Defense Could Become Delayed Casualty of COVID-19
By Dan Markham
on Oct 13, 2020
For the aerospace market, defense spending has provided a buffer to the brutal news the industry has experienced since the start of the pandemic. While other markets, such as automotive, have already seen rebounds from the shutdowns associated with the onset of the coronavirus outbreak, commercial aerospace is a long way from recovery.
"Clearly military markets carried more of the load in the first half of 2020 as the impact of the virus began to manifest itself,” said TIMET’s Henry Seiner during this week’s 2020: Titanium Virtual Conference presented by the International Titanium Association.
According to Aviation Week, approximately 2,100 military aircraft will be delivered across the globe over the course of the next five years, continuing to prop up the market. About 22 percent are deliveries to North America.
But defense isn’t necessarily immune to the effects of the virus. It just may take a little longer to suffer the consequences.
Looking back at the most recent recession, the global financial crisis of 2008-09, defense spending took a considerable hit in the five years after the downturn ended. With a few exceptions, most countries with significant defense budgets reduced spending in the half-decade following the recession.
“There are other factors that will help determine what the next 5-10 years look like, but clearly there’s been a significant amount of spending by governments to counter the virus in 2020. Expectations are it will be drawn out and the recovery will be uneven, such that defense budgets will be under the magnifying glass in the coming years,” Seiner said.
Aviation Week estimates global defense spending will decline by about 5 percent over the next five years, approximately $70-80 billion annually. However, it’s possible the reductions in spending could be twice that amount.