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The Portuguese Defense Industry - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017

This report 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 Portuguese defense industry.

 
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Dallas, TX -- (SBWIRE) -- 10/15/2012 -- Portugal’s defense budget was US$3.14 billion in 2012 and, during the review period, recorded a CAGR of 1.7%. However, the country’s high fiscal debt is forcing austerity measures which will cause the defense budget to decline during the forecast period to reach US$2.87 billion by 2017.The primary factors driving Portugal’s defense expenditure are military modernization set out in the country’s military procurement program[1] (LPM) and Portugal’s commitment to international organizations such as the NATO (North Atlantic Treaty Organization), the Organization for Economic Co-operation and Development (OECD), the EU (European Union), and the United Nations (UN). The majority of the defense budget is used for personnel expenses, including the pensions and salaries of the armed personnel. The expenditure for equipment procurement, which averaged 18.6% of the total defense budget during the review period, is expected to fall to 17.9% by 2013, as the country is intending to reduce the budget of LPM by 40%.[1] The Lei de Programação Militar (LPM)is Portugal’s long-term military procurement program, passed in 2006.

What are the key drivers behind recent market changes?
Portugal’s defense expenditure is primarily driven by military modernization plans and the country”s participation in international peacekeeping missions. In 2006, the government established its military funding program (LPM) which defined the long-term modernization objectives for the armed forces. The LPM is an eighteen-year program, divided into three six year phases, and the government had planned to spend EUR5.45 billion (US$7.42 billion) on military modernization during 2006-2023. Portugal is a member of international organizations such as the EU, the UN and is a founding member of NATO and, as a part of these organizations; Portugal takes part in various peacekeeping missions.

What makes this report unique and essential to read?

The Portuguese Defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017provides detailed analysis of the current industry size and growth expectations from 2013to 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
- The report provides a detailed analysis of the current industry size and growth expectations from 2013to 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 Portuguese 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 Portugal. 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 Portuguese government procures the majority of its defense equipment from foreign companies due to its relatively under-developed domestic defense industry. However, the government is also importing capabilities that its domestic industry is capable of performing itself, and has even been exporting. The import of this hardware poses a challenge for the domestic defense industry, which has been slowly developing through joint ventures and partnership contracts.

Defense companies catering to the Portuguese market face the challenge of Portugal’s declining military capital expenditure. In 2006, the Portuguese government defined its long-term military funding program (LPM) which outlined procurement expenditure over the 18-year period 2006-23. However, the government is currently facing economic challenges and has been forced to adopt austerity measures to reduce the country’s high fiscal deficit. These austerity measures are reflected in defense spending with a 40% cut in LPM funding until 2013, and also a moratorium in new equipment procurement until 2013.

The Portuguese government has been accused of corrupt practices when awarding defense contracts. The government entered in to a contract with a German company to acquire two submarines at a cost of more than EUR1 billion (US$1.36 billion), and the government made these purchases when it faced huge financial constraints and was forced to resort to austerity measures. The German companies bribed the Portuguese defense officials to make the purchases, and also the offset contracts negotiated by the government were actually existing investments and did not give any additional benefit to the domestic defense industry

Key Highlights
Portugal’s Defense Ministry budget was US$3.14 billion in 2012, and recorded a CAGR of 1.7% during the review period. The Portuguese government is facing economic constraints due to the country’s high level of fiscal debt, which is expected to reach 115% of GDP by 2013. The debt is expected to be reduced to 4.5% of GDP by 2017 through the use of austerity measures, which will include lengthening t-bill maturities and implementing defense expenditure cuts. The government has made a 40% cut in the budget for the 2006 military funding program (LPM) until 2013, which establishes the long-term objectives for modernizing Portugal’s armed forces. The government has also announced that it will not make any new commitments for military equipment purchases until 2013.

Portugal’s homeland security expenditure falls under the budget of the Ministry of Internal Administration (MIA). The homeland security budget stands at US$2.2 billion in 2012, registering a CAGR of -3.08% during the review period and, during the forecast period, the budget is expected to grow at a CAGR of 7.68% to reach US3.01 billion by 2017. The fall in the growth rate is due to the austerity measures adopted by the government.

Portugal’s defense imports increased at a robust pace in 2010 due to the acquisition of submarines and frigates for its navy, C-295 transport aircraft from pan-European corporation EADS for its air force, and Pandur 2 armored vehicles and Leopard 2A6 battle tanks for its army. All these purchases were made as part of the country”s LPM program. However, the imports saw a steep decline in 2011, reaching a value of 115. During the forecast period the country’s defense imports are expected to decline as austerity measures lead to 40% cuts in planned LPM funding during 2010-2013. The government has also announced that it will not make any new commitments to purchase equipment until 2013.

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List Of Tables

Table 1: Portuguese Defense Expenditure (US$ Billion), 2008-2012
Table 2: Portuguese Defense Expenditure (US$ Billion), 2013-2017
Table 3: Portuguese GDP Growth vs. Defense Expenditure Growth vs. Defense Expenditure as Percentage of GDP, 2008-2012
Table 4: Portuguese GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2013-2017
Table 5: Portuguese Defense Budget Split Between Capital and Revenue Expenditure (%), 2008-2012
Table 6: Portuguese Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2017
Table 7: Portuguese Defense Capital Expenditure Breakdown (%), 2008-2012
Table 8: Portuguese Defense Capital Expenditure Breakdown (%), 2013-2017
Table 9: Portuguese Defense Function Expenditure Split (%), 2008-2012
Table 10: Portuguese Defense Function Expenditure Split (%), 2013-2017
Table 11: Portuguese Defense Budget Allocation for Navy (US$ billion),2008-2012
Table 12: Portuguese Defense Budget Allocation for Navy(US$ billion), 2013-2017
Table 13: Portuguese Army Expenditure(US$ billion), 2008-2012
Table 14: Portuguese Army Expenditure(US$ billion),2013-2017
Table 15: Portuguese Air Force Expenditure (US$ billion), 2008-2012
Table 16: Portuguese Air Force Expenditure (US$ billion), 2013-2017
Table 17: Portuguese Central Services Support Expenditure (US$ billion), 2008-2012
Table 18: Portuguese Central Services Support Expenditure (US$ billion), 2013-2017
Table 19: Portuguese Homeland Security Expenditure (US$ billion), 2008-2012
Table 20: Portuguese Homeland Security Expenditure (US$ billion), 2013-2017
Table 21: SDI Terrorism Index
Table 22: Benchmarking with Key Markets - 2008-2012 vs. 2013-2017
Table 23: Offset Regulations in Portugal
Table 24: OGMA - Indústria Aeronáutica de Portugal SA - Major Products and Services
Table 25: OGMA - Indústria Aeronáutica de Portugal SA - Alliances
Table 26: OGMA - Indústria Aeronáutica de Portugal SA - Recent Contract Wins
Table 27: EID - Empresa de Investigação e Desenvolvimento de Electrónica SA - Major Products and Services
Table 28: EID - Empresa de Investigação e Desenvolvimento de Electrónica SA - Alliances
Table 29: EID - Empresa de Investigação e Desenvolvimento de Electrónica SA - Recent Contract Wins
Table 30: Edisoft - Major Products and Services
Table 31: Edisoft - Alliances
Table 32: Edisoft - Recent Contract Wins
Table 33: EMPORDEF TI Inc. - Major Products and Services
Table 34: EMPORDEF TI Inc. - Alliances
Table 35: EMPORDEF TI Inc. - Recent Contract Wins
Table 36: ENVC - Major Products and Services
Table 37: ENVC - Alliances
Table 38: ENVC - Recent Contract Wins
Table 39: Indra Sistemas Portugal - Major Products and Services
Table 40: Indra Sistemas Portugal - Alliances
Table 41: Indra Sistemas Portugal - Recent Contract Wins
Table 42: AgustaWestland - Major Products and Services
Table 43: AgustaWestland - Alliances
Table 44: AgustaWestland - Recent Contract Wins
Table 45: Arsenal Alfeite - Major Products and Services
Table 46: Arsenal Alfeite - Recent Contract Wins
Table 47: Fabrequipa - Product Focus
Table 48: Fabrequipa: Alliances
Table 49: Fabrequipa: Recent Contract Awards
Table 50: Critical Software - Product Focus
Table 51: Critical Software: Alliances
Table 52: Critical Software: Recent Contract Awards
Table 53: Aero Voo de Portugal, LDA - Product Focus
Table 54: Instituto Geográfico do Exército - Product Focus

List Of Figures

Figure 1: Portuguese Defense Expenditure (US$ Billion), 2008-2012
Figure 2: Portuguese Defense Expenditure (US$ Billion), 2013-2017
Figure 3: Portuguese GDP Growth vs. Defense Expenditure Growth vs. Defense Expenditure as Percentage of GDP, 2008-2012
Figure 4: Portuguese GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2013-2017
Figure 5:Portuguese Defense Budget Split Between Capital and Revenue Expenditure (%), 2008-2012
Figure 6: Portuguese Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2017
Figure 7: Portuguese Defense Capital Expenditure Breakdown (%), 2008-2012
Figure 8: Portuguese Defense Capital Expenditure Breakdown (%), 2013-2017
Figure 9: Portuguese Defense Function Expenditure Split (%), 2008-2012
Figure 10: Portuguese Defense Function Expenditure Split (%), 2013-2017
Figure 11: Portuguese Defense Budget Allocation for Navy (US$ billion), 2008-2012
Figure 12: Portuguese Defense Budget Allocation for Navy (US$ billion), 2013-2017
Figure 13: Portuguese Army Expenditure(US$ billion), 2008-2012
Figure 14: Portuguese Army Expenditure(US$ billion), 2013-2017
Figure 15: Portuguese Air Force Expenditure (US$ billion), 2008-2012
Figure 16: Portuguese Air Force Expenditure (US$ billion), 2013-2017
Figure 17: Portuguese Central Services Support Expenditure (US$ billion), 2008-2012
Figure 18: Portuguese Central Services Support Expenditure (US$ billion), 2013-2017
Figure 19: Portuguese Homeland Security Expenditure (US$ billion), 2008-2012
Figure 20: Portuguese Homeland Security Expenditure (US$ billion), 2013-2017
Figure 21: SDI Terrorism Heat Map, 2011
Figure 22: SDI Terrorism Index, 2011
Figure 23: Benchmarking with Key Markets - 2008-2012 vs. 2013-2017
Figure 24: Defense Expenditure of the World's Largest Military Spenders (US$ Billion), 2012 and 2017
Figure 25: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2012
Figure 26: Portuguese Defense Import Trend, 2007-2011 (TIV values)
Figure 27: Portuguese Defense Import by Country (%), 2007-2011 (TIV values)
Figure 28: Portuguese Defense Imports by Category (%), 2007-2011
Figure 29: Portuguese Defense Exports Trend, 2007-2011 (TIV Values)
Figure 30: Portuguese Defense exports by Country (%), 2007-2011
Figure 31: Portuguese Defense Exports by Category (%), 2007-2011
Figure 32: Industry Dynamics: Porter's Five Forces Analysis
Figure 33: Indra Sistemas Portugal - Revenue Trend Analysis (EUR Billion), 2007-2011
Figure 34: Indra Sistemas Portugal - Operating Profit Trend Analysis (EUR Million), 2007-2011
Figure 35: Indra Sistemas Portugal - Net Profit Trend Analysis (EUR Million), 2007-2011
Figure 36: Critical Software - Revenue Trend Analysis (Euro million), 2007-2011
Figure 37: Portuguese Population - Female (In Millions), 2008-2017
Figure 38: Portuguese Population - Male (In Millions), 2008-2017
Figure 39: Portuguese Construction Output, Current Prices, Local Currency (Billions), 2001-2010
Figure 40: Portuguese Construction Output, Current Prices, US Dollars (In Billions), 2001-2010
Figure 41: Portuguese Current Account Balance as Percentage of GDP, 2008-2017
Figure 42: Portuguese Exports of goods and services, current prices (US$ Billion), 2001- 2010
Figure 43: Portuguese Exports of services, current prices (Local Currency Billion), 2003- 2012
Figure 44: Portuguese Fiscal Balance as a percentage of GDP, 2001-2009
Figure 45: Portuguese Foreign Direct Investment(US$ Billion), 2001-2010
Figure 46: Portuguese GDP at Purchasing Power Parity (US$ Billion), 2006-2015
Figure 47: Portuguese GDP at Constant Prices(Local Currency Billion), 2006-2015
Figure 48: Portuguese GDP at Constant Prices(US$ Billion), 2006-2015
Figure 49: Portuguese GDP at Current Prices(Local Currency Billion), 2006-2015
Figure 50: Portuguese GDP at Current Prices(US$ Billion), 2006-2015
Figure 51: Portuguese General Government Final Consumption Expenditure (US$ Billion), 2001-2010
Figure 52: Portuguese Gross Fixed Capital Formation, Current Prices(US$ Billion), 2001-2010
Figure 53: Portuguese Imports of goods and services (current US$ Billion), 2001-2010
Figure 54: Portuguese Imports of services (current local currency billion), 2003-2012
Figure 55: Portuguese Inflation, average consumer prices, 2008-2017
Figure 56: Portuguese Manufacturing Output, Current Prices (Local Currency Billion), 2001-2010
Figure 57: Portuguese Manufacturing Output, Current Prices (US$ Billion), 2001-2010
Figure 58: Portuguese Wholesale Price Index, 2000-2009
Figure 59: Portuguese Hydroelectricity Installed Capacity (Million Kilowatts), 2000-2009
Figure 60: Portuguese Natural Gas Consumption (Million Kilowatts), 2001-2010
Figure 61: Portuguese Natural Gas Consumption (Million Kilowatts), 2001-2010
Figure 62: Portuguese Net Conventional Thermal Electricity Generation (Billion Kilowatt hours), 2001-2010
Figure 63: Portuguese Net Geothermal, Solar, Wind, and Wood Electric Power Generation (Billion Kilowatt hours), 2001-2010
Figure 64: Portuguese Net Hydroelectric Power Generation(Billion Kilowatt hours), 2001-2010
Figure 65: Portuguese Petroleum Consumption (Thousand Barrels Per Day), 2002-2011
Figure 66: Portuguese Petroleum Production (Thousand Barrels Per Day), 2002-2011
Figure 67: Portuguese People Employed in R and D (Number of researchers per million people), 2000-2009
Figure 68: Portuguese Coal Consumption (Thousand Short Tons), 2001-2010
Figure 69: Portuguese Political Stability Index, 2002-2010
Figure 70: Portuguese Transparency Index, 2002-2011
Figure 71: Portuguese Fixed Broadband Internet Subscribers (Thousands), 2001-2010
Figure 72: Gross Domestic Expenditure on Research and Development as % of GDP, 2000-2009
Figure 73: Portuguese Investment in Telecommunication (EUR Million), 2000-2009
Figure 74: Patents Granted, 2002-2011
Figure 75: Fixed line calling cost local, 2001-2010
Figure 76: Fixed Line Calling Cost National, 2001-2010

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