Marked by ongoing conflicts in Israel-Palestine and Ukraine, 2024 will see ongoing tensions with China and Iran which pose significant threats to the international order. Geopolitical concerns aside, the industry grapples with supply chain issues, talent shortages, operational risks, and rising costs amid inflation. In the biggest global election year in history we could see significant strategic changes from key players such as the USA, UK, India, Taiwan, Ukraine, and Russia. Here are the five key trends likely to dominate 2024…

 

#1 AI and digitalisation efforts to bring security and efficiencies

The defence industry faces challenges in rapidly adopting new defensive systems and procedures to keep up with adversaries' technological innovations. From upgrading aging software to mitigate cyber threats, to expanding access to, and the adoption of, key cyber credentials, keeping up with digital trends remains pivotal. Meanwhile, governments are prioritising bringing AI to maturity while ensuring its development is safe and responsible. The rapid adoption of AI, spurred by recent advancements like Chat-GPT, is underway in industry, and indeed OpenAI has already started the year by easing its stance on the use of ChatGPT for military purposes.

The impact of AI for defence is forecast to be significant, from helping front-line users detect threats to activating cyber defences faster and with greater agility. Additionally, the integration of AI into defence supply chains could improve platform and parts delivery efficiency, reducing delays and costs, whilst improving security. Meanwhile, digital twins, coupled with machine learning, can enhance visibility of supply chain problems or complexities. According to a BAE report, 86% of defence and aerospace decision makers say their nation has adopted AI for defence applications, so the technology is set to become increasingly mature in 2024.

 

#2 Decarbonisation initiatives continue

Following recent data which indicates that 2023 was the hottest year ever, the impetus behind decarbonisation efforts sees renewed urgency. The contribution of the global defence industry to carbon emissions has come under a microscope, with some having suggested that the sector had been overlooked, but there have been some major decarbonisation initiatives, including the establishment of NATO’s Centre of Excellence for Climate Change and the UK’s Sustainable Support Strategy.

The impact of climate change upon defence goes beyond the weight of its own contributions, with both the UN and NATO describing climate change as a ‘threat multiplier’, alluding to the destabilising impact climate can have on societies and economies. Industry is rising to meet the challenge, with innovations such as new power solutions or increased circularity in manufacturing.  Last year the EU signalled its intention for defence supply chains to become more sustainable, alongside developing more localised energy in a drive for logistical resilience. Individual initiatives such as the Royal Air Force’s first use of sustainable aviation fuel in a fighter aircraft are lighting the way towards a greener, more sustainable, military.

 

#3 Recruitment challenges to persist

Defence is facing significant challenges when it comes to acquiring talent, skills and retention, from front-line military roles to cyber, quantum and manufacturing. In recent weeks the UK’s Royal Navy has seen significant problems with hiring, at a critical time for the force, with ships being deployed to the Red Sea to counter Houthi Rebels. Last month, the Times reported that Armed forces and defence companies are locked in ‘a war for talent’.

Dwindling forces are due to the lack of recruits for basic training, a lack of digital skills, and the pull of incentives given by neighbouring sectors. The EU and US have recently signalled their plans to try and combat personnel shortages in key areas. The US’ new Defence Industrial Strategy, cites ‘workforce readiness’ as a key strategic focus, with a desire to develop a ‘sufficiently skilled and staffed workforce’. Meanwhile, the European Commission expects skills shortages to increase into the future, with defence urgently requiring skills and talent acquisition, as procurement organisations seek to develop and manage emerging disruptive technologies.

 

#4 Agile supply chains to be prioritised

The scramble to arm Ukraine and Donald Trump’s trade war with China have highlighted US and allied supply chain vulnerabilities. The last couple of years have seen efforts to build a more resilient supply chain. The US CHIPS act and the EU CHIPS Act designed to securitise semiconductor supply, the European Defence Agency has set out to ensure ‘security of supply’ across the EU, and at the start of 2024, the US’ Defence Industrial Strategy took aim at supply chain fragility, seeking to make it more sustainable alongside more flexible acquisition processes.

2024 will see more emphasis on agile supply chains: increasing pressure to move away from lengthy procurement processes that cannot react quickly enough or where the end product could be outdated by the time it comes into service. There will be a race to secure and effect easy access to increasingly scarce resources such as minerals driven by the appetite for batteries and the move away from fossil fuels. The surge of additive manufacturing creates a ‘just in time’ supply option, while new military tactics such as the use of drones and increasing need for cyber security will continue to push military to commercial and more readily available solutions.

 

#5 Alliances and collaboration lead development and procurement

Collaborative development programmes such as the sixth-generation fighter efforts: Tempest (by Italy, Japan and the UK) and FCAS (by France, Germany and Spain), are key initiatives designed to combine the best of each nation’s domestic capabilities and combat declining resources. Meanwhile, the AUKUS programme demonstrates how two established nuclear navies (UK and US) are aiding Australia in bolstering Indo-Pacific security. Furthermore, NATO’s Defence Innovation Accelerator for the North Atlantic (DIANA), which opened its doors with three innovation challenges in 2023, has established test centres and accelerator units across Europe and North America. The collaboration of NATO members is nothing new, but this more centralised effort to progress on emerging disruptive technologies is hoped to go from strength to strength in 2024.

Group-purchases have become increasingly common amongst NATO allies in recent years, with a marked increase since the war in Ukraine began. Just two weeks ago, Germany, the Netherlands, Romania and Spain agreed to jointly purchase $5.5 billion worth of Patriot missiles following their effective use observed in Ukraine. Additionally, the research opportunities posed by the war in Ukraine have seen allies and industry testing experimental tech in partnership with Ukrainian soldiers, helping speed up development initiatives, particularly for drones. Following on from the big trend of multi-domain integration, Defence Engage expects multi-national development, purchases and bids to strengthen regional military power and aid embattled allies such as Israel and Ukraine, to continue in 2024 amid ongoing geopolitical upheaval.

 

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