2022 Aerospace and Defense Industry Trends

Aerospace and defense industry is gradually recovering from the pandemic consequences, but still remains vulnerable as the world hasn’t fully overcome this crisis yet. Nevertheless, this year, the industry is going to focus on implementing innovations and searching for more opportunities for growth.

So, what trends are expected to shape the industry this year? Read further to explore the most significant of them in detail.

Decarbonization: Meeting the Need for Net-Zero Emissions

Following the adoption of various initiatives aimed at reducing the negative effect of industries on climate change (e.g. the European Green Deal), decarbonization remains a trend that is here to stay for at least a couple of decades. Currently, A&D organizations are expected to leverage latest technologies and focus on technological and operational improvements to address the sustainability challenge. First of all, this refers to green manufacturing, namely reducing Scope 1 and Scope 2 emissions (produced directly and indirectly during manufacturing and operations correspondingly). This can be achieved by means of:

utilization of advanced technologies (e.g. digital twin, additive manufacturing) to improve product design and engineering,
selecting sustainable alternative materials,
combining smart technologies and green energy (the factory of the future),
supply chain reconfiguration and streamlining shipping and distribution.

Reducing Scope 3 emissions (produced by the manufactured product, e.g. an aircraft during flight) is more challenging as long as they are more difficult to control. However, the A&D companies should use emerging technologies such as sustainable aviation fuels and electric propulsion to reduce their significant carbon footprint. [1]

Advanced Air Mobility: New Era in Transportation Service

Advanced Air Mobility refers to the application of new-generation vehicles, such as flying cars and cargo drones driven by electric vertical take-off and landing (eVTOL), which is expected to revolutionize urban mobility. Currently, some organizations have passed the research and development stage and are performing testing and piloting of the innovative vehicles. For example, NASA established the Advanced Air Mobility (AAM) National Campaign and has already started testing the all-electric vertical takeoff and landing aircraft that could serve as an air taxi in the future [2]. Therefore, further developments and testing of these vehicles will continue in 2022.

Space Market Growth: New Opportunities

2022 Aerospace and Defense Industry Trends image 4 | Epicflow

In 2022, developments related to the launch industry, satellite trends, and new technology are expected to facilitate growth in space-based services. What is more, according to the top space companies’ executives, space exploration growth along with private aerospace business offers certain economic possibilities, from new markets to job opportunities. There are several trends that will shape the space economy in 2022.

Increase in private investments in space companies, which will accelerate innovations coming to market.
The rise of public-private partnerships: governments and companies will collaborate to reduce space risks for humans and manage space traffic effectively.
Job opportunities creation: this refers not only to scientists and engineers, but also to those dealing with accounting, IT, marketing, design, manufacturing, and more.
Licensing deals instead of building and owning strategies by government agencies. [3]

Smart Factory and Digital Thread: A Step to Higher Production Efficiency

The A&D industry also has to cope with unprecedented innovations and increased complexity. These challenges can be addressed with the help of a digital thread and smart factory.

The digital thread is an innovative approach to a product’s whole lifecycle, from its design to marketing and sales. It facilitates interaction between the physical and digital worlds and makes it possible to collect real-time data and feedback along the way. Therefore, A&D organizations have opportunities to reduce service cost, speed up product time to market, stay agile and be able to meet customer’s changing demands.

The other innovative solution that can accelerate operational improvements is smart factory that involves connecting people, machines, data, and value chain in smart factory networks. These solutions will help A&D companies to reduce costs due to optimized production, increased visibility, and better quality.

So, in 2022, the industry is expected to take advantage of both solutions to increase production efficiency. [1]

Mergers and Acquisitions: Key Drivers

According to PwC [4], defense M&A activity is likely to be driven by growing geopolitical competition and technological innovations, and is expected to develop actively in 2022 and further. The investments will be focused on emerging technologies through the acquisitions of innovative startups. As for the deals in the commercial aerospace sector, they are likely to remain dependent on the post-pandemic recovery pace.

As for the general M&A focus of A&D companies, they should be ready to execute those mergers and acquisitions that are associated with delivering innovative capabilities and expanding into new markets, e.g. hypersonics, space tourism, and electric propulsion [1].

Military Technology Trends

New technologies aim to transform the battlefield in the following directions: sustainability, autonomy, connectivity, and lethality. The picture below illustrates the most influential ones [5].

Aerospace and Defense Industry Trends 2022 3

And here is a brief outlook of how these technologies can be used in the defense domain.

Artificial Intelligence contributes to computational reasoning for ISR (intelligence, surveillance, and reconnaissance) missions. Digital twin technology and machine learning allow defense manufacturers to test military product iterations.
Advanced Defense Equipment involves the one that enables hypersonic flights, directed-energy weapons, space militarization, and more.
The implementation of robotics and autonomous systems allows the military to reduce soldiers’ workload, protect forces, increase situational awareness, search rescue operations, and perform other functions.
The Internet of Things makes it possible to connect ships, planes, drones, and soldiers with operating bases and make them a cohesive network.
Offensive cyber warfare is used by the military in various forms from malware to phishing attacks. In turn, the defense domain is suffering from cyberattacks as well, so its another focus is cyber protection that can be achieved by means of combining cybersecurity, automation, and AI.
Immersive technologies, such as virtual and augmented reality, are used to improve combat training and real-time decision making.
Additive manufacturing makes it possible to reduce costs for producing defense equipment, enable new engineering solutions, and minimize logistics load.
Big data allows the military to gain strategic advantage thanks to quick and effective data collection, analysis, dissemination, and the opportunity to run simulations for better decision-making.
5G provides instant situational awareness, enhances training and battlefield capabilities. This is achieved due to its fast speed, hyper-converged connectivity, secured data networks, and the ability to connect distant equipment into a battlefield network.
Blockchain-based solutions are mostly used to protect military data and counter cyber threats.

The Impact of Russia-Ukraine War on Aerospace and Defense Industry

In a nutshell, the defense sector is going to develop actively to meet the increasing demand for weapons, while the aerospace sector, especially commercial aviation, has already faced some challenges. Here are the most significant consequences of the ongoing military conflict.

Rising demand for weapons.

This has been caused by two factors: providing military aid to Ukraine by the US and some of the EU countries as well as the rearmament intention demonstrated by a number of NATO countries in response to the Russian aggression [6].

Increasing defense spending.

Defense orders and future budgets in the U.S. and Europe are expected to grow significantly. What is more, over the next five years, spending on military equipment could rise up to 50%. In particular, a number of the European Union countries (including Germany, Sweden, Belgium, Poland, Lithuania, Romania, Denmark, France, Latvia, and the Netherlands) have declared their intention to increase their annual defense expenditures. [7; 8]

Challenges for commercial aviation.

A great number of countries have closed their airspace as a result of the war: Ukraine, Belarus, and Moldova have done so due to the risks related to military actions, while air travel between a great number of countries (the U.S., the EU countries, Canada, and others) and Russia has been canceled. This poses certain challenges for commercial aviation, e.g., some flights have to be rerouted, which will increase their duration and fuel cost. [9]

Possible titanium shortages.

Russia has been one of the world’s largest suppliers of aerospace titanium that is used in the production of commercial and military aircrafts. For example, Boeing and Airbus relied on Russian titanium in manufacturing their aircrafts. As a result of sanctions, A&D companies can no longer order raw materials from Russia. At the beginning of the year, manufacturers prepared for possible shortages by replenishing titanium supplies. But, obviously, they will have to look for alternative sourcing channels to avoid risks of titanium shortage. [10]

Project and Resource Management in Aerospace and Defense

In 2022, as the industry is facing ongoing development, the number of projects and their complexity is increasing, and the need for proper project and resource management is growing as well. The abundance of projects turns A&D organizations into complex multi-project environments with interdependent projects and shared resources. Besides, the number of people engaged in these projects is growing as well; plus they are often distributed across the globe, which creates additional hurdles on the way to successful implementation of initiatives. To ensure seamless delivery of A&D projects and programs, organizations require purposeful and well-thought project and resource management efforts, which means that project and resource management will maintain their relevance in 2022.

Conclusion

Basically, 2022 will be marked by continuing recovery and implementation of digital innovations for the A&D industry. Let’s summarize the main trends to be observed this year.

Reducing negative environmental impact by means of decarbonization.
Further development and testing of innovative eVTOL vehicles (flying cars and cargo drones).
Significant growth in the space market opening numerous possibilities from new markets to job opportunities.
The adoption of smart factory and digital thread as means of increasing production efficiency.
Increased number of deals as part of mergers and acquisitions activity.
The most influential military technologies will include artificial intelligence, advanced defense equipment, and robotics and autonomous systems.
As a result of Russia-Ukraine war, the defense sector is going to develop actively, while aerospace can face certain challenges.
Project and resource management will maintain their relevance this year due to the increasing number of initiatives and projects to be implemented.