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30 August 2023
The Aerospace and Defense industry has encountered challenges that greatly affected its supply chain, resulting in increased complexity. These challenges stem from factors such as the COVID-19 pandemic, workforce shortages, and the recent Russia-Ukraine conflict. Major defense companies have identified supply chain challenges as the primary cause of missing revenue targets and reduced growth forecasts. Furthermore, the industry’s situation is complicated by the fact that most defense suppliers serve both aerospace and defense equipment manufacturers.
To address these issues, several noteworthy government policies have contributed to the growth of the US Aerospace and Defense sector, as highlighted below:
• The Department of Defense’s budget request of $842 billion for fiscal year 2024, driven by strategic competition with China. The government is prioritizing defense budget allocation towards defending the nation, supporting service members and their families, and fostering stronger relationships and cooperation with allied nations.
• A significant increase of 40% in funding for the Pacific Deterrence Initiative, aimed at strengthening force posture, enhancing defenses in Hawaii and Guam, and fostering closer collaboration with allies and partners in the region.
• Investments in infrastructure, logistics, domain awareness, and resilience in countries such as Japan, Australia, Guam, and those involved in the Compact of Free Association, with a focus on forward-stationing and deploying additional forces.
The government’s strategic budget allocations have increased defense infrastructure investments and collaboration with allied nations, thereby strengthening the industry’s growth potential.