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Future of the Saudi Arabia Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Published: Jul 31, 2017 | Pages: 137 | Publisher: Strategic Defence Intelligence | Industry: Defense | Report Format: Electronic (PDF)

Future of the Saudi Arabia Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Summary

The Future of the Saudi Arabian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2021, published by Strategic Defence Intelligence, provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

Synopsis

This report offers detailed analysis of the Saudi Arabian defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.

In particular, it provides an in-depth analysis of the following - 

- The Saudi Arabian defense industry market size and drivers: detailed analysis of the Saudi Arabian defense industry during 2017-2021, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country’s expenditure and modernization patterns
- Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to the army, navy, and air force. It also details the key challenges faced by defense market participants within the country
- Porter’s Five Force analysis of the Saudi Arabian defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry
- Import and Export Dynamics: analysis of prevalent trends in the country’s imports and exports over the last five years
- Market opportunities: details of the top five defense investment opportunities over the next 10 years
- Competitive landscape and strategic insights: analysis of the competitive landscape of the Saudi Arabian defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

Scope

- Saudi Arabia is one of the largest defense spenders in the world, behind the US, China, and Russia, with a military budget valued at US$50.9 billion in 2017. The country is the largest market in the Middle East due to its robust economic and financial position backed by its oil exports. The rising tension with Iran, aggressive procurement strategies, and modernization programs, along with the need to strengthen its indigenous defense industry, are the main factors boosting the country’s military expenditure.
- On a cumulative basis, the country is expected to invest US$352.9 billion for defense purposes, of which US$159.8 billion is earmarked for capital expenditure to fund defense procurements. The government’s well-defined military modernization plans along with its efforts to supress Houthi insurgency in Yemen as well as its support for rebel factions within Syria, are expected to stimulate the expenditure over the next few years
- The MoD is expected to invest in fighters and multirole aircraft, infrastructure construction and facilities management.

Reasons to buy

- This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Saudi Arabian defense industry market trends for the coming five years
- The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
- Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. - This will provide the user with a total competitive landscape of the sector
- A deep qualitative analysis of the Saudi Arabian defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts
 Table of Contents

1. Introduction 9
1.1. What is this Report About? 9
1.2. Definitions 9
1.3. Summary Methodology 11
1.4. About Strategic Defence Intelligence 12

2. Executive Summary 13

3. Market Attractiveness and Emerging Opportunities 16
3.1. Current Market Scenario 17
3.1.1. Primary Threat Perception 17
3.1.2. Military Doctrine & Strategy 19
3.1.3. Military Fleet Size 21
3.1.4. Procurement Programs 26
3.1.5. Ongoing procurement programs 26
3.1.6. Future procurement programs 27
3.1.7. Social, Political and Economic Environment & Support for Defense Projects 29
3.1.8. Political & Strategic Alliances 30
3.2. Defense Market Size Historical and Forecast 31
3.2.1. Saudi Arabian defense budget to grow at an estimated CAGR of 7.54% during 2018-2022 31
3.2.2. Strained relationship with Iran, military modernization programs, and the need to develop its indigenous defense sector to be key factors driving defense expenditure 34
3.2.3. Saudi Arabian defense expenditure as a percentage of GDP is expected to average 8.9% during the forecast period 36
3.3. Analysis of Defense Budget Allocation 38
3.3.1. Majority of the budget to be allocated for revenue expenditure 38
3.3.2. Capital expenditure is anticipated to record a CAGR of 8.29% during the forecast period 40
3.3.3. Per capita defense expenditure expected to increase over the forecast period 42
3.4. Homeland Security Market Size and Forecast 44
3.4.1. The homeland security market in Saudi Arabia is expected to grow at a CAGR of 5.26% during the forecast period 44
3.4.2. Border Security and Infrastructure along with cyber security will be the key factors driving homeland security 47
3.4.3. Saudi Arabia considered at ‘moderate risk’ of terrorist attack 48
3.4.4. Saudi Arabia faces high level of threat from foreign terrorist organizations 49
3.4.5. Saudi Arabia has a terrorism index score of 5.4 51
3.5. Benchmarking with Key Global Markets 52
3.5.1. Saudi Arabia fifth largest defense spender 52
3.5.2. Saudi Arabia is expected to remain among the top five defense spending countries in the world 54
3.5.3. Saudi Arabia spent over 7.2% of its GDP on defense in 2017 55
3.6. Market Opportunities: Key Trends and Drivers 56
3.6.1. Fighters & Multi-Role Aircraft 56
3.6.2. Infrastructure Construction 58
3.6.3. Facilities Management 59

4. Defense Procurement Market Dynamics 60
4.1. Import Market Dynamics 60
4.1.1. Defense industry heavily relies on imports from foreign countries 60
4.1.2. The UK and the US are the key defense suppliers to Saudi Arabia 61
4.1.3. Aircraft to dominate Saudi Arabian defense imports 63
4.2. Export Market Dynamics 65
4.2.1. Saudi Arabia’s defense export market is negligible 65

5. Industry Dynamics 66
5.1. Five Forces Analysis 66
5.2. Bargaining power of supplier: Low to Medium 67
5.3. Bargaining power of buyer: Medium 67
5.4. Barrier to entry: Medium 67
5.5. Intensity of rivalry: High to Low 67
5.6. Threat of substitution: High 68

6. Market Entry Strategy 69
6.1. Market Regulation 69
6.2. Defense industry remains closed to FDI 69
6.3. Offset Program to aid defense industry and economy 69
6.4. Market Entry Route 71
6.4.1. Budgeting Process 71
6.4.2. Procurement Policy and Process 72
6.4.3. A large number of foreign corporations enter the defense market by winning contracts 73
6.4.4. Collaborations and cooperative agreements provide market entry opportunities 73
6.4.5. GCC - an entry route to Saudi Arabian military market 74
6.5. Key Challenges 75
6.5.1. Bribery, corruption, and political affiliations 75
6.5.2. Scarcity of skilled Labor and Nitaqat law 75

7. Competitive Landscape and Strategic Insights 76
7.1. Competitive Landscape Overview 76
7.1.1. Saudi Arabian defense sector is dominated by foreign competitors 76
7.1.2. Domestic participation in the Saudi Arabian defense industry is limited to few companies 77
7.2. Key Foreign Companies 78
7.2.1. BAE Systems Plc: overview 78
7.2.2. BAE Systems Plc: products and services 78
7.2.3. BAE Systems Plc: recent announcements and strategic initiatives 79
7.2.4. BAE Systems Plc: alliances 81
7.2.5. BAE Systems Plc: recent contract wins 82
7.2.6. BAE Systems Plc: financial analysis 83
7.2.7. Airbus Group: overview 85
7.2.8. Airbus Group: products 85
7.2.9. Airbus Group: recent announcement and strategic initiatives 85
7.2.10. Airbus Group: alliances 86
7.2.11. Airbus Group: recent contract wins 87
7.2.12. Airbus Group: financial analysis 88
7.2.13. General Dynamics Corporation: overview 90
7.2.14. General Dynamics Corporation: products and services 90
7.2.15. General Dynamics Corporation: alliances 92
7.2.16. General Dynamics Corporation: recent contract wins 92
7.2.17. Lockheed Martin: overview 95
7.2.18. Lockheed Martin: products 95
7.2.19. Lockheed Martin: recent announcements and strategic initiatives 95
7.2.20. Lockheed Martin: alliances 97
7.2.21. Lockheed Martin: recent contract wins 98
7.2.22. Lockheed Martin: Financial Analysis 100
7.2.23. Science Applications International Corporation: overview 102
7.2.24. Science Applications International Corporation: products 102
7.2.25. Science Application International Corp. (SAIC): recent contracts and strategic initiatives 102
7.2.26. Science Applications International Corporation: alliances 103
7.2.27. Science Applications International Corporation: recent contract wins 103
7.2.28. Sikorsky Aircraft Corporation: overview 105
7.2.29. Sikorsky Aircraft Corporation: products 105
7.2.30. Sikorsky Aircraft Corporation: recent announcements and strategic initiatives 105
7.2.31. Sikorsky Aircraft Corporation: alliances 106
7.2.32. Sikorsky Aircraft Corporation: recent contract wins 107
7.2.33. Thales: overview 108
7.2.34. Thales: products 108
7.2.35. Thales: recent announcements and strategic initiatives 108
7.2.36. Thales: alliances 109
7.2.37. Thales: recent contract wins 110
7.2.38. Boeing: overview 111
7.2.39. Boeing: products and services 111
7.2.40. Boeing: recent announcements and strategic initiatives 111
7.2.41. Boeing: alliances 112
7.2.42. Boeing: recent contract wins 113
7.2.43. Northrop Grumman Corporation: overview 114
7.2.44. Northrop Grumman Corporation: products 114
7.2.45. Northrop Grumman Corporation: recent announcements and strategic initiatives 114
7.2.46. Northrop Grumman Corporation: alliances 116
7.2.47. Northrop Grumman Corporation: recent contract wins 117
7.3. Key Domestic Companies 118
7.3.1. Advanced Electronics Company: overview 118
7.3.2. Advanced Electronics Company: services 118
7.3.3. Advanced Electronics Company: recent announcements and strategic initiatives 118
7.3.4. Advanced Electronics Company: alliances 119
7.3.5. Advanced Electronics Company: recent contract wins 119
7.3.6. Al Salam Aircraft Company: overview 121
7.3.7. Al Salam Aircraft Company: products and services 121
7.3.8. Al Salam Aircraft Company: alliances 121
7.3.9. Al Salam Aircraft Company: recent contract wins 122

8. Business Environment and Country Risk 123
8.1. Economic Performance 123
8.1.1. GDP per Capita 123
8.1.2. Gross Domestic Product 124
8.1.3. Exports of goods and services LCU Bn 125
8.1.4. Imports of goods and services, LCU Bn 126
8.1.5. Gross National Disposable Income 127
8.1.6. Market Capitalization of listed companies (US$ Bn) 128
8.1.7. Market Capitalization of listed companies (as a % of GDP) 129
8.1.8. Goods Exports as a % of GDP 130
8.1.9. Goods Imports as a % of GDP 131
8.1.10. Services Imports as a % of GDP 132
8.1.11. Services Exports as a % of GDP 133
8.1.12. Net Foreign Direct Investment (current US$ Bn) 134
8.1.13. Net FDI as a % of GDP 135
8.1.14. Mining, Manufacturing, Utilities Output (LCU Bn) 136

9. Appendix 137
9.1. About SDI 137
9.2. Disclaimer 137
List of Tables

Table 1: The Saudi Arabian Land Forces Strength (Including National Guard) 21
Table 2: Saudi Arabian Navy Strength 23
Table 3: Saudi Arabia Air Force Strength 24
Table 4: Saudi Arabian - Ongoing Development and Procurement Programs 26
Table 5: Saudi Arabian - Future Procurement Programs* 27
Table 6: Saudi Arabian Defense Expenditure (SAR billion and US$ billion), 2013-2022 32
Table 7: Saudi Arabia GDP Growth and Defense Expenditure as Percentage of GDP Growth, 2013-2022 36
Table 8: Saudi Arabia Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 38
Table 9: Saudi Arabia Defense Capital Expenditure (SAR billion and US$ billion), 2013-2022 40
Table 10: Saudi Arabian Per-Capita Defense Expenditure (US$), 2013-2022 42
Table 11: Saudi Arabian Homeland Security Expenditure (SAR billion & US$ billion), 2013-2022 45
Table 12: Terrorism Index, 2017 49
Table 13: Benchmarking with Key Markets - 2013-2017 vs. 2018-2022 52
Table 14: Saudi Arabia - Offset Guidelines and Agreements 70
Table 15: Saudi Arabian Budget Formation Timetable 71
Table 16: Market Entry by Key Foreign Competitors 73
Table 17: Competitive Landscape of the Saudi Arabian Defense Industry 76
Table 18: BAE Systems Plc. - Product Focus 78
Table 19: BAE Systems Plc. - Alliances 81
Table 20: BAE Systems Plc. - Recent Contract Wins 82
Table 21: Airbus Group - Product Focus 85
Table 22: Airbus Group- Alliances 86
Table 23:Airbus Group- Recent Contract Wins 87
Table 24: General Dynamics Corporation - Product Focus 90
Table 25: General Dynamics Corporation - Alliances 92
Table 26: General Dynamics Corporation - Recent Contract Wins 92
Table 27: Lockheed Martin - Product Focus 95
Table 28: Lockheed Martin - Alliances 97
Table 29: Lockheed Martin - Recent Contract Wins 98
Table 30: Science Application International Corp. (SAIC) - Product Focus 102
Table 31: Science Applications International Corporation - Alliances 103
Table 32: Science Applications International Corporation - Recent Contract Wins 103
Table 33: Sikorsky Aircraft Corporation - Product Focus 105
Table 34: Sikorsky Aircraft Corporation - Alliances 106
Table 35: Sikorsky Aircraft Corporation - Recent Contract Wins 107
Table 36: Thales - Product Focus 108
Table 37: Thales - Alliances 109
Table 38: Thales - Recent Contract Wins 110
Table 39: Boeing - Product Focus 111
Table 40: Boeing - Alliances 112
Table 41: Boeing - Recent Contract Wins 113
Table 42: Northrop Grumman - Product Focus 114
Table 43: Northrop Grumman Corporation - Alliances 116
Table 44: Northrop Grumman Corporation - Recent Contract Wins 117
Table 45: Advanced Electronics Company - Product Focus 118
Table 46: Advanced Electronics Company - Alliances 119
Table 47: Advanced Electronics Company - Recent Contract Wins 119
Table 48: Al Salam Aircraft Company - product focus 121
Table 49: Al Salam Aircraft Company - Alliances 121
Table 50: Al Salam Aircraft Company - Recent Contract Wins 122

List of Figures

Figure 1: Saudi Arabian Defense Expenditure (SAR Billion), 2013-2022 32
Figure 2: Saudi Arabian Defense Expenditure (US$ Billion), 2013-2022 33
Figure 3: Saudi Arabian GDP Growth vs. Defense Expenditures Percentage of GDP Growth, 2013-2022 37
Figure 4:Saudi Arabian Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 39
Figure 5: Saudi Arabian Capital Expenditure (in SAR Billion), 2013-2022 41
Figure 6: Saudi Arabian Defense Capital Expenditure (US$ billion), 2013-2022 41
Figure 7: Saudi Arabian Per Capita Defense Expenditure (US$), 2013-2022 43
Figure 8: Saudi Arabian Homeland Security Expenditure (SAR Billion), 2013-2022 45
Figure 9: Saudi Arabian Homeland Security Expenditure (US$ billion), 2013-2022 46
Figure 10: Terrorism Heat Map, 2017 48
Figure 11: Terrorism Index, 2017 51
Figure 12: Benchmarking with Key Markets - 2013-2017 vs. 2018-2022 53
Figure 13: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2017 and 2022 54
Figure 14: Benchmarking with Large Defense Spenders as % of GDP - 2017 55
Figure 15: Fighters & Multi-Role Aircraft Market Size (US$ Million), 2017-2027 57
Figure 16: Infrastructure Construction Market Size (US$ Million), 2017-2027 58
Figure 17: Facilities Management Market Size (US$ Million), 2017-2027 59
Figure 18: Saudi Arabian Defense Import Trend, 2012-2016 (TIV values) 60
Figure 19: Saudi Arabian Defense Imports by Country (%), 2012-2016 62
Figure 20: Saudi Arabian Defense Imports by Weapon Category (%), 2012-2016 64
Figure 21: Industry Dynamics - Porter’s Five Forces Analysis 66
Figure 22: Saudi Arabia - military chain of command 72
Figure 23: BAE Systems - Revenue Trend Analysis (GBP Billion), 2012-2016 83
Figure 24: BAE Systems - Operating Profit Trend Analysis (GBP Billion), 2012-2016 83
Figure 25: BAE Systems - Net Profit Trend Analysis (GBP billion), 2012-2016 84
Figure 26: Airbus Group - Revenue Trend Analysis (EUR Billion), 2012-2016 88
Figure 27: Airbus Group - Operating Profit Trend Analysis (EUR Billion), 2012-2016 88
Figure 28: Airbus Group - Net Profit Trend Analysis (EUR Billion), 2012-2016 89
Figure 29: Lockheed Martin - Revenue Trend Analysis (US$ Billion), 2012-2016 100
Figure 30: Lockheed Martin - Operating Profit Trend Analysis (US$ Billion), 2012-2016 100
Figure 31: Lockheed Martin - Net Profit Trend Analysis (US$ Billion), 2012-2016 101
Figure 32: Saudi Arabian GDP per Capita (US$), 2016-2025 123
Figure 33: Saudi Arabian GDP (current US$ bn), 2016-2025 124
Figure 34: Saudi Arabian Exports of goods and services (current LCU Bn), 2005-2014 125
Figure 35: Saudi Arabian Imports of goods and services (current LCU Bn), 2005-2014 126
Figure 36: Saudi Arabian Gross National disposable income (US$ Bn), 2005-2014 127
Figure 37: Saudi Arabian Market Capitalization of listed companies (US$ Bn), 2005-2012 128
Figure 38: Saudi Arabian Market Capitalization of listed companies (as a % of GDP), 2005-2012 129
Figure 39: Saudi Arabian Goods exports as a % of GDP, 2005-2014 130
Figure 40: Saudi Arabian Goods Imports as a % of GDP, 2005-2014 131
Figure 41: Saudi Arabian Services Imports as a % of GDP, 2005-2014 132
Figure 42: Saudi Services Exports as a % of GDP, 2005-2014 133
Figure 43: Saudi Arabian net Foreign Direct Investment (current US$ Bn), 2005-2014 134
Figure 44: Saudi Arabian Net FDI as a % of GDP, 2005-2014 135
Figure 45: Saudi Arabian Mining, Manufacturing, Utilities Output (LCU Bn), 2005-2014 136 



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