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April 30, 2020

Covid-19 and the current defence aerospace opportunity

By GlobalData

With the Covid-19 crisis impacting both commercial and defence sectors of the aerospace industry, the critical first stage of measures was the injection of cash through the defence supply chain to maintain viability of the chain and its supplier constituent parts. In the medium term, the question as to how primes that straddle defence and commercial will respond to the situation financially has loomed large.

Comments by James Geurts, assistant secretary of the US Navy for research, development and acquisition, point to the potential to use the stalled commercial sector’s facilities to perform a number of defence sector tasks. The US Navy has accelerated new orders and contracts, buying spare parts and conducting depot maintenance at accelerated rates, during the period commercial aviation at these facilities has all but frozen.

The accelerated order of spare parts serves beyond pushing cash through the system, in that it also serves for greater efficiencies and better preparedness, as evidenced by Nato Deputy Secretary-General (DSG) Dan Mircea Geoană’s comments this week that Nato states need to improve their stockpiling and be more systematic in the process. The dispersal of the different facilities in the supply chain, such as F-35 facilities in hard-hit Italy, has highlighted the difficulty presented by facility dispersal and potential vulnerabilities.

With the downturn in commercial activity and the Covid-19 crisis highlighting deficiencies and problems both in the supply chain as well as the preparedness methods currently in place, the current stage of the crisis presents defence with an important opportunity to build stockpiles of critical equipment, both pushing cash through the system and allowing a rapid build-up of thus-far limited stockpiles needed for future crisis, pandemic and conflict preparedness.

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