Arlington, Va. – In case you missed it, AIA President and CEO Eric Fanning joined the Defense and Aerospace Report podcast yesterday to discuss challenges industry faces to ramp production in an uncertain budget environment.
Fanning emphasized the need for clearer, more sustainable demand signals from the Pentagon and Congress. He underscored uncertainty of defense funding as one of the main pressure points for industry. Industry relies on stable and adequate funding to invest in new technologies and preserve legacy programs — the prospect of entering the next fiscal year without a defense budget disincentivizes industry to spend the necessary capital expenditure to meet demand at scale and speed.
“The demand signals need to be married with resource.” Fanning said. “If we’re going to enter the next fiscal year without a budget, that sends a very mixed message to industry so that companies are skeptical about the durability of the demand signal and it being met with resource.”
Coupled with supply chain bottlenecks, Fanning highlighted the challenge of the interconnected nature of the commercial and defense supply chain. He warned that if government work becomes too uncertain or burdensome companies could choose to prioritize non-defense production lines.
“The supply chain is not monolithic — there are lots of issues that impact it,” Fanning said. “Most AIA members are doing defense and non-defense work and asking: ‘Do I want to make extra investments on my defense side at the expense of my non-defense side, which is also surging?’”
Fanning also discussed the legislative status of intellectual property rights, emphasizing that at a time when industry must meet unprecedented demand, forced disclosure of proprietary information without compensation discourages participation in the defense industrial base.
You can listen to the full podcast here.
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