The price of aeronautical engineering services is projected to grow at a slightly slower rate in the three years to 2017, primarily due to anticipated weak demand from the military
Los Angeles, CA (PRWEB) January 07, 2015
Aeronautical engineering services have a buyer power score of 3.9 out of 5, which indicates moderate buyer power in the market. On one hand, buyer power is restricted due to the high level of specialization and low availability of substitute services. At the same time, the highly fragmented nature of the market has fueled competition, benefiting buyers. “Moreover, the low level of vendor financial risk has further bolstered buyer negotiation power,” says IBISWorld procurement analyst Agiimaa Kruchkin. “Consequently, despite the existing challenges, buyer power has strengthened over the three years to 2014.”
Over the past three years, demand from the commercial sector has slowly rebounded. Namely, research and development expenditure, indicative of demand from aircraft manufacturers and operators, has trended upward, fueling demand for aeronautical engineering services. Likewise, domestic trips by US residents have risen, supporting service price growth. However, the fragmented nature of the market has intensified price-based competition, aiding buyer power to an extent. Furthermore, the subsiding level of federal funding for defense has hampered price growth. “Government agencies typically procure these engineering services under multiyear contracts,” adds Kruchkin. “Thus, as military spending has weakened, demand for aircraft design, repair and maintenance services has plummeted.” Falling federal funding for defense presents significant is expected to severe limit growth in the price of aeronautical engineering services.
Demand for aeronautical engineering from the commercial sector will continue to grow in the next three years. Namely, the anticipated rebound among aircraft operators and manufacturers will boost demand for engineering services. As a result, reviving demand will offset the dwindling role of government agencies and maintain buyer power in the three years to 2017. Also, price-based competition is anticipated to further intensify in the next three years, which will prevent vendors from drastically raising prices. Although service prices are expected to grow at a tepid rate, buyers can still benefit from establishing multiyear supply contracts. For more information, visit IBISWorld’s Aeronautical Engineering Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of aeronautical engineering services, often referred to by the broader term of aerospace engineering. Operators provide expertise pertinent to the design/concept/analysis, production and the in-service (i.e. maintenance, modifications, logistics and fleet support) phases of aircraft or related devices. Relevant services include durability tests, thermal analysis and damage tolerance analysis. Aeronautical engineers also offer consultancy services to help improve the productivity and efficiency of the buyer's operations by better managing talent and the costs of production. Additionally, some vendors provide services aimed at achieving different certifications, such as approval of a device or a plane by the Federal Aviation Administration.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.