Survey: Cost Cutting The Top Challenge For Defense Execs

Wall Street Journal (Jarzemsky, Dow Jones Newspapers) - Cost-cutting pressure is the top challenge among aerospace and defense executives, and most firms are outsourcing engineering services to better manage costs, according to an Accenture PLC (ACN) survey. The consulting firm's survey of 31 executives based in Asia, Europe and the Americas comes as the sector has been contending with a U.S. Department of Defense that is shifting priorities and slowing spending growth. Lockheed Martin Corp. (LMT) Chairman and Chief Executive Bob Stevens recently said the industry faces "a new reality" as a decade-long military spending binge tapers off.

The study found 90% of executives saw cost-reduction pressures as one of their three biggest challenges, followed by supplier consolidation at 52% and increased competition from new players at 36%. Meanwhile, 61% of executives surveyed said they're buying engineering services to better manage costs. Respondents considered confidentiality, impact on quality and flexibility for fluctuating demand crucial when sourcing engineering consulting services. Read Accenture survey here.