The UK Defense Industry - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 by ICDResearch

VIEWS: 120 PAGES: 159

More Info
									                                                 The UK Defense Industry-Market
                                                Opportunities and Entry Strategies
                                                  Analyses and Forecasts to 2017




www.strategicdefenceintelligence.com                                           icdreports@progressivedigitalmedia.com

             John Carpenter House, 7 Carmelite Street, LondonEC4Y 0BS, United Kingdom, Tel: +44 (0)20 7936 6830
The UK Defense Industry-Market Opportunities and Entry Strategies Analyses and Forecasts to 2017


 TABLE OF CONTENTS

 1.   Introduction ......................................................................................................................... 11
   1.1. What is this Report About? ..........................................................................................................11
   1.2. Definitions .....................................................................................................................................11
   1.3. Summary Methodology.................................................................................................................13
   1.4. SDI Terrorism Index ......................................................................................................................14
   1.5. About Strategic Defence Intelligence (www.strategicdefenceintelligence.com) ......................14
 2.   Executive Summary ............................................................................................................ 15
 3.   Market Attractiveness and Emerging Opportunities ........................................................ 17
   3.1. Defense Market Size Historical and Forecast..............................................................................18
       3.1.1. The UK’s defense expenditure will register a CAGR of -2.04% despite budget cuts ............................... 18
       3.1.2. Peace keeping operations and terrorism are the primary drivers of defense spending ........................... 20
   3.2. Analysis of Defense Budget Allocation .......................................................................................21
       3.2.1. Majority of defense budget allocated for revenue expenditure................................................................. 21
       3.2.2. Defense capability allocation to continue to dominate UK defense budget ............................................. 23
       3.2.3. Budget allocation for peacekeeping operations to register a CAGR of -3.71% over the forecast period 25
       3.2.4. Defense capability budget to be reduced over the forecast period .......................................................... 27
       3.2.5. Major share of defense capability budget to be spent on defense equipment and support ..................... 29
       3.2.6. Allocation for war pension benefits to register a CAGR of -15.81% over the forecast period .................. 31
   3.3. Homeland Security Market Size and Forecast ............................................................................33
       3.3.1. Homeland security budget to decline over the forecast period ................................................................ 33
       3.3.2. Domestic terrorism and cyber security to be the key drivers in the homeland security market ............... 36
       3.3.3. UK experienced moderate terror activity during the review period .......................................................... 39
   3.4. Benchmarking with Key Global Markets .....................................................................................41
       3.4.1. The UK has one of the largest defense budgets in Europe ...................................................................... 41
       3.4.2. During 2012 the UK emerged as the fourth-largest defense spending country in the world .................... 43
       3.4.3. The UK allocates a significant percentage of GDP towards defense ....................................................... 44
       3.4.4. The UK ranked sixth among the top arms exporting countries in 2011 ................................................... 45
   3.5. Market Opportunities: Key Trends and Growth Stimulators ......................................................46
       3.5.1. Enhancing aerial refueling capabilities will provide attractive market opportunities ................................. 46
       3.5.2. Increased demand for armored fighting vehicles expected ...................................................................... 46
       3.5.3. New satellite-based communication systems will open up new business opportunities .......................... 46
       3.5.4. Construction of new warships will be an attractive opportunity for auxiliary suppliers ............................. 47
       3.5.5. Demand for nuclear deterrent submarines set to increase ...................................................................... 48
       3.5.6. Maintenance and repair sector set to drive the UK defense markets over the forecast period ............... 48




                                                                                                                                                              2
 www.strategicdefenceintelligence.com                                                     icdreports@progressivedigitalmedia.com
The UK Defense Industry-Market Opportunities and Entry Strategies Analyses and Forecasts to 2017

 4.   Defense Procurement Market Dynamics ........................................................................... 49
   4.1. Import Market Dynamics ...............................................................................................................50
      4.1.1. Defense imports expected to decline over the next five years ................................................................. 50
      4.1.2. The US continues to have a significant share in the UK’s arms imports .................................................. 51
      4.1.3. Missiles and aircraft constitute the majority of UK arms imports .............................................................. 52
   4.2. Export Market Dynamics ..............................................................................................................53
      4.2.1. Defense exports grew moderately during the review period .................................................................... 53
      4.2.2. Saudi Arabia, the US and India are the largest importers of UK arms ..................................................... 54
      4.2.3. Aircraft, artillery and ships account for the majority of exports ................................................................. 55
 5.   Industry Dynamics .............................................................................................................. 56
   5.1. Five Forces Analysis.....................................................................................................................56
      5.1.1. Bargaining power of supplier: low to medium ........................................................................................... 57
      5.1.2. Bargaining power of buyer: high ............................................................................................................... 57
      5.1.3. Barrier to entry: medium ........................................................................................................................... 57
      5.1.4. Intensity of rivalry: low to high .................................................................................................................. 57
      5.1.5. Threat of substitution: low to medium ....................................................................................................... 57
 6.   Market Entry Strategy ......................................................................................................... 58
   6.1. Market Regulation .........................................................................................................................58
      6.1.1. Offset policy aids development of the domestic defense industry ........................................................... 58
      6.1.2. The UK permits 100% FDI in its defense industry .................................................................................... 59
   6.2. Market Entry Route .......................................................................................................................60
      6.2.1. Joint weapons development programs are a viable market entry opportunity ......................................... 60
      6.2.2. Joint ventures open up new market entry strategy choices ..................................................................... 60
      6.2.3. Forming subsidiaries in the UK and the acquisition of domestic companies provide good market entry
      opportunities .......................................................................................................................................................... 61
   6.3. Key Challenges .............................................................................................................................62
      6.3.1. Defense budget cuts will have negative implications for defense companies .......................................... 62
      6.3.2. Preference for domestic and EU companies pose a challenge for non-European companies ................ 62
 7.   Competitive Landscape and Strategic Insights ................................................................ 63
   7.1. Competitive Landscape Overview ...............................................................................................63
   7.2. Key Domestic Companies ............................................................................................................63
      7.2.1. BAE Systems Plc: overview...................................................................................................................... 63
      7.2.2. BAE Systems Plc: products and services ................................................................................................. 63
      7.2.3. BAE Systems Plc: recent announcements and strategic initiatives ......................................................... 64
      7.2.4. BAE Systems Plc: alliances ...................................................................................................................... 65
      7.2.5. BAE Systems Plc: recent contract wins .................................................................................................... 66
      7.2.6. BAE Systems Plc: financial analysis ........................................................................................................ 67




                                                                                                                                                                                    3
 www.strategicdefenceintelligence.com                                                                icdreports@progressivedigitalmedia.com
The UK Defense Industry-Market Opportunities and Entry Strategies Analyses and Forecasts to 2017
      7.2.7. GKN Aerospace Services: overview ......................................................................................................... 69
      7.2.8. GKN Aerospace Services: products and services .................................................................................... 69
      7.2.9. GKN Aerospace Services: recent announcements and strategic initiatives ............................................ 70
      7.2.10. GKN Aerospace Services: alliances ......................................................................................................... 71
      7.2.11. GKN Aerospace Services: recent contract wins ....................................................................................... 71
      7.2.12. GKN Aerospace Services: financial analysis............................................................................................ 73
      7.2.13. Rolls-Royce Plc: overview ........................................................................................................................ 75
      7.2.14. Rolls-Royce Plc: products and services ................................................................................................... 75
      7.2.15. Rolls-Royce Plc: recent announcements and strategic initiatives ............................................................ 76
      7.2.16. Rolls-Royce Plc: alliances ........................................................................................................................ 77
      7.2.17. Rolls-Royce Plc: recent contract wins ...................................................................................................... 77
      7.2.18. Rolls-Royce Plc: financial analysis ........................................................................................................... 79
      7.2.19. Babcock International Group Plc: overview .............................................................................................. 81
      7.2.20. Babcock International Group Plc: products and services ......................................................................... 81
      7.2.21. Babcock International Group Plc: recent announcements and strategic initiatives ................................. 82
      7.2.22. Babcock International Group Plc: alliances .............................................................................................. 82
      7.2.23. Babcock International Group Plc: recent contract wins ............................................................................ 82
      7.2.24. Babcock International Group Plc: financial analysis ................................................................................. 83
   7.3. Key Foreign Companies ...............................................................................................................85
      7.3.1. AgustaWestland: overview ....................................................................................................................... 85
      7.3.2. AgustaWestland: products and services .................................................................................................. 85
      7.3.3. AugustaWestland: recent announcements and strategic initiatives ......................................................... 86
      7.3.4. AugustaWestland: alliances ..................................................................................................................... 86
      7.3.5. AugustaWestland: recent contract wins ................................................................................................... 86
      7.3.6. Thales UK: overview ................................................................................................................................. 88
      7.3.7. Thales UK: products and services ............................................................................................................ 88
      7.3.8. Thales UK: recent announcements and strategic initiatives..................................................................... 90
      7.3.9. Thales UK: alliances ................................................................................................................................. 91
      7.3.10. Thales UK: recent contract wins ............................................................................................................... 91
      7.3.11. General Dynamics UK Ltd: overview ........................................................................................................ 93
      7.3.12. General Dynamics UK Ltd: products and services ................................................................................... 93
      7.3.13. General Dynamics UK Ltd: recent announcements and strategic initiatives ............................................ 93
      7.3.14. General Dynamics UK Ltd: alliances ........................................................................................................ 94
      7.3.15. General Dynamics UK Ltd: recent contract wins ...................................................................................... 95
      7.3.16. Boeing UK: overview ................................................................................................................................ 96
      7.3.17. Boeing UK: products and services ........................................................................................................... 96
      7.3.18. Boeing UK: recent announcements and strategic initiatives .................................................................... 96
      7.3.19. Boeing UK: alliances ................................................................................................................................. 97




                                                                                                                                                                          4
 www.strategicdefenceintelligence.com                                                           icdreports@progressivedigitalmedia.com
The UK Defense Industry-Market Opportunities and Entry Strategies Analyses and Forecasts to 2017
      7.3.20. Boeing UK: recent contract wins .............................................................................................................. 98
      7.3.21. Boeing UK: financial analysis ................................................................................................................... 99
      7.3.22. L-3 TRL: overview................................................................................................................................... 101
      7.3.23. L-3 TRL: products and services .............................................................................................................. 101
      7.3.24. L-3 TRL: recent announcements and strategic initiatives ...................................................................... 101
      7.3.25. L-3 TRL: alliances ................................................................................................................................... 102
      7.3.26. Northrop Grumman UK: overview .......................................................................................................... 103
      7.3.27. Northrop Grumman UK: products and services ..................................................................................... 103
      7.3.28. Northrop Grumman UK: recent announcements and strategic initiatives .............................................. 104
      7.3.29. Northrop Grumman UK: alliances ........................................................................................................... 104
      7.3.30. Northrop Grumman UK: recent contract wins......................................................................................... 105
      7.3.31. Lockheed Martin UK Ltd: overview ......................................................................................................... 106
      7.3.32. Lockheed Martin UK Ltd: products and services .................................................................................... 106
      7.3.33. Lockheed Martin UK Ltd: recent announcements and strategic initiatives ............................................. 106
      7.3.34. Lockheed Martin UK Ltd: alliances ......................................................................................................... 107
      7.3.35. Lockheed Martin UK Ltd: recent contract wins ....................................................................................... 108
      7.3.36. EADS UK: overview ................................................................................................................................ 109
      7.3.37. EADS UK: products and services ........................................................................................................... 109
      7.3.38. EADS UK: recent announcements and strategic initiatives.................................................................... 110
      7.3.39. EADS UK: alliances ................................................................................................................................ 111
      7.3.40. EADS UK: recent contract wins .............................................................................................................. 111
 8.   Business Environment and Country Risk ....................................................................... 112
   8.1. Demographics & Social Statistics..............................................................................................112
      8.1.1. Population – Female ............................................................................................................................... 112
      8.1.2. Population - Male .................................................................................................................................... 113
   8.2. Economic Performance ..............................................................................................................114
      8.2.1. Business Confidence index .................................................................................................................... 114
      8.2.2. Construction Output, Current Prices, Local Currency ............................................................................ 115
      8.2.3. Construction Output, Current Prices, US Dollars ................................................................................... 116
      8.2.4. Current Account Balance as Percentage of GDP .................................................................................. 117
      8.2.5. Exports of goods and services, current prices ....................................................................................... 118
      8.2.6. Exports of services, local currency ......................................................................................................... 119
      8.2.7. Fiscal Balance as a percentage of GDP................................................................................................. 120
      8.2.8. Foreign Direct Investment....................................................................................................................... 121
      8.2.9. GDP at Purchasing Power Parity ........................................................................................................... 122
      8.2.10. GDP, Constant Prices(Local Currency) .................................................................................................. 123
      8.2.11. GDP, Constant Prices (US$ Billion) ....................................................................................................... 124
      8.2.12. GDP, Current Prices(Local Currency) .................................................................................................... 125




                                                                                                                                                                           5
 www.strategicdefenceintelligence.com                                                           icdreports@progressivedigitalmedia.com
The UK Defense Industry-Market Opportunities and Entry Strategies Analyses and Forecasts to 2017
       8.2.13. GDP, Current Prices (US$ Billion) .......................................................................................................... 126
       8.2.14. General Government Final Consumption Expenditure ........................................................................... 127
       8.2.15. Gross Fixed Capital Formation, Current Prices ...................................................................................... 128
       8.2.16. Imports of goods and services ................................................................................................................ 129
       8.2.17. Import of services ................................................................................................................................... 130
       8.2.18. Inflation, average consumer prices ......................................................................................................... 131
       8.2.19. Interest rate (Lending) ............................................................................................................................ 132
       8.2.20. Manufacturing Output, Current Prices (Local Currency Bn) ................................................................... 133
       8.2.21. Manufacturing Output, Current Prices (US$ Billions) ............................................................................. 134
       8.2.22. US$- Exchange Rate (EoP) .................................................................................................................... 135
       8.2.23. US$- Exchange Rate (EoP) .................................................................................................................... 136
       8.2.24. Wholesale Price Index ............................................................................................................................ 137
   8.3. Energy and Utilities .....................................................................................................................138
       8.3.1. Hydroelectricity Installed Capacity .......................................................................................................... 138
       8.3.2. Natural Gas Consumption ...................................................................................................................... 139
       8.3.3. Natural Gas Imports................................................................................................................................ 140
       8.3.4. Natural Gas Production .......................................................................................................................... 141
       8.3.5. Net Conventional Thermal Electricity Generation .................................................................................. 142
       8.3.6. Net Geothermal, Solar, Wind, and Wood Electric Power Generation .................................................... 143
       8.3.7. Net Hydroelectric Power Generation ...................................................................................................... 144
       8.3.8. Nuclear Electricity Net Generation ......................................................................................................... 145
       8.3.9. Petroleum, Consumption ........................................................................................................................ 146
       8.3.10. Petroleum, Production ............................................................................................................................ 147
   8.4. Labour ..........................................................................................................................................148
       8.4.1. People Employed in R & D ..................................................................................................................... 148
   8.5. Minerals .......................................................................................................................................149
       8.5.1. Coal Consumption .................................................................................................................................. 149
       8.5.2. Coal Production ...................................................................................................................................... 150
   8.6. Social & Political Risk .................................................................................................................151
       8.6.1. Political Stability Index ............................................................................................................................ 151
       8.6.2. Transparency Index ................................................................................................................................ 152
   8.7. Technology ..................................................................................................................................153
       8.7.1. Fixed Broadband Internet Subscribers ................................................................................................... 153
       8.7.2. Gross Domestic Expenditure on Research and Development as % of GDP ......................................... 154
       8.7.3. Patents Granted ...................................................................................................................................... 155
       8.7.4. Software Patents .................................................................................................................................... 156
       8.7.5. Fixed line calling cost local ..................................................................................................................... 157
       8.7.6. Fixed Line Calling Cost National ............................................................................................................ 158




                                                                                                                                                                            6
 www.strategicdefenceintelligence.com                                                            icdreports@progressivedigitalmedia.com
The UK Defense Industry-Market Opportunities and Entry Strategies Analyses and Forecasts to 2017

 9.   Appendix ............................................................................................................................ 159
   9.1. Contact Us ...................................................................................................................................159
   9.2. About SDI.....................................................................................................................................159
   9.3. Disclaimer ....................................................................................................................................159




                                                                                                                                                             7
 www.strategicdefenceintelligence.com                                                    icdreports@progressivedigitalmedia.com
The UK Defense Industry-Market Opportunities and Entry Strategies Analyses and Forecasts to 2017

 LIST OF FIGURES
 Figure 1: UK Defense Expenditure (US$ Billion), 2008–2012 .......................................................................................................................... 18
 Figure 2: UK Defense Expenditure (US$ Billion), 2013–2017 .......................................................................................................................... 19
 Figure 3: UK Defense Budget Split between Capital and Revenue Expenditure (%), 2008–2012 .................................................................... 21
 Figure 4: UK Defense Budget Split between Capital and Revenue Expenditure (%), 2013–2017 .................................................................... 22
 Figure 5: UK Defense Budget Break up(%), 2008–2012 .................................................................................................................................. 23
 Figure 6: UK Defense Budget Break up (%), 2013–2017 ..................................................................................
								
To top