February 13, 2025

Advancing Digital Growth

Pioneering Technological Innovation

2025 Aerospace and Defense Industry Outlook

2025 Aerospace and Defense Industry Outlook

3. Strategic spending: Defense priorities are helping shape spending in the industry

While the demand for aerospace and defense products and services comes from both the commercial and defense sides, much of the strategic spending is being driven by, or heavily bolstered by, defense priorities. In 2025, the industry is expected to see continued and growing focus in several key areas, including rocket technology, unmanned systems, and space capabilities.

The space economy continues to grow, fueled by the commercial sector

According to the Space Foundation, the global space economy grew to US$570 billion in 2023, a 7.4% year-over-year increase (in line with a predicted five-year compound annual growth rate of 7.3%), driven primarily by the commercial sector.21 In particular, the positioning, navigating, and timing (PNT) subsector accounted for about 47% (US$209 billion) of the commercial total of US$445 billion.22 This market is expected to grow by 155% by 2035 and may be the prime focus in the year ahead.23 Companies in sectors from supply chain management to transportation are likely to continue to lean on PNT technologies for location-based services.24

Rising investments and focus on solid rocket motors in the defense sector

The US defense budget request for fiscal 2025 reflects the DoD’s continued focus on investing in strategic areas to strengthen the defense industrial base by leveraging the Defense Production Act Purchases and the Industrial Base Analysis and Sustainment programs. These programs have a combined total budget request of US$1.5 billion.25 Meanwhile, US$163.4 million of the fiscal 2025 budget request is allocated to hypersonic research and development efforts to address lead time and sub-tier 1 supplier issues for thermal protection and solid rocket motor technologies.26

This priority for solid rocket motors ranges from missile technology to requirements in the space arena. In fact, a focus on solid rocket motors is not new but a continuation of a growing trend that is contributing to a flurry of commercial activity. In the past year alone, the Army, Navy, and Air Force have invested over US$100 million in new market entrants working to develop large solid rockets.27 In just the last two years, there have been a number of high-profile deals in the aerospace and defense industry: A US prime contractor acquired one of the two solid rocket motors providers in the United States28 and two primes signed a strategic agreement to produce rockets in large quantities.29

Over the last decade, the DoD budget requests for procurement and R&D related to missiles and munitions have increased by 340%, reaching US$30.6 billion in fiscal 2024 from US$9 billion in fiscal 2015.30 These signs indicate that the industry can expect to see continued growth in the global solid rocket market through 2025.

Unmanned aerial systems at the forefront of defense and commercial expansion

Geopolitical tensions are contributing to much of the current and projected focus of defense spending. Nowhere is this impact more evident than in the unmanned systems (aka drone) market. A year ago, some estimates valued the 2023 global military drone market as high as US$20.21 billion.31

The pace for unmanned systems will likely remain in focus in 2025. The fiscal 2025 DoD budget request allocates a portion of the US$61.2 billion for air power to unmanned aircraft systems like the MQ-4 Triton and the MQ-25 Stingray.32

On the commercial front, operators are finding applications for unmanned aerial systems in an array of industries including construction, real estate, infrastructure, oil and gas, agriculture, and logistics.33 In a landmark decision for the US aviation industry, the Federal Aviation Administration will now allow simultaneous beyond visual line of sight flights for multiple commercial operators in the Dallas area.34 This, in addition to potential sanctions on foreign-made drones, may set the stage for further growth in unmanned aerial systems.35

From military demands to commercial applications, 2025 is shaping up to be a year of continued growth for several next-generation unmanned technologies in aerospace and defense.

link

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright © All rights reserved. | Newsphere by AF themes.