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Future of the Australian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 by StrategicDefenceIntelligence

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Product Synopsis This report is the result of SDI’s extensive market and company research covering the Australian 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 Australian 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 a market share in the Australian defense industry. What is the current market landscape and what is changing? Australian defense expenditure increased at a CAGR of 6.03% during the review period and values US$26.3 billion in 2013. The focus of the Australian government will be on the modernization of its armed forces, participation in peacekeeping operations, and counterterrorism activities. What are the key drivers behind recent market changes? Military modernization, counterterrorism activities, and participation in peacekeeping missions are the major drivers of the Australian defense industry. What makes this report unique and essential to read? The Future of the Australian 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

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


 TABLE OF CONTENTS

 1.    Introduction ......................................................................................................................... 10
  1.1. What is this Report About? ..........................................................................................................10
  1.2. Definitions .....................................................................................................................................10
  1.3. Summary Methodology .................................................................................................................12
  1.4. SDI Terrorism Index ......................................................................................................................13
  1.5. About Strategic Defence Intelligence (www.strategicdefenceintelligence.com) ......................13
 2.    Executive Summary ............................................................................................................ 14
 3.    Market Attractiveness and Emerging Opportunities ........................................................ 17
  3.1. Defense Market Size Historical and Forecast..............................................................................18
   3.1.1. The Australian defense budget is expected to grow at an estimated CAGR of 5.1% during the forecast
   period, to reach US$35.2 billion in 2018 ............................................................................................................... 18
   3.1.2. Military modernization, counterterrorism activities, and participation in peacekeeping missions are the
   major drivers of the Australian defense industry.................................................................................................... 21
   3.1.3. Military expenditure as a percentage of GDP is expected to increase during the forecast period ................ 22
  3.2. Analysis of Defense Budget Allocation .......................................................................................24
   3.2.1. Capital expenditure allocation in the overall defense budget is expected to increase over the forecast
   period 24
   3.2.2. Other expenditure is expected to be the largest during forecast period ...................................................... 26
   3.2.3. Air force expenditure to grow at a CAGR of 3.58% over the forecast period and to reach US$5.6 billion in
   2018 29
   3.2.4. Army expenditure to grow at a CAGR of 3.64% over the forecast period to reach US$7.02 billion in 2018.. 32
   3.2.5. Naval expenditure is expected to reach US$1 billion by 2018 .................................................................... 34
  3.3. Homeland Security Market Size and Forecast ............................................................................36
   3.3.1. Homeland security expenditure is expected to grow at a CAGR of 5.1% during the forecast period............ 36
   3.3.2. Organized crime, cyber-security and maritime security are the major drivers of homeland security
   expenditure .......................................................................................................................................................... 38
   3.3.3. Australia faces minimal threat from foreign terrorist organizations .............................................................. 40
  3.4. Benchmarking with Key Global Markets .....................................................................................42
   3.4.1. Australian defense expenditure expected to remain modest compared to leading spenders ....................... 42
   3.4.2. The country will continue to be significant in the global arms market .......................................................... 44
   3.4.3. Defense expenditure as a percentage of GDP to increase marginally over forecast period......................... 45
   3.4.4. Australia has a moderate per-capita defense expenditure .......................................................................... 46
  3.5. Market Opportunities: Key Trends and Growth Stimulators ......................................................47
   3.5.1. Fighters & Multi-Role Aircraft ..................................................................................................................... 47
   3.5.2. Armored vehicles- Mine Resistant Ambush Protected Vehicle (MRAP) ...................................................... 48




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


   3.5.3. Maritime Security ...................................................................................................................................... 49
   3.5.4. Destroyers ................................................................................................................................................ 50
   3.5.5. Border Security ......................................................................................................................................... 51
   3.5.6. Air Reconnaissance Aircraft ...................................................................................................................... 52
   3.5.7. Attack Aircraft MRO................................................................................................................................... 53
 4.    Defense Procurement Market Dynamics ........................................................................... 54
  4.1. Import Market Dynamics ...............................................................................................................55
   4.1.1. Defense imports expected to increase considerably over the forecast period ............................................. 55
   4.1.2. US was the largest arms supplier to Australia during 2008-2012 ................................................................ 56
   4.1.3. Imports of aircraft and missiles continue to increase .................................................................................. 57
  4.2. Export Market Dynamics ..............................................................................................................58
   4.2.1. Defense exports expected to increase during forecast period .................................................................... 58
   4.2.2. US was the major importer of the Australian defense goods during 2008-2012 .......................................... 59
   4.2.3. Ships constitute majority of exports ........................................................................................................... 60
 5.    Industry Dynamics .............................................................................................................. 61
  5.1. Five Forces Analysis.....................................................................................................................61
   5.1.1. Bargaining power of supplier: Low to Medium ............................................................................................ 62
   5.1.2. Bargaining power of Buyer: High ............................................................................................................... 62
   5.1.3. Barrier to entry: High ................................................................................................................................. 62
   5.1.4. Intensity of rivalry: Medium to High ............................................................................................................ 62
   5.1.5. Threat of Substitution: High ....................................................................................................................... 62
 6.    Market Entry Strategy ......................................................................................................... 63
  6.1. Market Regulation .........................................................................................................................63
   6.1.1. AIC program ensures the participation of local industry .............................................................................. 63
   6.1.2. Approval for foreign investment in defense sector set at US$216.2 million ................................................. 64
  6.2. Market Entry Route .......................................................................................................................65
   6.2.1. Foreign military sales (FMS) to Australia ................................................................................................... 65
   6.2.2. Establishing a domestic subsidiary is the preferred market entry route ....................................................... 66
   6.2.3. Foreign OEMs sub-contract defense deals to domestic firms in order to enter the market .......................... 67
   6.2.4. Foreign OEMs offer domestic companies access to global supply chains in order to enter the industry ...... 67
   6.2.5. DRSS provides opportunities to develop strong relations with the ADO...................................................... 67
  6.3. Key Challenges .............................................................................................................................68
   6.3.1. Cost overruns and project delays continue to worry defense industry......................................................... 68
   6.3.2. Global supply chain pose challenge for foreign OEMs ............................................................................... 69
 7.    Competitive Landscape and Strategic Insights ................................................................ 70
  7.1. Competitive Landscape Overview ...............................................................................................70




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

  7.2. Key Domestic Companies ............................................................................................................70
   7.2.1. Raytheon Australia: Overview ................................................................................................................... 70
   7.2.2. Raytheon Australia: Major Products and Services...................................................................................... 70
   7.2.3. Raytheon Australia: Recent Announcements and Strategic Initiatives ........................................................ 71
   7.2.4. Raytheon Australia: Alliances .................................................................................................................... 71
   7.2.5. Raytheon Australia: Recent Contract Wins ................................................................................................ 72
   7.2.6. Austal Ltd.: Overview ................................................................................................................................ 73
   7.2.7. Austal Ltd.: Major Products and Services .................................................................................................. 73
   7.2.8. Austal Ltd.: Recent Announcements and Strategic Initiatives ..................................................................... 73
   7.2.9. Austal Ltd.: Alliances ................................................................................................................................. 74
   7.2.10. Austal Ltd.: Recent Contract Wins ............................................................................................................. 74
   7.2.11. Austal Ltd.: Financial analysis ................................................................................................................... 75
   7.2.12. Boeing Defense Australia: Overview.......................................................................................................... 77
   7.2.13. Boeing Defense Australia: Major Products and Services ............................................................................ 77
   7.2.14. Boeing Defense Australia: Recent Announcements and Strategic Initiatives .............................................. 78
   7.2.15. Boeing Defense Australia: Alliances .......................................................................................................... 78
   7.2.16. Boeing Defense Australia: Recent Contract Wins ...................................................................................... 79
   7.2.17. Saab Systems: Overview .......................................................................................................................... 80
   7.2.18. Saab Systems: Major Products and Services............................................................................................. 80
   7.2.19. Saab Systems: Recent Announcements and Strategic Initiatives ............................................................... 80
   7.2.20. Saab Systems: Alliances ........................................................................................................................... 81
   7.2.21. Saab Systems: Recent Contract Wins ....................................................................................................... 81
   7.2.22. General Dynamics Land Systems Australia: Overview ............................................................................... 82
   7.2.23. General Dynamics Land Systems Australia: Major Products and Services ................................................. 82
   7.2.24. General Dynamics Land Systems Australia: Recent Announcements and Strategic Initiatives ................... 82
   7.2.25. General Dynamics Land Systems Australia: Recent Contract Wins............................................................ 82
   7.2.26. Lockheed Martin Australia: Overview......................................................................................................... 83
   7.2.27. Lockheed Martin Australia: Major Products and Services ........................................................................... 83
   7.2.28. Lockheed Martin Australia: Recent
								
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