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Cost reduction top priority for aerospace executives

 - July 18, 2010, 12:06 AM

Pressure to reduce costs is the top priority facing aerospace executives, according to a new survey by global management consultancy Accenture. As a result, companies will be forced to increase the use of external engineering services over the next three years, it finds.

The survey, carried out with 31 senior executives in “leading aerospace and defense companies worldwide” revealed that 61 percent were already buying in engineering services to improve management of production costs. Supplier consolidation was the second major challenge, followed by increased competition from new players in the industry.

“Until now, companies have tended to buy services locally. Going forward, they will buy more often from global locations as doing the work costs less and improves efficiency,” said Accenture aerospace and defense managing director Damien Lasou. Another finding was that pricing was critical, ranking among the top three criteria for decision-making. However, companies wishing to outsource face three main difficulties: confidentiality, impact on quality and flexibility to fluctuations in demand. 

Accenture, with net revenues of $21 billion in 2009, currently has aerospace and defense contracts with BAE Systems (supply chain management), Avio (high-performance supply chain), Thales (knowledge management) and Finmeccanica (better information for high performance).