Saudi Arabia needs to move beyond defence assembly and develop domestic aerospace and defence engineering capabilities to capture more value from its spending, according to a report by consultancy Alvarez & Marsal (A&M).
The report said engineering capabilities could capture 30%-40% of lifecycle value in defence programmes, compared with 5%-15% for assembly-only localisation, as the kingdom seeks to advance its defence industry under its Vision 2030 target of localising 50% of defence spending by 2030.
In its report, titled "Beyond Localization: The Next Phase of Saudi Arabia's Aerospace & Defense Ambition", A&M said the next stage of development would require Saudi Arabia to build capabilities in areas including design, modification, certification and long-term support of defence platforms.
The report identified artificial intelligence-enabled product development, software-driven defence systems, autonomous technologies, supply-chain resilience and increased private-sector participation as key trends reshaping the aerospace and defence sector.
“Saudi Arabia has built real momentum in localisation and the next phase is about engineering. Sovereignty starts with domestic engineering capability, and the ability to design, modify, certify and sustain platforms in-country,” remarked Colie Spink, Middle East regional leader at A&M.
“Our benchmarks show that this capability typically takes decades to build. With the right operating model, disciplined execution and digital product development methodologies, the Kingdom is well positioned to accelerate that journey. That is the real opportunity ahead,” he stated.
The A&M report said digital engineering tools, including model-based systems engineering, digital twins and AI-assisted development, could help shorten the time required to build local expertise and accelerate Saudi Arabia's transition towards higher-value defence capabilities.
At the centre of the report is the engineering capability ladder, a five-level pathway from tooling and manufacturing through to full systems design and Model-Based Systems Engineering-native program ownership. Built organically, climbing it can take decades. Saudi Arabia has an opportunity to accelerate this progression.
"Digital product development is the single biggest accelerator available to Saudi Arabia," stated Andrea Di Lello, Senior Director with Alvarez & Marsal Strategy & Performance Improvement in Riyadh.
"Model-based systems engineering, digital twins, virtual testing and AI-augmented engineering can compress requirement-to-market timelines materially. AI in particular shortens the experience gap, allowing junior local teams to work at levels that once required decades of accumulated know-how,” he noted.
“Combined with the kingdom's national AI agenda, this can turn capability transfer into a matter of months rather than years, provided governance is in place from day one,” he added.
Saudi Arabia aims to increase defence localisation to 50% by 2030 from around 25% currently, with state-backed entities including the Public Investment Fund and Saudi Arabian Military Industries (SAMI) supporting investments, partnerships and technology transfers.
A&M said Saudi Arabia could draw lessons from countries such as Turkey, which has expanded from licensed production arrangements into indigenous defence programmes and a growing export industry.
The report concluded that long-term competitiveness in aerospace and defence would depend on engineering expertise, certification capabilities and sustained innovation, with manufacturing serving as a foundation for developing a broader domestic industry.-TradeArabia News Service