Analysis of the results of a recent poll by Verdict indicated that COVID-19 is expected to have a disruptive impact on defence supply chains.
The poll was conducted to assess the impact of COVID-19 outbreak on defence supply chains.
The poll analysis, based on 480 responses, showed that 85% of the respondents believed COVID-19 outbreak would be disruptive on defence supply chains. A majority 48% opined that the disruption will be high, having chosen to answer ‘very disruptive’.
A moderate disruption is expected by 36% of the respondents, while approximately 15% of the respondents predict a minimal impact of the outbreak.
Reflecting the concern is the US Department of Defense’s (DoD) initiative to maintain cash flow by accelerating payments through prime contracts and expediting payments to subcontractors, according to analysis by GlobalData, a leading analytics firm.
Production and assembling activities by big companies such as Airbus and Boeing have been temporarily suspended in locations affected by lockdowns due to COVID-19, although key support services continue to be provided. Airbus, for example, temporarily suspended all non-essential activities in Spain from 29 March to 09 April, while Boeing too announced similar pauses in production in multiple locations.
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The Australian DoD and the UK Ministry of Defence (MoD) have also initiated measures in support of defence supply chains, such as adjusting procurement policies to expedite the acquisition of materials and services related to the coronavirus outbreak.
Limited short-term impact on naval shipbuilding, says GlobalData
According to GlobalData, naval shipbuilding is vulnerable to the COVID-19 outbreak in the short-term, due to the temporary closure of shipyards and cash-flow issues through the supply chain. Although the delays are not clear immediately, GlobalData sees only a limited impact on naval shipbuilding since many countries classify it as essential work.
The longer-term impact of COVID-19, however, will be in the form of a reduction in programme funding due to recession resulting from the pandemic, says GlobalData.