Tuesday 24 September 2013

Future of the Canadian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018

Researchmoz presents this most up-to-date research on"Future of the Canadian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018".The report focuses primarily on quantitative market metrics in order to characterize the growth and evolution of the Remote Patient Monitoring Market.


Product Synopsis

This report is the result of SDI's extensive market and company research covering the Canadian defense industry, and provides detailed analysis of both historic and forecast defense industry values including key growth stimulators, analysis of the leading companies in the industry, and key news.

Introduction and Landscape

Why was the report written?

The Future of the Canadian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 offers the reader an insight into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain market share in the Canadian defense industry.

What is the current market landscape and what is changing?

The Canadian defense budget, which is projected to be US$18.8 billion in 2014, is expected to dip at a CAGR of 1.17% during the forecast period and reach US$17.9 billion by 2018. Defense expenditure that amounted to 1% of GDP in 2013 is expected to fall to 0.8% by 2018 due to budget cuts. The downward slope is primarily due to the government's steps to curb its expenditure through restructuring of operations, efficiency enhancements, and erasing redundancy. Another contributing factor is the end of the Afghanistan war and withdrawal of troops from the region in 2014. 
The capital expenditure budget, which stood at an average of 17.3% in the review period, is expected to increase to 21.5% in the forecast period, due to the government's modernization plans. The HLS budget was US$348.0 million in 2009 and moved up to US$379.0 million in 2013, driven by increasing threats to cyber security, terrorist activity, and increased border security to combat illegal immigration. In the coming years, demand for equipment is mainly expected to revolve around fighters and multi-role aircrafts, armored personnel vehicles, corvettes, frigates, and UAVs.

What are the key drivers behind recent market changes?

Canada's defense expenditure primarily stands on the nation's military modernization goals set in 2008, targeted at the re-designing of the Canadian Army. Furthermore, the tussle with Russia over the sovereignty of the Arctic region also compels Canada to incur expenditure on its forces to protect its territory.

What makes this report unique and essential to read?

The Future of the Canadian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 provides detailed analysis of the current industry size and growth expectations from 2014 to 2018, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.

Key Features and Benefits
  • The report provides detailed analysis of the current industry size and growth expectations from 2014 to 2018, including highlights of key growth stimulators, and also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.
  • The report includes trend analysis of imports and exports, together with their implications and impact on the Canadian defense industry.
  • The report covers five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.
  • The report allows readers to identify possible ways to enter the market, together with detailed descriptions of how existing companies have entered the market, including key contracts, alliances, and strategic initiatives.
  • The report helps the reader to understand the competitive landscape of the defense industry in Canada. It provides an overview of key defense companies, both domestic and foreign, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.

Key Market Issues
  • Canadian IRBs, which define defense offsets, provide a timescale for the submission of offset plans. These timescales are generally short and, therefore, challenge defense companies to identify offsets and submit proposals. The offset policy also defines penalties for not submitting offset plans in time and the bidder is rejected if 30% of the offset proposal is not submitted with the bid. Of the remaining 70%, 30% of the offset obligation must be identified within one year from the date of awarding the contract, and the remaining 40% has to be identified within three years. If these timelines are not adhered to, foreign companies may face a penalty of additional IRB obligations equal to 50% of the unfulfilled amount. 
  • ITAR is a set of regulations defined by the US government to control the trade of defense-related technology. Under the regulations, Canadian companies are allowed to offer Canadian citizens access to sensitive technology under certain circumstances. However, an employee of a Canadian defense company that is a national of a restricted country cannot access the information, which leads to non-compliance with Canadian human rights as it constitutes discrimination based on an employee's nationality or place of origin. The US authorities have proposed an amendment to the existing regulation in August 2010.

Key Highlights
  • Canada's defense expenditure is driven by the demand for military equipment refurbishment. The government felt the need to equip the armed forces with advanced and better technology and, subsequently, in 2008, released the CFDS that outlines the restructuring of Canadian military bases. The CFDS has assigned 12% of its total budget for upgrades over a twenty-year period spanning across 2008 to 2027. The DND also remains committed to roll-out the National Shipbuilding Procurement Strategy that aims to elevate the country's naval fleet, which was neglected in the budget revision of 2005-2006. This would primarily involve the purchase of supply ships, frigates, and off-shore patrol vessels for the Arctic region. The air and land forces will also receive a facelift via new and more technologically superior fighter aircraft and armored vehicles coming in place of the ones lost or depleted during the operation in Afghanistan.
  • One of the biggest threats that Canada's vital infrastructure, including government data base, utilities, and communication and transportation systems, are facing is that of cyber attacks. These sectors, which were once physically protected, are now interconnected through cyber networks. However, Canada suffers from the absence of tough defense against cyber criminals and hackers from China and Russia. In 2011, the entire Treasury Board Secretariat had to be kept off-line for months as government computer infrastructure was badly attacked by dangerous malware. To fight against cyber intrusion, the federal authority has introduced Canada's Cyber Security Strategy that lists the government's measures to secure the cyberspace for all Canadians. Under this plan, the government started the Canadian Cyber Incident Response Centre (CCIRC) which functions collectively with national and international partners in determining, preventing, and negating cyber-attacks.

Table of Content

1 Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. SDI Terrorism Index
1.5. About Strategic Defence Intelligence

2 Executive Summary

3 Market Attractiveness and Emerging Opportunities
3.1. Defense Market Size Historical and Forecast
3.1.1. Canadian defense expenditure recorded a CAGR of 1.49% over 2009-2013
3.1.2. Equipment Modernization, Force Development and fight for sovereignty over Arctic region to form base of defense expenditure
3.1.3. Defense budget expected to stay below 1.0% of GDP over 2014-2018
3.2. Analysis of Defense Budget Allocation
3.2.1. Allocation Trend expected to change during the forecast period
3.2.2. Capital expenditure to be US$19.5 billion over the forecast period
3.2.3. DND to spend US$72.0 billion on revenue expenditure during forecast period
3.3. Homeland Security Market Size and Forecast
3.3.1. Homeland security market expected to decline at a CAGR of 2.81% during the forecast period
3.3.2. Homeland security expenditure primarily on cyber-attacks, terrorism and border security
3.3.3. Canada falls under “some risk” of terrorism category
3.3.4. Canada has terrorism index score of 0.1
3.4. Benchmarking with Key Global Markets
3.4.1. Canada's defense budget grew at a CAGR higher than the US during the review period
3.4.2. The US and China dominate the global defense industry, while Canada ranks eleventh
3.4.3. Canada allocates lower share of GDP for defense than US and Russia
3.4.4. Terrorist activities are moderate in Canada
3.5. Market Opportunities: Key Trends and Growth Stimulators
3.5.1. Fighters and Multi-Role Aircraft expected to grow
3.5.2. Investments on Air Reconnaissance to increase in the coming years
3.5.3. Canada to concentrate on Naval Surface Combatants modernization
3.5.4. Armored Personnel Carriers undergoing modernization
3.5.5. Demand for UAVs to mount during the forecast period

4 Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Defense imports expected to increase during the forecast period
4.1.2. US defense companies are the main arms suppliers to Canada
4.1.3. Armored vehicles, engines, and aircraft account for the majority of Canadian arms imports
4.2. Export Market Dynamics
4.2.1. Defense exports are expected to increase in the forecast period
4.2.2. The US stands as the largest market for the Canadian defense industry
4.2.3. Aircraft and missiles account for the majority of exports

5 Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of supplier: medium
5.1.2. Bargaining power of buyer: high
5.1.3. Barrier to entry: medium
5.1.4. Intensity of rivalry: medium to high
5.1.5. Threat of Substitution: low to medium
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