As a partner to the majority of aeronautics, space, and defense industry stakeholders, ALTEN is driving the major projects currently taking place and helping shape the digital transformation of this industry. ALTEN’s unique market position also gives the company insider insights into new market entrants, alliances, and other major shifts that are changing the business environment.
Pierre Bonhomme, Executive Vice President ALTEN Technology France, UK, and Northern Germany, and Patrick Boulongne, Director of Business Development, spoke to ALTEN Mag about this rapidly-growing industry, which accounts for more than 20% of ALTEN’s annual revenue.
The Aeronautics, Space, and Defense market is unique in that it is dominated by a handful of big global players that are consolidating their positions through alliances and acquisitions: “Safran acquired Zodiac. UTC acquired Rockwell & Collins. Thales acquired Gemalto. And the top two aircraft manufacturers Airbus and Boeing have formed major alliances with Bombardier (on the A220) and Embraer, to name just a few,” said Mr Bonhomme, ALTEN’s Executive Vice President. ALTEN’s other markets are much more diffuse. The IT market is characterized by hundreds of players; the life sciences market has dozens. The aeronautics, space, and defense industry, however, is consolidating around a very small number of customers with a global presence. These market leaders are crucial to ALTEN’s business development strategy. ALTEN does also seek opportunities with smaller companies, however, especially when it comes to product development and innovative technology.
“ALTEN has been adapting to its customers’ needs and broadening its end-to-end service lineup for ten years now. We have made investments in integrating digital technology into our customers’ industrial environments. And, we take a comprehensive approach to our customers’ organizations. Airbus and Rolls-Royce are leveraging our know-how and capacity to create synergies. Today we are positioned to support our customers worldwide across all functions within their organizations.”
Pierre Bonhomme, Executive Vice President, ALTEN
A partner with diverse know-how
So, what do these customers expect from ALTEN engineers? The first thing they are looking for is a global, cross-country solution with the diverse know-how they need. “They want partners that are experts in development engineering, of course, but also in manufacturing engineering, supply chain, and IT and digital technology, which is where ALTEN does more than 30% of its business,” said Mr Bonhomme. These customers also demand extremely specialized skills due to a level of engineering maturity that is often higher than what is seen in other industries. “Some of the leaders on the aeronautics, space, and defense market are using pretty disruptive and, in some cases, pioneering practices,” said Mr Boulongne, ALTEN’s Director of Business Development, Key Accounts.
A global footprint
Another distinctive feature of the aeronautics, space, and defense market is that it is much harder to be approved as a supplier than on other markets. The major players are not thinking country-by-country, so potential suppliers have to have a global footprint to even be considered. “When our customers place their trust in us, our goal is to be wherever they need us. We want to be there to support them in reaching their objectives,” said Mr Bonhomme. “Thales recently came to us for support in 22 countries, and Airbus is looking to us to work with them in North America.” Mr Boulongne added: “When Dassault takes orders for the Rafale in Qatar, India, or Egypt, or when Naval Group sells submarines to Australia, they need partners to support them on these contracts, especially when there are offset clauses covering obligations like transferring technology or producing locally to promote economic development, for instance. These situations represent opportunities for us and for the customer who, by working with us, is guaranteed to have access to the right resources in the right location.”
For an ALTEN engineer, the “typical” assignment is changing. “We are our customers’ partners on all of their challenges,” said Mr Boulongne. “The issue is no longer what our customers’ want, but rather what our customers’ customers want. So, what we are seeing is a shift toward services. Airbus, for example, is looking to the supply chain to support the development and sale of new services like entertainment, fleet management, data analysis, and predictive maintenance to airlines. We are capable of supporting Airbus as it moves into these new lines of business.”
A strong growth outlook
The growth outlook on the aeronautics, space, and defense market is strong. Aircraft manufacturers currently have ten-plus-year order backlogs. The challenge will be to ramp up production while maintaining the level of quality that their customers expect, especially given the transition of production facilities to “Factory 4.0” technologies. Security, economic competitiveness, environmental protection, innovation, and reliability are still crucial, however, especially in today’s environment.
The big aircraft manufacturers are banking on incremental development and customization, with shorter development times. They are also investing in the new programs that will make the difference for them in terms of sales looking ahead. We are seeing new approaches to maintenance and retrofits for larger and aging fleets. And, at the same time, we are witnessing the emergence of whole new ecosystems, like the autonomous flying taxi.
New entrants on the space market like SpaceX and Blue Origin have spurred ALTEN customers to take all of the necessary measures to remain competitive. They come to ALTEN to bring their methods into the future with solutions that have proven their effectiveness in the automotive and civil aeronautics industries, for example. The “space race” is very topical right now, with projects like One Web, which will create a constellation of 650 microsatellites to provide worldwide internet coverage.
In defense, the scope of technology and know-how is also broadening. Cybersecurity has become vital amid increasing attacks, and ALTEN has the resources to roll out European-scale cybersecurity projects. The drone market is also driving growth, with many countries increasing their spending and starting new programs to respond to geopolitical situations.
“In the space industry, competition and the emergence of new market entrants are spurring innovation. The buoyant satellite market has benefited ALTEN, and we have seen strong growth in our satellite business since 2017.”
Patrick Boulongne, Director of Business Development, ALTEN