COVID-19 hits training and simulation
With ITEC 2020 now postponed until 1-3 September and companies in the defence and aerospace sector having called a halt to employee travel, COVID-19 is having a dramatic effect on the global training and simulation (T&S) market as well as collective military training.
In addition, military training centres around the world are seeing a reduced throughput as service chiefs follow guidelines on social distancing or are having to deploy troops for COVID-19 support to the civil community.
This situation is likely to continue for some time, as the World Health Organization predicts that the US will probably become the epicentre for COVID-19 over coming days. According to some reports, the US now has more cases than China, Italy and Spain combined.
As far as the T&S industry in North America is concerned, CAE has a broad portfolio of simulation products and services covering the military, business aviation, healthcare simulation and commercial airlines. In normal times, this broad portfolio provides a competitive advantage; however, over the past month the company has seen its stock price plummet by almost 40% from C$37.12 (US$26.47) to a low of C$14.50.
According to some reports, CAE is laying off workers, reducing salaries and hours and putting a brake on capital investment.
Smaller companies are also being impacted. US-based virtual small arms training specialist VirTra has seen around 62% wiped off its stock price over the same period. These are clearly challenging times for the T&S industry and the problem is likely to linger, as funding for military training is now being diverted to counter the COVID-19 threat.
The question that many are asking is will the COVID-19 pandemic affect future programmes such as the US Army’s Synthetic Training Environment (STE) and the UK’s Project Selbourne and Collective Training Transformation Programme (CTTP)?
As far as STE is concerned, many contracts have already been let and as such, there is work in progress to keep contractors busy. At the other end of the spectrum, the UK’s Project Selbourne and CTTP may not be so lucky.
The winner of Selbourne is due to be announced in May, while CTTP is still in the ‘industry discussion’ phase, albeit on the third iteration. Both programmes require extensive face-to-face discussions between the military and industry. Under the present situation, that is not going to happen; therefore, both are certain to be delayed, especially considering the defence budget shortfall and the UK government emptying the coffers for COVID-19 requirements.
We have entered a very difficult period for the T&S industry and the broader military training community. Military training has slowed and in some cases, stopped altogether. The same can be said of funding for T&S projects.
With travel stopped, industry business development and sales executives cannot see customers to sell products and services. There are difficult times ahead.
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