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Future of the UK Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2021

Published: Apr 29, 2016 | Pages: 130 | Publisher: Strategic Defence Intelligence | Industry: Defense | Report Format: Electronic (PDF)

Summary

The UK's defense expenditure stood at US$60 billion in 2012 and decreased to US$54.4 billion in 2016, recording a negative CAGR of 2.42%. This is primarily due to consistent defense expenditure cuts by the government, with the aim of reducing the country's overall expenditure. However, this trend is expected to change from 2017-onwards when a steady increase is expected owing to procurements and strengthening the country's overall defense system. Over the forecast period, the country's defense expenditure is expected to register a positive CAGR of 3.09% and, cumulatively, the country is estimated to spend US$305.5 billion.

Key Findings

- During 2012-2016, the UK's defense expenditure registered negative growth of -2.42%, decreasing from US$60 billion in 2012 to US$54.4 billion in 2016
- Defense expenditure is anticipated to register a positive CAGR of 3.09% over 2017-2021and reach a value of US$65.2 billion in 2021
- Over the forecast period, the country's budget for homeland security is expected to be US$111.9 billion cumulatively
- The key areas of investment are expected to be submarine-ballistic, multi-role aircraft, IT-services networking, facilities management, and multi-mission helicopter MRO

Synopsis

Strategic Defence Intelligence's report - Future of the UK Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2021 offers detailed analysis of the industry with market size forecasts from 2017-2021. This report sheds light on factors that influence demand in the industry, key market trends, and challenges faced by industry participants.

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

- Defense industry market size and drivers: detailed analysis of the defense industry during 2017-2021, including highlights of the demand drivers and growth stimulators. 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 defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, 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 from 2016 to 2026
- Competitive landscape and strategic insights: including an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

Reasons To Buy

- Identify and track the global defense market and make regional comparisons to effectively target new revenue streams
- Understand the importance of being led by the defense ministries in the military procurement market and define your strategies with insight on what your customers really want by analyzing recent orders, technical specifications, and the country's expected investment pattern during 2017-2021
- Make correct business decisions based on detailed analysis of the defense industry from 2017-2021,which includes the total competitive landscape of the sector with detailed profiles of the top domestic and foreign defense manufacturers along with information about their products, alliances, recent contract wins, and financial analysis
- Determine prospective investment areas by gaining an in-depth understanding of the industry in terms of market opportunities
- Channel resources by identifying various military requirements that are expected to generate revenues across different sectors during 2017-2021
 Table of Content

1. Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. SDI Terrorism Index
1.5. About Strategic Defence Intelligence

2. Executive Summary

3. Market Attractiveness and Emerging Opportunities
3.1. Defense Market Size Historical and Forecast
3.1.1. The UK‟s defense expenditure is expected to increase at a CAGR of XX%
3.1.2. Counter-terrorism activities, procurements, and peacekeeping operations are the primary factors driving defense expenditure
3.1.3. The country‟s defense expenditure as a percentage of GDP is expected to remain at an average XX% over the forecast period
3.2. Analysis of Defense Budget Allocation
3.2.1. Percentage allocation towards capital expenditure to remain constant
3.2.2. More than XX% of the UK‟s defense budget is allocated for defense capabilities
3.2.3. The allocation for peacekeeping operations is expected to remain constant over the forecast period but foreign military aid is expected to reduce
3.2.4. Expenditure on defense capability expected to grow at a CAGR of XX% over the forecast period
3.2.5. Expenditure on land force to constitute the majority of defense expenditure
3.2.6. Capital expenditure to register a CAGR of XX% over the forecast period
3.3. Homeland Security Market Size and Forecast
3.3.1. Homeland security budget set to remain fairly constant over the forecast period
3.3.2. Border security and countering cyber-attacks to be the key drivers for homeland security
3.3.3. The UK is „highly affected‟ by terrorist activities
3.3.4. The UK faces high threat from terrorist organizations
3.4. Benchmarking with Key Global Markets
3.4.1. The UK ranks among major Global Defense Markets
3.4.2. The UK is expected to be among the top XX defense spending countries in the world
3.4.3. The UK allocates a significant percentage of GDP towards defense
3.4.4. UK faces high risk of terrorist attack
3.5. Market Opportunities: Key Trends and Growth Stimulators
3.5.1. Submarine - Ballistic
3.5.2. Multi-role Aircraft
3.5.3. IT Services- Networking
3.5.4. Facilities Management
3.5.5. Multi-mission Helicopter MRO

4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Defense imports expected to remain consistent with the historic trends
4.1.2. US stands as the leading arms exporter to UK; a trend expected to continue in the coming years
4.1.3. Aircraft, Missiles, and Engines account for more than three-quarters of UK arms imports
4.2. Export Market Dynamics
4.2.1. The UK‟s Defense Exports increased at a CAGR of XX% during the historic period
4.2.2. Saudi Arabia, India, and Indonesia are the prime buyers of UK defense exports
4.2.3. Aircraft comprises a major part of the country‟s defense exports

5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of supplier: low
5.1.2. Bargaining power of buyer: high
5.1.3. Barrier to entry: medium
5.1.4. Intensity of rivalry: medium
5.1.5. Threat of substitution: low to medium

6. Market Entry Strategy
6.1. Market Regulation
6.1.1. Offset policy discarded in order to maintain competitiveness of domestic suppliers
6.1.2. The UK permits XX% FDI in its defense industry
6.1.3. Government‟s initiative to boost the defense industry
6.2. Market Entry Route
6.2.1. Joint weapons development programs are a viable market entry opportunity
6.2.2. Joint ventures open up new market entry strategy choices
6.2.3. Forming subsidiaries in the UK and acquiring domestic companies provide good market entry opportunities
6.3. Key Challenges
6.3.1. Consistent defense budget cuts to have negative implications for defense companies
6.3.2. Dominance of domestic and EU defense companies impede the progress of non-European firms

7. Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.2. Key Domestic Companies
7.2.1. BAE Systems Plc.: overview
7.2.2. BAE Systems Plc.: Products
7.2.3. BAE Systems Plc.: recent announcements and strategic initiatives
7.2.4. BAE Systems Plc.: alliances
7.2.5. BAE Systems Plc.: Recent contract wins
7.2.6. BAE Systems Plc.: financial analysis
7.2.7. GKN Aerospace Services: overview
7.2.8. GKN Aerospace Services: products
7.2.9. GKN Aerospace Services: recent announcements and strategic initiatives
7.2.10. GKN Aerospace Services: alliances
7.2.11. GKN Aerospace Services: recent contract wins
7.2.12. GKN Aerospace Services: Financial Analysis
7.2.13. Rolls-Royce Plc.: overview
7.2.14. Rolls-Royce Plc.: products
7.2.15. Rolls-Royce Plc.: recent announcements and strategic initiatives
7.2.16. Rolls-Royce Plc.: alliances
7.2.17. Rolls-Royce Plc.: recent contract wins
7.2.18. Rolls-Royce Plc.: financial Analysis
7.2.19. Babcock International Group Plc.: overview
7.2.20. Babcock International Group Plc.: products and services
7.2.21. Babcock International Group Plc.: recent announcements and strategic initiatives
7.2.22. Babcock International Group Plc.: alliances
7.2.23. Babcock International Group Plc.: recent contract wins
7.2.24. Babcock International: Financial Analysis
7.3. Key Foreign Companies
7.3.1. AgustaWestland: overview
7.3.2. AgustaWestland: products
7.3.3. AgustaWestland: recent announcements and strategic initiatives
7.3.4. AgustaWestland: alliances
7.3.5. AgustaWestland: recent contract wins
7.3.6. Thales UK: overview
7.3.7. Thales UK: products
7.3.8. Thales UK: recent announcements and strategic initiatives
7.3.9. Thales UK: alliances
7.3.10. Thales UK: recent contract wins
7.3.11. General Dynamics UK Ltd: overview
7.3.12. General Dynamics UK Ltd: products
7.3.13. General Dynamics UK Ltd: recent announcements and strategic initiatives
7.3.14. General Dynamics UK Ltd: alliances
7.3.15. General Dynamics UK Ltd: recent contract wins
7.3.16. Boeing UK: overview
7.3.17. Boeing UK: products
7.3.18. Boeing UK: recent announcements and strategic initiatives
7.3.19. Boeing UK: alliances
7.3.20. Boeing UK: recent contract wins
7.3.21. L-3 TRL: overview
7.3.22. L-3 TRL: services
7.3.23. L-3 TRL: recent announcements and strategic initiatives
7.3.24. L-3 TRL: alliances
7.3.25. Northrop Grumman UK: overview
7.3.26. Northrop Grumman UK: services
7.3.27. Northrop Grumman UK: recent announcements and strategic initiatives
7.3.28. Northrop Grumman UK: alliances
7.3.29. Northrop Grumman UK: recent contract wins
7.3.30. Lockheed Martin UK Ltd: overview
7.3.31. Lockheed Martin UK Ltd: products and services
7.3.32. Lockheed Martin UK Ltd: recent announcements and strategic initiatives
7.3.33. Lockheed Martin UK Ltd: alliances
7.3.34. Lockheed Martin UK Ltd: recent contract wins
7.3.35. EADS UK: overview
7.3.36. EADS UK: services
7.3.37. EADS UK: recent announcements and strategic initiatives
7.3.38. EADS UK: alliances
7.3.39. EADS UK: recent contract wins

8. Business Environment and Country Risk
8.1. Economic Performance
8.1.1. Gross Domestic Product Per Capita
8.1.2. Gross Domestic Product in Current US$
8.1.3. Exports of goods and services, current prices
8.1.4. Imports of goods and services, current prices
8.1.5. Gross National Disposable Income, current prices
8.1.6. Local Currency Unit per US$, Period Average
8.1.7. Market Capitalization of Listed Companies (US$ Billions)
8.1.8. Market Capitalization of Listed Companies (% GDP)
8.1.9. Government Cash Surplus/Deficit, Local Currency
8.1.10. Goods Exports as % of GDP
8.1.11. Goods Imports as % of GDP
8.1.12. Services Imports as a % of GDP
8.1.13. Services Exports as a % of GDP
8.1.14. Foreign Direct Investment, BoP, Current Values in US$ Billions
8.1.15. Foreign Direct Investment as a % of GDP
8.2. Minerals
8.2.1. Mining, Manufacturing, Utilities Output

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

Table 1: UK Defense Expenditure (GBP billion and US$ billion), 2012-2021 
Table 2: UK GDP Growth vs. Defense Expenditure as Percentage of GDP Growth, 2012-2021 
Table 3: UK Defense Budget Split between Capital and Revenue Expenditure (%), 2012-2021 
Table 4: UK Defense Budget Break up(%), 2012-2021 
Table 5: UK Peacekeeping Services Budget and Foreign Military Aid (US$ Billion), 2012-2021 
Table 6: UK Defense Capability Budget (GBP andUS$ Billion), 2012-2021 
Table 7: UK Defense Capability expenditure Break up (%), 2012-2021
Table 8: Capital Expenditure (US$ Billion), 2012-2021 
Table 9: UK Homeland Security Expenditure (US$ Billion), 2012-2021 
Table 10: Benchmarking with Key Markets - 2012-2016 vs. 2017-2021
Table 11: SDI Terrorism Index 
Table 12: UK's Participation in International Defense Development Programs 
Table 13: BAE Systems Plc. - Product Focus 
Table 14: BAE Systems Plc. - Alliances 
Table 15: BAE Systems Plc. - Recent Contract Wins 
Table 16: GKN Aerospace Services - Product Focus 
Table 17: GKN Aerospace Services - Alliances 
Table 18: GKN Aerospace Services - Recent Contract Wins 
Table 19: Rolls-Royce Plc. - Product Focus 
Table 20: Rolls-Royce Plc. - Alliances 
Table 21: Rolls-Royce Plc. - Recent Contract Wins 
Table 22: Babcock International Group Plc. - Product Focus 
Table 23: Babcock International Group Plc. - Alliances 
Table 24: Babcock International Group Plc. - Recent Contract Wins 
Table 25: AgustaWestland - Product Focus 
Table 26: AgustaWestland - Alliances 
Table 27: AgustaWestland - Recent Contract Wins
Table 28: Thales UK - Product Focus 
Table 29: Thales UK - Alliances 
Table 30: Thales UK - Recent Contract Wins 
Table 31: General Dynamics UK Ltd - Product Focus 
Table 32: General Dynamics UK Ltd - Alliances 
Table 33: General Dynamics UK Ltd - Recent Contract Wins
Table 34: Boeing UK - Product Focus 
Table 35: Boeing UK - Alliances 
Table 36: Boeing UK - Recent Contract Wins 
Table 37: L-3 TRL - Product Focus 
Table 38: L-3 TRL - Alliances
Table 39: Northrop Grumman UK - Product Focus 
Table 40: Northrop Grumman UK - Alliances 
Table 41: Northrop Grumman UK - Recent Contract Wins 
Table 42: Lockheed Martin UK Ltd - Product Focus 
Table 43: Lockheed Martin UK Ltd - Alliances
Table 44: Lockheed Martin UK Ltd - Recent Contract Wins 
Table 45: EADS UK - Product Focus 
Table 46: EADS UK - Alliances 
Table 47: EADS UK - Recent Contract Wins 


List of Figures

Figure 1: UK Defense Expenditure (GBP Billion), 2012-2021 
Figure 2: UK Defense Expenditure (US$ Billion), 2012-2021 
Figure 3: UK GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2012-2021 
Figure 4:UK Defense Budget Split between Capital and Revenue Expenditure (%), 2012-2021 
Figure 5: UK Defense Budget Break-up(%), 2012-2021 
Figure 6: UK Peacekeeping Services Budget (US$ Billion), 2012-2021 
Figure 7: UK Defense Capability Budget (GBP Billion), 2012-2021 
Figure 8:UK Defense Capability Budget (US$ Billion), 2012-2021 
Figure 9: UK Defense Capability expenditure Break up (%), 2012-2021 
Figure 10: Capital Expenditure (US$ Billion), 2012-2021 
Figure 11: UK Homeland Security Expenditure (GBP Billion), 2012-2021 
Figure 12:UK Homeland Security Expenditure (US$ Billion), 2012-2021 
Figure 13: SDI Terrorism Heat Map, 2016 
Figure 14: SDI Terrorism Index, 2016 
Figure 15: Benchmarking with Key Markets - 2012-2016 vs. 2017-2021 
Figure 16: Defense Expenditure of the World‟s Largest Military Spenders (US$ Billion),2016 and 2021 
Figure 17: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2016 
Figure 18: Submarine - Ballistic Market Size (US$ Billion), 2016-2026 
Figure 19: Multi-role Aircraft Market Size (US$ Billion), 2016-2026 
Figure 20: Networking Market Size (US$ Billion), 2016-2026 
Figure 21: Facilities Management Market Size (US$ Million), 2016-2026 
Figure 22: Multi-mission Helicopter MRO Market Size (US$ Million), 2016-2026 
Figure 23: UK Defense Import Trend, 2011-2015 (TIV values) 
Figure 24: UK Defense Imports by Country (%), 2011-2015 
Figure 25: UK Defense Imports by Category (%), 2011-2015
Figure 26: UK Defense Export Trend, 2011-2015 (TIV values) 
Figure 27: UK Defense Exports by Country (%), 2011-2015 
Figure 28: UK Defense Exports by Category (%), 2011-2015 
Figure 29: Industry Dynamics - Porter‟s Five Forces Analysis 
Figure 30: BAE Systems - Revenue Trend Analysis (GBP billion), 2011-2015 
Figure 31: BAE Systems - Operating Profit (GBP billion), 2011-2015 
Figure 32: BAE Systems - Net Profit Trend Analysis (GBP billion), 2011-2015 
Figure 33: GKN Aerospace - Revenue Trend Analysis (GBP billion), 2011-2015 
Figure 34: GKN Aerospace - Operating Profit (GBP billion), 2011-2015 
Figure 35: GKN Aerospace -Profit Trend Analysis (GBP billion), 2011-2015 
Figure 36: Rolls-Royce - Revenue Trend Analysis (GBP billion), 2010-2014 
Figure 37: : Rolls-Royce - Operating Profit (GBP billion), 2010-2014 
Figure 38: : Rolls-Royce - Profit Trend Analysis (GBP billion), 2010-2014 
Figure 39: Babcock International - Revenue Trend Analysis (GBP billion), 2011-2015 
Figure 40: Babcock International - Operating Profit (GBP billion), 2011-2015
Figure 41: Babcock International -Profit Trend Analysis (GBP billion), 2011-2015 
Figure 42: UK GDP Per Capita, 2015-2025 
Figure 43: UK GDP (in US$ Bn) , 2015-2025 
Figure 44: UK Exports of goods,( LCU Billions), 2005-2014 
Figure 45: UK Imports of goods and services (LCU Billions), 2005-2014 
Figure 46: UK Gross National Disposable Income, current prices (US$ Billion), 2005-2012 
Figure 47: UK GBP per US$, 2015-2024 
Figure 48: UK Market Capitalization of listed companies (US$ Billion), 2005-2012 
Figure 49: UK Market Capitalization of listed companies(%GDP), 2005-2012 
Figure 50: UK Government Cash surplus/deficit (LCU Billion), 2005-2012 
Figure 51: UK Goods exports as % of GDP, 2005-2014
Figure 52: UK Goods imports as % of GDP, 2005-2014
Figure 53: UK Services Imports as a % of GDP, 2005-2014 
Figure 54: UK Services exports as a % of GDP, 2005-2014 
Figure 55: UK FDI, net (BoP, Current US$ Bn), 2005-2014 
Figure 56: UK Net FDI as a % of GDP, 2005-2014 
Figure 57: UK Mining, manufacturing, and utilities output (US$ Bn), 2005-2014"

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