Lewes, DE -- (SBWIRE) -- 02/19/2014 -- This report is the extensive market and company research covering the UK 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 UK 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 UK defense industry.
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What is the current market landscape and what is changing?
The UK is one of the major military spenders across the world. Counter terrorism measures and peacekeeping operations have been key factors stimulating defense spending in the UK and are expected to do the same over the forecast period. Currently, the UK MoD is embarking on budget cuts, a trend expected to continue until 2017, after which, the government will increase the budget slightly. The budget cut is primarily due to the government's steps to curb its overall expenditure through the restructuring of operations, efficiency enhancements, and erasing redundancy. Another contributing factor is the end of the Afghanistan war and planned withdrawal of troops from the region by the end of 2014. Over the forecast period, the capital expenditure share of the total defense budget is expected to increase steadily due to the government's procurement plans. The country's homeland security expenditure, which recorded a CAGR of -0.85% over the review period, is expected to increase at a CAGR of 1.45% over the forecast period, driven by increasing threats to cyber security, terrorist activity, and increased border security.
What are the key drivers behind recent market changes?
Certain factors pertaining to the security of UK are expected to drive the nation's defense expenditure in the coming years. These include the risk of attacks from internal and external terrorist groups and border conflicts with Algeria and Spain. Additionally, ammunition modernization initiatives will be an area of focus for military expenditure over the forecast period.
What makes this report unique and essential to read?
The Future of the UK 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 2014to 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 UK 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 UK. 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.
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Key Market Issues
The UK government has announced plans to reduce defense expenditure over the next five years in order to control the country's increasing fiscal deficit. Such reductions will lead to a decline in procurements and are expected to have a negative impact on domestic defense companies. The announcement of defense budget cuts followed the Strategic Defense and Security Review, conducted in October 2010, and follows many other countries that have already cut their defense budgets, resulting in a contracted global defense market. The MoD is planning to reduce personnel by 33,000 across all three military services, including 5,500 in the Royal Navy, 19,500 in the Army, and 8,000 in the Royal Air Force, by 2020. In addition, the civilian workforce is being reduced by 32,000 at the same time.
The MoD protects domestic defense companies by allowing only direct offsets to foreign exporters and by encouraging foreign bidders to use UK sub-contractors on a competitive basis. In addition, the UK government gives priority to domestic companies in meeting its Urgent Operational Requirements. Since the UK is a member of the EU, defense procurements for goods and services are conducted in accordance with the EU Procurement Regulations. According to these regulations, EU firms are given priority over non-European firms when similar financial and technical bids are offered. Additionally, the government favors agreements in joint development with other European defense firms making it inaccessible to non-European defense firms. As an example, the UK government has taken the initiative in cooperative procurement, including several major programs, such as: the Airbus A400M and MBDA Meteor, and in the creation of the European Defense Agency (EDA) in July 2004. The EDA supports the more effective harmonization of military requirements and promotes a more open defense equipment market in Europe, acting as a barrier for entry for non-European companies.
Following the UK's international military operations against the Taliban and Al-Qaeda in Afghanistan, the level of terrorist activity of extremist groups in the UK has increased considerably over the last few years. The country's close association with the US makes it even more vulnerable to terrorist attacks. The current threat to the UK from international terrorism is considered to be severe, with many instances of terror attacks across the nation in the last couple of years. Within the mainland of the UK, the level of threat is substantially high from international terrorism and moderate from Northern Ireland based terrorist groups. For example, in September 2010, suicide attacks were planned to be executed but were disrupted through combined operation by the US, the UK, French and German intelligence agencies. In July 2013, Pavlo Lapshyn, a Ukrainian student who wished to start a 'race war', attacked a mosque in Tipton with an explosive device. To fight against these terrorist attacks and to ensure border security, the government has introduced e-borders, a system that electronically collects and checks individual passenger details against UK police, security and immigration watch lists. Technology such as full body scanners and boarding pass scanners will be installed at all airports to prevent terrorist groups from entering the country. Additionally, the government formed the National Counter Terrorism Security Office (NaCTSO), a police unit that works towards the protection of crowded places as well as assists Centre for Protection of National Infrastructure (CPNI) for the security of the country's critical infrastructure.
The UK faces substantial threats from internal and external terrorist groups that have compelled the country to strengthen its borders and internal security. The country's role in Afghanistan, Iraq, and Northern Africa has exposed the country to a higher level of terrorism. The country is also involved in a border dispute with Spain over the contested area of Gibraltar. Tension between the two countries heightened in July 2013, when Spain blocked the border checkpoint between Spain and Gibraltar. UK retaliated by sending warships and is threatening to take legal action against Spain. On the domestic front, terrorism threats originate from the partition of Ireland in 1921, and from the dispute between Irish Nationalists and Unionists. As the security situation in Northern Ireland evolved, the domestic intelligence body MI5 took on responsibility for national security intelligence work in Northern Ireland in 2007, bringing the arrangements there in line with the rest of the UK.With these potential threats, the country is expected to invest substantially in fortifying its border security. These initiatives include the collaboration of UK Border Agency with the National Maritime Information Center, introduction of automated boarding pass scanners in airports and passenger body scanners. London City and Gatwick airports deployed Human Recognition Systems' MFlow Journey Technology for passenger queue measurement with a facial recognition feature. The government is expected to introduce such technology improvements at other UK airports in the near future. Investments in technology and e-Border systems are expected to drive the homeland security market over the forecast period
Over the review period, the UK's defense imports increased at a CAGR of 7.73%, with a 113.3% increase in 2012 over 2011. The country is expected to continue with its defense budget cuts over the forecast period as it tries to balance the lingering dual impact of the war in Afghanistan and the economic downturn. These defense budget cuts have worked in favor of the domestic defense industry, which is expected to receive a much larger share of the UK defense procurement budget, as the government is expected to source more defense equipment domestically. This focus on domestic procurement is expected to accrue from the UK MoD's efforts to incorporate necessary force modernization measures within the pruned budget. The UK's expected pull out from Afghanistan in 2014 is also expected to have an adverse effect on defense imports as equipment such as armored vehicles and UAVs will not have to be procured on a priority basis. As a result, defense imports are expected to decline over the forecast period.
Spanning over 169 pages, 80 tables and 36 figures “Construction in Kuwait - Key Trends and Opportunities to 2017” 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 9 companies - BAE Systems Plc, GKN Aerospace Services , Rolls-Royce Plc, Babcock International Group Plc, AgustaWestland , Thales UK , General Dynamics UK Ltd ,Boeing UK ,L-3 TRL.
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