Global A&D Industry Expanding
If the top ten Aerospace & Defense companies worldwide are the “Tyrannosaurus Rexes” with yearly revenues in the $35 to $70 billion range, smaller A&D companies, roughly half their size with revenues of $15 billion to $35 billion, are the “Raptors.” Smaller yes, but impressive in their own way and quite as lethal too.
The worldwide Aerospace and Defense (A&D) industry was worth three quarters of a trillion dollars in 2012; with a 12% CAGR, the industry will reach $1.6 trillion by 2020. Think of this space as an ecosystem capable of supporting a certain number of large, medium and small predators. The largest predators gobble of the biggest prizes while the medium and smaller predators fight over the scraps.
A Look At Global A&D Industry By Size
The industry has traditionally been led by North America and Western Europe but this is beginning to change as Asia, the Middle East, Eastern Asia, Russia and Brazil are spending significantly more than in the past. In the A&E industry the split between commercial and defense revenue has been steady for the past decade with 59% of the aggregate revenues spent on defense and 43% spent on commercial aerospace, primarily in aircraft manufacturing.
Over the past decade, the top three “Tyrannosaurus Rexes” have not changed: Boeing is the largest with worldwide sales of $69 billion, European Aerospace & Defense Agency (EADS) at $68 billion and Lockheed Martin at $46 billion. The “new rex” on the block” is Finmeccanica, an Italian conglomerate, with $42 billion in revenues.
As for “Raptors” Bombardier ($18 billion), Thales ($18 billion), Safron ($16 billion) and L-3 Communications ($15 billion) are some of the better known and there are a slew of smaller companies in the $5 billion to $15 billion range.
Major sub-sectors in the A&D include: weapon systems and ammunitions, space launchers and satellites, naval systems, including shipbuilding, land systems, including vehicles and equipment, aircraft manufacturing, design and integration, aircraft, sub-systems and components, aircraft services including MRO & IT, and defense electronics and communications.
A “Raptor” Or Mid Sized A&D Leader: Thales Group of France
Thales Group is a French multinational company headquartered in Paris. The company designs and builds electrical systems in aerospace, space, defense, security and transportation markets. The company employs 68,000 people worldwide, less than half of the 170,000 Boeing employees. The company spends $3.3 billion (2.5 billion euros) a year on Research & Development, has a portfolio of 13,000 patents, five joint laboratories with universities in France, the United Kingdom, the Netherlands, Singapore and Canada and more than 30 partnerships with universities and public research institutes in Europe, Asia and the United States.
Thales has and amazing portfolio of projects in the sectors they work in and a number of achievements. Following are just a few:
- the number one worldwide in air traffic management with more than 40% of the worlds airspace managed by Thales
- number three worldwide and number one in Europe in avionics
- number two in the world in in-flight entertainment and conductivity
- number two worldwide in rail signaling systems
- world leader in European Train Control Systems (ETCS) for urban rail networks and integrated supervision systems for transportation networks
- number one worldwide insecurity for interbank electronic transactions
- number three worldwide in hardware-based encryption systems
- number one in Europe in information system security
- strong growth in critical infrastructure, security and border protection
Though Thales is small when compared to the larger entrance in the A&D market, it has carved out a significant niche in the industry and continues to grow and prosper. As to whether it is a healthy Raptor or a baby Tyrannosaurus Rex, we’ll have to wait and see. With the A&D market set to grow to nearly $2 trillion by 2020, IndustryTap will be watching to see what happens in the sector, with respect to mergers, acquisitions, new entries, emerging technologies, worldwide balance of power and more.