The aerospace and defence industry across the globe is an enabler of modern society. Many of the same companies that produce civil, commercial and military aircraft and spacecraft, also contribute to the progress of a multitude of non-aerospace sectors. Globalisation is a key trend in this industry. As a result, aerospace is becoming more global with each passing year.
Globalisation of aerospace industry
Much like many car and truck models, it is becoming increasingly difficult to define, say, a large commercial aircraft as either ‘European’ or ‘American,’ since a large percentage of their parts content is manufactured in different regions of the world and assembled in others. As the industry becomes more global, the mega-contractors—referred to as ‘large systems integrators’ or ‘primes’—that fully assemble the myriad parts and subsystems into an aircraft increasingly, are partnering with suppliers around the world versus relying mostly on companies close to home.
There are several reasons for this trend, which include gaining or expanding access to distant markets, spreading the financial risk of developing a new aircraft model and avoiding interruptions in production by securing backup sources of critical parts and materials.
Role of SME sector
Small firms make up the vast majority of the global aerospace industry, but they are no less important to the job of building a completely assembled aircraft, whatever form it takes. Small suppliers are also responsible for much of the engineering innovation that fuels the aerospace industry’s growth. This is where policies like ‘Make in India’ have a big role to play in creating an ecosystem of agile defence manufacturing and boosting the SMEs in the supplier ecosystem.
The ‘Make in India’ policy was a welcome move for a country of over a billion population, for two reasons. Firstly, manufacturing is the only segment that can create jobs on a large scale, hence, it can provide massive employment opportunities. Secondly, manufacturing brings in the much-needed balance on GDP that is currently skewed heavily towards services.
Challenges in aerospace & defence sector
The policy started on a good note and created a positive dynamic from many FIIs and global companies. However, the recently published results from industry bodies have a contrasting tale to tell. Despite a slew of measures, the manufacturing sector’s contribution to GDP has marginally fallen down from 2014 to 2018. So, the imminent question is—where does the problem lie? There could be several factors, however to understand the hurdles of aerospace and defence manufacturing sector in India, we have to analyse the following four challenges.
1) Program execution: In the past, the industry, as a whole, has had difficulty running development programmes for new business, commercial and military aircraft and spacecraft, driving up costs and missing critical delivery dates. Among other reasons, these programme management struggles could have been due to intense competition, which necessitated optimistic pricing, cost and delivery plans. A closer look at several large-scale programmes that have missed their commitments in recent years reveals many root causes, including the use of immature technologies, lack of appropriate levels of systems engineering discipline and a plethora of complex engineering changes after the programme was well under way. These are compounded by the growing complexity of today’s programmes and disruptive technologies. Programmes must seamlessly integrate advanced connectivity, sensors and other IoT technologies into an aircraft’s system of systems, new materials into airframes, as well as adopt industrial-scale Additive Manufacturing, multi-robotic advanced manufacturing and other production trends, in order to increase interoperability, safety and profitability.
2) Supply chain management: As the aerospace industry is faced with record-setting production rates to meet the growing needs for thousands of next generation aircrafts in the coming decade, the globally distributed network of suppliers is becoming more integrated all the time, allowing for seamless commerce between companies. However, orchestrating global supply chains has greatly increased the complexity of managing teams of contractors. Every supplier—regardless of size—plays a critical role and hiccups, even at the lowest levels of the global supply chain and can create major disruptions in the flow of essential parts and materials for the programme to remain on schedule and on budget. The large companies who do the final assembly of aircrafts, could do a much better job at synchronising these networks of companies and be more transparent with information that could help them in meeting their commitments.
3) Affordability: Defence will remain a market valued in the hundreds of billions of dollars globally. The aerospace industry, faced with the need to embrace a new paradigm, is a prime example that improving the customer experience, no matter how essential, can be extremely difficult. The ability to satisfy this imperative—to fulfill this new customer experience—will be as much of a competitive differentiator as any other part of an aerospace contractor’s business. From offering new customer experiences with optimised cabin layouts, amenities and Wi-Fi, to delivering sophisticated unmanned aerial systems or private-sector space rockets that can carry passengers, companies must innovate, build and operate systems that can compete with new entrants and cash-infused startups, and embrace innovative technologies, while working with flat budgets and driving down costs.
4) Workforce: Due to the technology-intensive nature of aerospace, the industry requires highly skilled labour. It also requires a sufficient number of engineers and scientists in critical disciplines to sustain a culture of innovation. As companies redefine their workforce and how they partner with their supply chain, they must be able to facilitate knowledge transfer and protect intellectual property. This need is inspiring the industry to rethink traditional strategies in collaboration and business processes. It is also inspiring the industry to partner with academic research institutions, such as, the 3DEXPERIENCE Innovation Centres in Karnataka and Andhra Pradesh.
With the 3DEXPERIENCE platform, we look at attempting to answer some of the challenges. These include cloud-based offerings, which can substantially bring down the TCO of some key digital technologies that are used for virtual validation before the goods are produced physically. The focus needs to be on getting it right the first time and every time, thereby, reducing the cost of re-work and time.
Furthermore, the built-in abilities to power innovation in the manufacturing domain, especially the Additive Manufacturing solution that helps these organisations to embrace new materials and new methods, opens new horizons of possibilities in the world of manufacturing. In this domain, the 3DEXPERIENCE Marketplace offers to bring buyers, sellers and producers of goods on one platform, providing a larger audience to each and thereby, improving the price for buyers, reducing the cost for sellers and providing the economies of scale to the producers.
Thus, in conclusion, it can be said that the success of the ‘Make in India’ initiative lies in the success of the SME/MSME sector and not just the large enterprises. Empowering SMEs/MSMEs through the access of the above digital technologies can be one of the ways to bring the agility in sectorial transformation. The Indian government should quickly address these shortcomings so as to ensure that the industry continues to grow and emerging new players get a level playing field.