Researchmoz presents this most up-to-date research on"Future of the
US 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 US 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 US 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 US defense industry.
What is the current market landscape and what is changing?
The US is the world's leading defense
market, with a defense budget of US$613.9 billion in 2013, and is
expected to remain at the top defense spenders table over the forecast
period. Although funding for overseas operations is estimated to
decrease, the country's base military expenditure is expected to
increase at a CAGR of 1.93% over the forecast period. Plans for
acquisition of advanced defense equipment coupled with replacement of
old and obsolete equipment are projected to drive the country's capital
expenditure presenting growth opportunities for the defense equipment
and technology suppliers, despite looming threat of budget cuts and
sequestration. Sequestration will not terminate or affect the existing
contracts, but only affect the DoD's future contracts and the number of
equipment to be procured under these contracts. Still, the US market is
estimated to retain its attractiveness for foreign defense companies and
new entrants, which can enter the market through joint development or
strategic alliance with or acquisition of domestic players. The US
government's encouragement of foreign direct investment (FDI) in defense
sector will also help foreign companies in entering the market. The
homeland security market of the US is expected to be driven by missions
such as preventing terrorism and enhance security; securing and manage
borders; enforcing and administering immigration laws; safeguarding and
securing cyberspace; as well as ensuring disaster resilience. During the
forecast period, the US is expected to invest in homeland security
products such as surveillance equipment, and cutters and patrol vessels,
and the budget of the US is expected to increase from US$60.7 billion
in 2013 to US$65.3 billion in 2018, registering a CAGR growth of 2.15%.
What are the key drivers behind recent market changes?
Rebalancing of Asia- Pacific,
turbulent Middle East, modernization and replacement of obsolete
equipment, are expected to drive defense spending
What makes this report unique and essential to read?
The Future of the US 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
US 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 The US.
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
- 2011 Budget Control Act (BCA) has set a
cap on total national defense budget funding, starting with US$546
billion in 2013 and reduced it by US$54.3 billion each subsequent year.
BCA necessitated the US Department of Defense (DoD) to take-up US$487
billion of reductions in its expenditure over the period of 10 years.
Sequestration, if allowed to go into effect, would alter virtually every
aspect of DoD's planning. It would force a uniform reduction in budget
authority of approximately 10.3% across all accounts other than military
personnel. Sequestration does not affect defense budget funding that
has already been obliged, but only affects DoD's ability to award new
contracts and exercise option on existing contracts. While sequestration
will reduce funding for nearly all acquisition programs across DoD, it
will not directly terminate programs. An across-the-board reduction will
force DoD to renegotiate many contracts to be able to buy in smaller
quantities since less funding will be available.
- The US must modernize its aging fleet
of equipment, such as fighter aircraft, helicopters, land defense
systems, and maritime equipment; however, the rising unit cost of
defense systems poses a challenge to procurement funding. The cost of
military hardware is increasing due to technological advancements and a
shortage of skilled labor in the design, engineering, and manufacturing
sectors, coupled with the rising cost of input materials such as metal.
In addition, the per-unit overhead costs at production facilities
increased due to a reduction in the number of units manufactured; for
example, in the shipbuilding industry the cost of constructing ships has
been increasing 1.4% per year faster than the price of final goods and
services in the US economy. The US government has reduced the amount of
military hardware to be procured, resulting in a reduction in the number
of units to be produced, a loss in profits, and increasing unemployment
in such sectors.
- With the US aiming to reduce the
country's defense expenditure by US$60 billion during 2013-2018, and
rising personnel and health costs, the country's capital expenditure on
defense is anticipated to decrease. Furthermore, the government
encourages companies throughout the defense market to increase the
efficiency of the organizations and sell unprofitable units. In
addition, reverse engineering by countries like China and Iran will
enable the defense companies of these countries to offer defense
equipment at lower price, posing a challenge to the domestic defense
companies of the US. According to SDI's Defense Industry Business
Outlook 2013-2014 survey, 43% of respondents from the North American
region agree that the reverse engineering from countries is the biggest
concern for the defense industry in the coming five years, and as a
result, defense companies will be compelled to take greater risks and
accept lower profits on the limited number of available government
contracts. Due to a combination of the above factors, unemployment is
expected to increase, negotiations with suppliers and customers will
become tense, and efforts to reduce expenses will increase across the
board. Companies such as Lockheed Martin and Northrop Grumman have
already taken strategic steps, such as the sale of unprofitable units
and redundancy packages for senior managers, in order to reduce
executive payrolls.
Key Highlights
- Rebalancing of Asia-Pacific: Post
decade-long wars in Afghanistan and Iraq the US shifted its defense
strategic focus towards the region with potential to pose threat to its
economy and superpower status. Growing might of Chinese military and its
assertiveness in regional disputes in the recent years have grabbed the
attention of the US. The US considers China to possess the capability
of affecting its superpower status both economically and militarily.
Chinese investments in fifth generation aircraft, cyber warfare,
anti-aircraft and anti-ship weaponry, aircraft carriers, submarines, and
ballistic missiles pose a potential threat to US power projection
capabilities in the Pacific. Another potential threat for the US is
North Korea, which is perceived to be trying to achieve nuclear
capability. The country also believes that North Korea is actively
pursuing the development of thermonuclear weapons such as hydrogen bombs
in which plutonium and uranium are combined for a higher energy yield.
- Following the 9/11 attacks, the US
reorganized and integrated its federal agencies and created the
Department of Homeland Security (DHS) for the purpose of building a
strengthened homeland security enterprise and to be equipped to counter a
range of threats. The DHS's expenditure is expected to driven by the
mission areas such as preventing terrorism and enhancing security,
securing and managing its borders, and safeguarding and securing
Cyberspace. Preventing Terrorism and enhancing security: DHS's top
priority mission area is preventing terrorism on its land and enhancing
the security. DHS's counterterrorism responsibilities focus on
preventing the unauthorized acquisition, importation, movement, or use
of chemical, biological, radiological, and nuclear materials and
capabilities within the United States; and reducing the vulnerability of
critical U.S. infrastructure and key resources, essential leadership,
and major events to terrorist attacks and other hazards. Recent Boston
Marathon bombings have re-imposed the need of counter terrorism measures
and the country is expected increase fund allocations for this purpose.
- The US has a highly developed defense
industry that is capable of fulfilling the majority of domestic military
requirements, and the nation is also the largest global exporter of
defense equipment due to its highly advanced defense industrial base.
Despite this, the US has become increasingly open to importing arms
goods from foreign defense equipment suppliers in the UK and Canada, and
consequently, arms imports registered a steady increase during the
review period; the majority of imports consist of subsystems and
components for aircraft and armored vehicles. Although global military
expenditure registered a decline in 2009 due to the global economic
slowdown, US defense exports continued to grow that year; the largest
consumers of US defense goods during 2008-2012 were South Korea,
Australia, and the UAE. While the country exports all types of defense
equipment, the majority consists of fighter aircraft, missile defense
systems, armored vehicles, engines, and sensors.
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