Naperville, IL -- (SBWIRE) -- 07/17/2012 -- This report is the result of extensive market and company research covering the Brazilian defense industry. It 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 Brazilian defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 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 Brazilian defense industry.
What is the current market landscape and what is changing?
The Brazilian defense market valued US$38.27 billion in 2012, with US$2.87 billion spent on the procurement of military hardware and a considerable amount spent on training, pension payments, maintenance, repair, and overhaul. The country’s modernization of its outdated defense systems, and simultaneous focus on the development of its domestic defense capabilities to reduce dependence on foreign suppliers, has resulted in Brazil’s pursuing technology transfer agreements. During the review period, the country allocated an average of 1.5% of its GDP to defense, a figure which is among the lowest in the region, and it also spent the smallest per capita defense spending in the region of US$195 in 2012.
What are the key drivers behind recent market changes?
During the forecast period, Brazil’s defense expenditure will be driven by factors such as the modernization of Brazil’s defense systems, development of domestic defense capabilities, and efforts to protect the Amazon region. The country procured 12 second-hand Mirage 2000Cs, and is currently negotiating the procurement of 36 fourth-generation fighter jets from Dassault, SAAB, and Boeing. The country is developing a 19-ton air transport and aerial refueling aircraft along with a ship building and naval yard. The System for the Vigilance of the Amazon (SIVAM) program, which the government executed in partnership with Raytheon, involves the patrol and protection of the dense Amazon region against deforestation, land invasion, drug trafficking, and illegal mining.
What makes this report unique and essential to read?
The Brazilian Defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 provides detailed analysis of the current industry size and growth expectations from 2013 to 2017, 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
Market Opportunity and Attractiveness.
The report provides detailed analysis of the current brazil defense industry size and growth expectations from 2013 to 2017, 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.
The report includes trend analysis of imports and exports, together with their implications and impact on the Brazilian 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.
Market Entry Strategy.
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.
Competitive Landscape and Strategic Insights.
The report helps the reader to understand the competitive landscape of the defense industry in Brazil. 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
Complying with Brazil’s requirement for extensive technology transfer.
Brazil has a strict offset obligation for defense deals equivalent to 100% of the contract value. This has proved a challenge for foreign OEMs whose government have a policy of limited technology transfer, including the US-based company Boeing. Moreover, Brazil’s offset policy requires that defense contracts use domestic companies for the manufacture and assembly of defense systems.
Delay in the closure of defense deals and low allocation for capital defense expenditure.
A significant challenge faced by defense suppliers to Brazil is the time taken by the ministry of Defense to ratify defense deals. Since defense procurements occur through competitive bidding, competing companies must undergo technical compliance checks, after which the ministry enters a lengthy negotiation process with bidders designed to secure the maximum technology transfer at the lowest price. As such, the ratification process is further delayed by the long negotiation and competing offers given by the various defense firms.
Brazilian annual defense expenditure valued US$38.27 billion in 2012.
Brazil had the tenth-largest defense expenditure in the world in 2012. The country’s defense expenditure, which valued US$23.81 billion in 2008, grew at a CAGR of 12.6% during the review period, to reach US$38.27 billion in 2012. Throughout the review period the government spent a total of US$155 billion on its defense. The modernization initiatives in Brazil have resulted in higher spending on defense.
Brazil expected to invest US$3 billion in homeland security during the forecast period.
Brazil is a vast country geographically, and is expected to be a lucrative market for suppliers of homeland security systems during the forecast period. The country’s various geographical features, which include dense forests, the Amazon River, and a long coastline, have resulted in increased reliance on the use of satellite and radar-based imaging systems to monitor and maintain homeland security. In collaboration with Raytheon, the country operates a dedicated Amazon Protection System which monitors the river and surrounding region. The government has also established an agreement with Unisys, for Unisys to assist in the monitoring of security across Brazilian ports
Europe was the largest supplier of aircraft components to Brazil over the review period.
Brazilian aircraft imports account for 45.5% of its total arms procurements, and involve the import of advanced fighter jets and components for the manufacture of indigenous aircraft systems such as helicopters and cargo aircraft. During the review period, Brazil has also procured missile systems from Israel, the US, and Spain, which included anti-ship, anti-submarine and beyond visual range missiles.
Brazil is expected to increase its aircraft exports, supported by increased technology and component procurements from Europe.
The Brazilian defense export market is expected to expand, fueled by the sale of its indigenous air cargo transport aircraft, in which a number of countries have expressed interest. The Brazilian manufacturing companies Embraer and Helibras, which specialize in the manufacture of light attack aircraft and helicopters, are global leaders in defense production. These firms specialize in the creation of superior quality customized defense systems, and are a popular choice for developing countries as they provide an affordable alternative to advanced fighter planes.
Empresa Brasileira de Aeronautica SA (Embraer), ForjasTauras SA, Avibras Industria Aerospacial (Avibras), Companhia Brasileira de Cartuchos, Helibras, Industria de Material Belico do Brasil (IMBEL), Aeroelectronica, Indústria Naval do Ceará (INACE), Northrop Grumman Corporation (Northrop Grumman), European Aeronautic, Defense and Space Co (EADS), Lockheed Martin Corporation (Lockheed Martin)
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