Doug Gates, KPMG International Global Chair, Industrial Manufacturing and Global Lead, A&D, comments: "A&D organisations will need to think about how they drive profitable growth in new segments while simultaneously managing costs within slower-growth segments. Executives are going to need to stretch their organisations outside of their comfort zone to explore new approaches and team up with new partners that can help to rapidly and cost-effectively exploit these emerging opportunities."
Amber Dubey, Head of Aerospace & Defence at KPMG in India comments: "Given the pro-reform approach of the Indian government and recent changes in policies related to defence procurement and FDI, India is the place to be. The large orders placed by leading commercial carriers will lead to increased pressure from the Indian government on global OEMs to enhance their manufacturing and sourcing footprint in India, a la China. KPMG's Global A&D Outlook provides key insights about the risks to watch out for and the likely mitigation tools."
Shaping the portfolio
As A&D organisations prepare to take advantage of new and emerging opportunities, the KPMG Global A&D Outlook survey suggests that executives are exploring a wide variety of strategies and options to drive growth. Eighty-seven per cent of the respondents say they plan to change the range of products they offer over the next two years; 91 per cent say they plan to change the range of services that they offer.
Of those respondents that say they are planning to make changes to their product portfolio, almost half - 47 per cent - say they will make significant investments to launch one or more new products.
Accordingly, KPMG's Global A&D Outlook reports that organisations expect to significantly ramp up investment into R&D. Indeed, whereas 30 per cent of respondents say they spent 6 per cent or more of revenues on R&D last year, 45 per cent now say they will spend at least that amount over the next two years.
More impressive still is the fact that one-in-five respondents say they will spend more than 10 per cent of revenues on R&D over the next two years. Compare these numbers to those of 2014 when no respondents indicated an anticipated R&D spend rate in excess of 10 per cent.
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