ALAMEDA, CA – The industry can expect reasonable growth over the next five years for aerospace, defense, and homeland security electronics, says Technology Forecasters Inc.

The research firm’s just-released report concludes that significant opportunities exist for suppliers to serve customers in these segments as they increase their reliance on outsourcing.

TFI estimates the total available market for this sector will grow to $152 billion by 2011, a 6.3% CAGR. EMS revenue from the sector will increase at a 9.3% CAGR, to $4.4 billion in 2011. EMS penetration will remain relatively low in the 3% range, TFI states.

In choosing OEMs, customers primarily focus on quality, dependable delivery, a competitive price, technical capability, and adherence to regulatory standards, says the researcher. Flexibility, responsiveness, and customer service also are critical issues.

Aerospace/defense electronics is attractive to EMS providers because of growth potential and portfolio diversification. However, the report flags several cautions: Contractual requirements can prove to be challenging; demonstrated experience in the government and aerospace contracting arena are critical for selection as a partner; government contracting moves at a much slower pace than the commercial world; upfront investment may take years to recover; project cancellations can occur; margin pressure in aerospace/defense is not as critical as the commercial world, but cost management is still an issue, says TFI.

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