Conference: Aerospace Defense Companies Can Help Save the Planet by Expanding into Adjacent Markets

 - November 23, 2012, 7:30 AM
Aerospace, defense and security companies should expand into adjacent markets, the E3DS conference in London heard. This chart explains Finmeccanica’s strategy to offer its expertise for earth monitoring and climate change; natural resources management; energy management and sustainable mobility; and healthcare and education. (Slide: Finmeccanica)

Managers and R&D specialists from the aerospace, defense and security (ADS) sector met in London last week to explore emerging adjacent markets, such as energy, environment and climate; food and water security; and natural disaster protection and response. Sponsored by EADS, Finmeccanica, Lockheed Martin, Northrop Grumman, Raytheon and Saab, the event was the third in a series organized by British consultantcy Dynamixx, in association with IHS.

According to one estimate from The Stimson Center, the civil and societal security market is worth $200 billion per annum. ADS companies have already expanded into such areas as heathcare, IT and maritime and border security, but they have plenty to offer in the realms of energy, environment, infrastructure and communications, speakers argued. Moreover, ADS companies operate on a global scale that matches the global nature of many of mankind’s key challenges, noted Dyamixx CEO Nick Cook. With defense budgets in Europe and North America declining, the ADS sector should address these potentially valuable new markets, urged David Reeths, director of aerospace and defense consulting for IHS Janes. “Defense companies must overcome the ‘guns and butter’ myth...they can be a catalyst for social welfare,” he said.

Some attendees noted that ADS companies would have to move beyond their “comfort zone,” where governments fund most of their R&D, and their business model is based on responding to well-defined defense requirements. However, Dr. Ray Johnson, chief technology officer for Lockheed Martin, said, “I’m becoming more confident in our ability to work in nongovernment markets.” Finmeccanica senior vice president strategy Lorenzo Fiori described how the Italian-led group had already produced a five-stream “Planet Inspired” strategy to create new solutions that exploit defense technology that it has already developed. “Many of these new challenges involve integrating with legacy infrastructure–and we do that routinely in the defense sector,” he said. “Our system engineers become the enablers,” he added.