On July 21st, the White House announced that “a healthy manufacturing and defense industrial base and resilient supply chains are essential to the economic strength and national security of the United States.”  Furthermore, it mandates a review and assessment of this industrial base and supply chain, including specific weaknesses such as “supply chains with single points of failure or limited resiliency.”

In 2016, US Aerospace and Defense (A&D) companies were responsible for $146.4 billion in exports and represented 10.1% of total exports for the US . Recognizing that the A&D supply chain is “a matter of national security” (and an important source of jobs), President Trump likely hopes to reduce the role of foreign A&D suppliers in order to reduce the risk engrained in this industry. As a result, we have investigated the US A&D supply chain to quantify the industry’s reliance on foreign suppliers and, specifically, those at risk.

Utilizing our PD Model Fundamentals, we identified 35 foreign A&D suppliers that we believe are most at risk of default. We considered “at-risk” firms as those having ‘ccc+’* or lower implied credit scores (approximating to a 9.637% or higher one year PD). Only one company in our pool of 35 “at-risk” suppliers is rated, further stressing the need for tools that allow for a globally consistent and generally applicable assessment of credit risk across the rated and unrated universe. Read more on this topic >

Which 35 firms topped the list of "at-risk" suppliers? Contact us to find out and learn how we identified them.

*Lowercase nomenclature is used to differentiate S&P Global Market Intelligence PD scores from the credit ratings used by S&P Global Ratings. S&P Global Ratings does not contribute to or participate in the creation of credit scores generated by S&P Global Market Intelligence.