The worldwide military maintenance, repair and overhaul (MRO) sector will experience an additional business decline of almost 3% from 2013 to 2014, according to Hal Chrisman, a leading analyst and vice president at aviation consultant company ICF SH&E.
Chrisman spoke at Aviation Week’s 2013 MRO Military conference in Atlanta on April 17. He said forecasting – a critical component of most industries but particularly in the after-market MRO world – this year is incredibly tricky, particularly in the U.S. where the Obama administration just last week released its fiscal 2014 budget request – a proposal widely criticized or lamented for ignoring the 2011 Budget Control Act’s mandates, as well as the effects of the law’s sequestration cuts that took effect last month.
So far, it appears defense operations and maintenance spending will drop nearly 8% from fiscal 2013 to 2014. But, “Analyzing this budget is a high-risk proposition,” Chrisman said.
Chuck Artymovich,Aeronautics vice president and general manager for modification and MRO, agreed. “What’s our environment? I don’t know, and our customer doesn’t know – [that is] for sure – right now,” he said in a difference panel on industry’s response to budget reductions. Artymovich said the effects of 2013’s sequestration will not be felt for another 6-12 months, and he warned defense officials’ plans, in part, could try to in-source work from contractors to protect against new rounds of base realignment and closures sought by the White House and Pentagon leaders.
Said Artymovich, “We are going to go through some very turbulent times over the next couple years, and the decisions that are being made are being driven not necessarily by smart economics … but because of the loss of jobs and politics.”