The term ‘aerospace’ is uses to refer to the Earth’s atmosphere above our planet. In other words, this is the part of atmosphere through which commercial, personal and military vehicles fly. Aerospace is often used to refer to the research, designing, manufacturing, operation and maintenance of vehicles that can fly. Defense, on the other hand, is a military action that is concerned with the protection of the country against an attack. Therefore, the term ‘aerospace and defense’ refers to the use of flying vehicles and aircraft to protect the borders of a country against an offense.
The Aerospace and Defense (A&D) industry is a critical business area that is more than just a business. Of course, there are businesses that are concerned about production, sales and profits, but this is one area of operations where countries take active interest because of their need to protect themselves.
Recent Changes In The Aerospace And Defense Industries
In recent times the A&D industry has gone through many changes, and some of them have been positive for the business and some not so positive.
Firstly, in the last decade or so, the perception of threat has increased – international terrorism has made it worse. Nations of the world have had to strike against Iraq and Afghanistan. There have also been instances of regional political tensions in China, India, Pakistan, and in other parts of the world. Countries are always trying to get the latest machinery so that they can remain armed and can face any contingencies. Because of this, the demand for A&D has only risen.
It also needs to be remembered here that this is a high technology industry that changes rapidly with scientific and technological breakthroughs. What this means is that, countries need to upgrade their facilities as new technology makes the old redundant. In other words, if your political enemy has upgraded, your defense abilities may fall short and you must also upgrade your resources.
This, of course, means that the aerospace and defense industry can keep selling to the same customer over and over again. But not everything is that good. In fact often, there are a great number of challenges. The main threats are from uncertainties concerning the supply of oil and the steep price hikes, political uncertainties and a worldwide credit crisis because of which countries are worried whether they will be able to meet the high prices of the A&D companies or not. There have been, after all, instances of default. There have also been instances where countries have had to take a loan to meet their defense needs.
The A&D Business And Industries Worldwide
These are big businesses and contracts can run into billions of dollars. Naturally there is a lot of competition among companies. There are usually two kinds of contract. Firstly, there is the contract of sale and second there is the maintenance contract wherein engineers of the company maintain the facilities, train government staff to maintain them, or do both.
Some of the biggest companies in the aerospace and defense industry are based in the European Union (BAE Systems, EADS, Dassault, Finmeccanica and Thales), China (the manufacturing and research facilities are located in Nanchang, Shenyang, Shanghai, Chengdu, Xian and Beijing), India (HAL in Bangalore), Russia (United Aircraft Building Corporation and Oboronprom), the UK (BAE Systems) and the US.