Demand is Surging: Are Aerospace & Defense Keeping Up? | The Factory Doctor w/ Alex Krutz

Podcast Spotlights​

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Usually demand affects different sectors in opposite ways. When commercial is in a down cycle, defense is going up.

 

Michael Bruno is seeing something he’s never seen before - a ‘ramp-up everywhere.’ And it’s not all roses.

 

As Executive Editor at Aviation Week, he’s talking to leaders across the industry, and seeing signs of stress. Here are the insights from our conversation.

 

When Every Sector is Hot, You’re At Risk of Being Replaced

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I think companies right now are really starting to struggle with how do they meet the demand of every P&L going up at the same time.

And I'm beginning to hear more stress. It's a great problem to have, but I'm beginning to hear more stress within industry about meeting this demand and not just fumbling the opportunity of a lifetime.

This is a generational opportunity, but it does come with risks. Michael pointed out that SpaceX building its own foundry points to the fact that they couldn’t get the products they need fast enough.

 

The Big Surprise About Tariffs Was How Little They Held Back the Industry

 

Tariffs have not become the barrier that I think almost universally everybody would have said before tariffs got announced... Companies wound up having more strategies than they knew of…more levers to pull. 

 

Companies have enjoyed fruitful profits from free trade and low cost outsourcing, but the lowest purchase price isn’t always the best price. 

 

Rising Prices Can Also Create Rising Profits

 

For our industry, prices have been down for so long and unable to go up that prices going up now, and looking like they can continue to inch up, is actually a good thing. It's going to mean more reliable revenue that's actually turning into profit on a wider scale across the board. 

 

For a long time, prices were frozen, sometimes locked in with long-term agreements based on decade-old structures. Now we’re entering an era where increasing costs are expected. And those increased costs can create increased profits for investing in things like next-generation aircraft and service improvements.     

 

Want to go deeper? Click to watch on YouTube, Apple Podcasts, or Spotify.

You’ll also discover: 

• Why GE Aerospace spent $12 billion on a castings supplier,

• How vertical integration is making a comeback,

• Why expanding capacity should be a national priority,

• What tech will go into next gen aircraft.