Lewes, DE -- (SBWIRE) -- 02/19/2014 -- This report is the extensive market and company research covering the Finnish 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 Finnish Defense Industry - Market Attractiveness, Competitive Landscape, and Forecasts to 2019offers the reader an insight into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain market share in the Finnish defense industry.
What is the current market landscape and what is changing?
Finland's total defense expenditure stands at US$3.7 billion in 2014 and is expected to grow at a CAGR of 5.79% over the forecast period, to reach US$4.34 billion in 2019. Finnish defense expenditure is primarily driven by participating in peacekeeping initiatives, the upgrade of military equipment such asF-18 Hornet jet fighters, the soldier modernization program, and the procurement of advanced technology equipment. The Finnish defense industry is expected to focus its expenditure on NASAMS II missile system, Leopard 2A6 main battle tanks, soldier combat systems, transport helicopters, ballistic protection and smart munitions systems, cyber security, and C4ISR systems. The country's defense budget stands at 1.16% of GDP in 2014 and is expected to increase marginally to 1.23% of GDP by 2019. During 2010-2014, the average capital expenditure allocation stood at 31.6% of the total defense budget, and this is expected to increase marginally over the forecast period to reach 32.1%. Revenue expenditure is expected to decrease from an average of 68.4% during 2010-2014 to 67.9% in the forecast period due to austerity measures by the government. The defense ministry plans to reduce the number of mobilized troops from 350,000 to 230,000 by 2015 and save on training costs by conducting joint activities with the Nordic partners.
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What are the key drivers behind recent market changes?
Modernization of defense systems, participation in peacekeeping initiatives, and the perceived threat from Russia expected to drive Finnish defense expenditure.
What makes this report unique and essential to read?
The Future of the Finnish Defense Industry - Market Attractiveness, Competitive Landscape, and Forecasts to 2019provides detailed analysis of the current industry size and growth expectations from 2015 to 2019, 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 2015 to 2019, 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 Finnish 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 Finland. 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
The Finnish defense industry favors Nordic and European countries for defense trade, as Finland is a member of the European Defense Agency and NORDEFCO (Nordic Defence Cooperation), which limits the scope for foreign companies to enter Finland's defense industry. Furthermore, the country follows a strict offset policy, according to which, offsets are mandatory for all transactions exceeding US$13.3 million and investors are required to reinvest 100% of the value of the contract into the Finnish economy. In the case of failure to perform, the foreign investor is obligated to pay a predetermined percentage of the unfulfilled offset obligation.
The Finnish defense forces are affected by the economic slowdown and are cutting operating costs, which is likely to affect training programs and encouraging participation in joint cross-border air and naval Nordic operations to save cost. Finland's state debt is forecast to increase further, causing lean times for the country's defense industry. The proposed steps for the forecast period include the closure of some military bases, a more centralized leadership structure, and the discontinuation of the existing four Provincial Command military districts. These changes will be implemented as part of a National Defense Reform Program (NDRP), which also includes a reduction in the number of professional soldiers across all ranks and the redundancies of administrative civilian personnel in the defense forces during 2012-2016.Furthermore, these cuts are leading to the procurement of second-hand equipment from other countries and joint procurement programs with Nordic countries. In January 2014, the defense force has decided to carry out a reform which will reduce the military divisions from 26 to 16 in the coming two years with an estimated cost saving of US$183 million by 2015.
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The Finnish armed forces have failed to embark on a defense modernization plan in the past decade, resulting in obsolete military hardware. Furthermore, the nation's participation in international peacekeeping missions has created demand for advanced defense systems such as fighter aircrafts, air surveillance systems, night vision systems, assault rifles, simulators, ballistic protection, helmet systems, and communication systems. Additionally, Finland is increasing its efforts to upgrade its air defense missile capabilities by procuring NASAMS II system, jointly developed by Norwegian Kongsberg Defense and US Raytheon under a contract worth US$460 million. Moreover, the country is anticipated to spend more than US$1 billion on the upgrade of the F-18 super hornet military aircraft during the forecast period. Due to austerity measures, the defense ministry is forced to focus on the acquisition of high quality secondhand equipment. In January 2014, the country joined with the Netherlands to purchase 100 secondhand Leopard 2A6 main battle tanks under a contract worth US$274 million. This initiative was taken to strengthen the upgrade plan of the army's armored battlefield units between 2015 and 2019. Furthermore, with the government aiming to reduce its troop size by 100,000 over the next five years, the country will be able to control revenue expenditures efficiently while procuring advanced weapons.
The country is susceptible to organized crime including the illicit drug trade, prostitution, and cyber-crimes. However, the authorities perceive cyber-crime and payment card fraud as growing threats. According to official data, an estimated 66 organized crime groups with a total of 948 members were operating in Finland during 2009. Additionally, the country serves as a transit hub and destination for women and girls trafficked from Russia, Estonia, Lithuania, Latvia, Ukraine, Belarus, Moldova, the Caucasus, China, and Thailand. Moreover, Finland is a destination for men and women trafficked for forced labor from China, Pakistan, and Bangladesh. The government enhanced its anti-trafficking measures in 2012 with increased collaboration between labor inspectors and police officials. Additionally, the Finnish Border Guard is focused on upgrading to the latest technology to assist in protecting its land borders, and is improving its sensor technology and updating data systems. Furthermore, the country plans to recruit 455 police officers by 2020 to provide enhanced internal security. In order to prevent these crimes, Finland will need to invest in surveillance equipment such as CCTV and enhance its border security by procuring electronic identification systems and automated border crossing systems.
In recent years, there have been a growing number of collaborations between Nordic countries which will enhance the defense capabilities of the country along with boosting the indigenous market. Finland is a part of NORDEFCO (Nordic Defence Cooperation) which is a collaboration among the Nordic countries, established in 2009, with the objective of strengthening the member countries' defense capabilities and operational capacity through cost-effective collaboration. The partners have witnessed converging military needs including explosive devices, long-range precision weapons, air surveillance, ground air defenses, and future mechanized battalion system. Therefore, member countries have planned strategic solutions including enhanced regional security, heightened common equipment procurements, and the establishment of joint operating units. The Nordic Vision 2020, rolled out in 2013, envisions an established committee of specialists and advisors responsible for conducting joint capacity building and security sector reform tasks. Moreover, regular cross-border training will contribute to maintaining and developing capabilities jointly, which will assist in the rapid deployment of forces to be used for the NATO Response Force and EU Battle Groups. Furthermore, the members aim to increase interoperability and create a pool of resources to facilitate air and sea surveillance in the Nordic region. For example, Sweden and Finland will join NATO partners Norway and Denmark to provide air surveillance patrols over Iceland in 2015.
Spanning over 107 pages, 28 tables and 67 figures “Future of the Finnish Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2019” report covering The Market Attractiveness and Emerging Opportunities, Defense Procurement Market Dynamics, Industry Dynamics, Market Entry Strategy, Competitive Landscape and Strategic Insights, Business Environment and Country Risk, Appendix. The report covered 1 company - KADDB.
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