Between 2002 and 2007, the A&D industry saw consistent growth. By the end of 2008, however, stocks of leading U.S.-based A&D companies had fallen by almost 40 percent. As of early March 2009, the U.S. economy has suffered its worst decline in 26 years.
The cash position for many A&D companies remains strong, based partly on reserves built up during the recent, robust years. In addition, many companies are developing and applying a number of strategies to help them reach their business goals and improve their competitive position.
These strategies include internal consolidations, personnel reductions, further adoption of lean manufacturing principles, and aggressive supplier management to reduce costs.
Other strategies involve expansion into markets beyond the company’s core business, tightened program management and controls, and proactive planning for anticipated cuts in defense spending. For their part, suppliers are finding new ways to improve working capital management, optimize cost efficiencies and enhance global competitiveness.
A&D companies should develop a balanced approach to financial and operational strategies that enable them to “prepare for the best but plan for the worst.” Properly designed and implemented, these strategies can help them adapt, survive and thrive in today’s turbulent times.