What makes high-performing A&D companies tick? has been saved
Analysis
What makes high-performing A&D companies tick?
Capabilities that can bolster competitiveness
Top aerospace and defense (A&D) companies that set themselves apart by offering competitive products at competitive prices are more likely to excel. How are these companies able to outperform the market? The answer may lie in their intense focus on certain competitive capabilities.
Explore content
- Download the report
- How can A&D companies improve their manufacturing competitiveness?
- Why study high-performing A&D companies?
- Framework for analyzing high performers
- Get in touch
What do high-performing A&D companies have in common?
Identifying the key capabilities that top aerospace and defense companies are investing in can help us understand their superior performance. It can also reveal how these high performers plan to continue to carry out their competitiveness into the future.
Based on our survey results, high performers are focusing on the following key capabilities for their current and future competitiveness:1
- Building a skilled workforce base and retaining talented employees
- Investing in cybersecurity and protecting intellectual property
- Leveraging Industry 4.0
How can A&D companies improve their manufacturing competitiveness?
Gone are the days when strong global growth helped companies generate substantial profits. Thus, identifying and investing in the right capabilities can be the key to becoming a top aerospace and defense company.
In these uncertain times, it can become much more important for A&D companies to quickly address any challenges they are facing, and at the same time, invest in new technologies that can help them cater to changing customer needs.
Overall, high-performing A&D companies should strive to protect their lead by being flexible and transforming themselves to suit changing market conditions.
Why study high-performing A&D companies?
High performers reported stronger financial metrics than other A&D companies over the last five years. To understand the importance of being a high performer, our analysis covered pure-play A&D companies or companies with A&D as their major business and with greater than US$2 billion revenues in 2016.
As can be seen in this chart, top quartile A&D firms grew much faster.2 Their profitability and free cash margins are double that of bottom quartile firms. And their returns on invested capital are more than three times that of bottom quartile A&D firms.
Framework for analyzing high performers
To better understand the specific capabilities that high-performing manufacturing companies are focusing on, the survey asked more than 500 chief executive officers to rate their companies' current competitiveness relative to their closest global rivals. They were also asked to rate how important they thought each capability would be to staying competitive in the future.
The results3 helped to conceptualize a framework with two principal elements:
- The positioning of 35 specific capabilities along two dimensions of:
- How competitive an organization is today with regard to the capability; and
- How important the organization believes that capability is to its future competitiveness.
- Identifying the capabilities that top aerospace and defense companies are focusing on to improve their performance in the future.
References
1 Deloitte Touche Tohmatsu Ltd. and Council on Competitiveness, 2016 Global Manufacturing Competitiveness Index Study, company-level analysis
2 Deloitte analysis based on data from S&P Capital IQ
3 Deloitte Touche Tohmatsu Ltd. and Council on Competitiveness, 2016 Global Manufacturing Competitiveness Index Study, company-level analysis
