'Flat Was The New Up'

No growth may be good growth. At least according to Deloitte's new 2011 outlook on the aerospace and defense industry. In a statement, the company announces:

"Flat was the new up" in 2010. Last year was a comparatively good year contrasted with many other industries. Aerospace & Defense (A&D) sector sales and profits were relatively flat, which was good in a recessionary environment. Looking ahead, flat revenues and profits may again be the story for the overall industry in 2011.

The Deloitte report, "Aerospace & Defense 2011 Outlook," attributes the forecast to the continued impact from anticipated defense spending cuts, offset by an uptick in commercial aerospace, and the slow recovering economic cycle.

There is a sense of unease as the Department of Defense (DOD) budgets for research, development and procurement are moderating or declining. Given the slowdown in U.S. defense spending, the report suggests that contractors need to consider how to replace revenues in areas such as foreign military sales, growth in adjacent markets and through gap filling and scale building acquisitions for example.