVATE & CONFIDENTIAL | AVASCENT | 9

Strongly agree my company can meet the challenge Competitive Landscape will be more intense in next year 6% 80%

Assessment of Global Competitive Environment

Competition increasing but leaders don’t feel ready

Source: Avascent and Fleishman Hillard Global Competitiveness Survey – July 2014

PRIVATE & CONFIDENTIAL | AVASCENT | 10

Global competition – from many places simultaneously

Top 10

1. China
2. Israel
3. India
4. Brazil
5. South Korea
6. Canada
7. Russia
8. Taiwan
9. Ukraine
10. Australia

Source: Avascent and Fleishman Hillard Global Competitiveness Survey – July 2014 Ranking represents share of executives surveyed that rank country as competitive threat

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PRIVATE & CONFIDENTIAL | AVASCENT | 11

High growth markets facing greatest competitive

threat: Unmanned, ISR, Air Traffic Management, Missiles, Satellites, Cyber

New business models: “80% solutions at 20% cost”
Home market support lacking: 7% strongly believe

their govt provides effective global sales support New threats and new models but limited response

Source: Avascent and Fleishman Hillard Global Competitiveness Survey – July 2014

PRIVATE & CONFIDENTIAL | AVASCENT | 12

“Sales models that worked even two years ago are no longer effective, and "rising" competitors with less restrictive export/compliance environments are winning at our expense,” American A&D Executive

Competitive environment rapidly changing

Source: Avascent and Fleishman Hillard Global Competitiveness Survey – July 2014

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PRIVATE & CONFIDENTIAL | AVASCENT | 13

Avascent Global Competitiveness Dashboard

1. Portfolio

Analysis

2. Evaluate &

Prioritize Markets

3. Develop

Strategic Approach

4. Establish

Market Presence

5. Value

Capture

6. Program

Execution

Optimal Company

Demonstrates capability consistently Demonstrates capability partially Rarely demonstrates capability

Global Expansion Steps

What can be done? Best practices for optimal results

Source: Avascent and Fleishman Hillard Global Competitiveness Survey – July 2014 Survey Results

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Sen. Jim Talent

Banner Public Affairs Partner 202-750-7500 Jtalent@bannerpublicaffairs.com Jon Barney Avascent Managing Director 202-280-6812 Jbarney@avascent.com Karen R. Harbaugh Squire Patton Boggs Partner 703-720-7885 karen.harbaugh@squirepb.com Jack Deschauer Squire Patton Boggs Partner 202-457-6338 jack.deschauer@squirepb.com

1

Global Opportunities and Challenges for Aerospace, Defense and Government Services Companies

Tuesday, October 14th, 2014

FY15 DOD President’s Budget Request

2

FY16 and beyond

period

Sequester

Global Competitors in a Global Marketplace

(Source: SIPRI)

3

Geopolitical Constraints on US Companies

Global Opportunities and Challenges for Aerospace, Defense and Government Services Companies

4

Aerospace & Defense companies – expand globally

Q: Will foreign markets be of greater importance to your company in the coming years?

YES! (93%) YES! (93%)

$80B ‐ $100B in annual opportunity space for A&D companies outside US

5

Strongly agree my company can meet the challenge Competitive Landscape will be more intense in next year 6% 80%

Assessment of Global Competitive Environment

Competition increasing but leaders don’t feel ready

Global competition – from many places simultaneously

Top 10

6

threat: Unmanned, ISR, Air Traffic Management, Missiles, Satellites, Cyber

their govt provides effective global sales support New threats and new models but limited response

“Sales models that worked even two years ago are no longer effective, and "rising" competitors with less restrictive export/compliance environments are winning at our expense,” American A&D Executive

Competitive environment rapidly changing

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What can be done? Best practices for optimal results

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