31 Jul, 2012

Tourism vs National Security: Time For Budget Comparisons

Imtiaz Muqbil

The travel & tourism industry often complains about inadequate budgets. But how does one define “inadequate”? One way is by comparing the budgets allocated to travel & tourism, which claims to be a promoter of peace, against those allocated to the defense and national security sector, which claims responsibility for keeping the peace. Although the question of which one contributes more to actually preserving the peace can be debated, there is no disputing the huge gap in their respective budgets.

This dispatch provides a summary snapshot of the national security, defense and military profiles and expenditures of just a few countries – the U.S., Saudi Arabia, South Africa, India, Vietnam, Brazil and South Korea. It does not contain any comparative tourism budgets. That is a deliberate omission. This editor wants readers to find that out themselves, which can be easily done via a quick check of their national budgets. Readers may discover that the entire tourism budgets of their respective countries may equate to the cost of perhaps a dozen drones, jet-fighters and tanks.

The peace-promoting and peace-keeping sectors have another thing in common: Both are major job-creators and economy-drivers. The importance of that also deserves comparative research.

This dispatch is designed as a thought-prompter, to raise questions and trigger a search for answers. It’s a relatively unexplored field of research, but it’s long overdue, especially as both sectors involve public interest, public money and most important, public safety and security.

The global situation today is a contradiction in terms: Tourism is supposed to promote peace, but the world is certainly not at peace, even though there is more tourism than ever before. Doesn’t make sense.

The information has been culled entirely from reports issued by Research and Markets, which claims to be “the leading source for international market research and market data.” It also includes a brief analysis of key trends shaping the war business, which will help explain some of the present geopolitical shifts and their key drivers. Many multinational companies in the weapons trade are also listed.

Over to my readers. Satyamev Jayate.

United States Defence and Security Report Q2 2012

July 24, 2012 – Following the withdrawal of US forces from Iraq, which was completed on December 18, 2011, the country is now contemplating the eventual withdrawal of its forces from Afghanistan; a process that will begin in mid-2012, and is expected to be completed by 2015.

As the US reduces its footprint in the country, it will hand over an increasing share of the security burden to the Afghan National Army and police force. Despite the end of NATO’s involvement in Afghanistan being on the horizon, relations between Washington DC and Kabul continue to be strained, following a string of high profile incidents where Afghan civilians have been murdered, copies of the Qur’an destroyed and Taliban corpses desecrated.

The eventual withdrawal of US forces from Afghanistan is expected to yield significant savings to the Department of Defense budget. For Fiscal Year (FY) 2013, President Barack Obama has requested US$525.4bn. During the next decade, the Pentagon is expected to make budget savings of up to US$487bn, which will be achieved, in part, by the cessation of military operations in Afghanistan. Over the long term, the US will make a major reduction in the size of its strategic nuclear weapons inventory. Currently, around 5,000 operational and reserve nuclear warheads are in the possession of the US armed forces, including around 200 tactical nuclear weapons. The New START (Strategic Arms Reduction Treaty) agreement between Russia and the US will see the Department of Defense reducing its air-launched and sea-launched nuclear weapons delivery systems.

Although ballistic missile defence efforts proved highly controversial during the administration of President George W. Bush, they have continued, albeit in a different form, under President Obama’s administration. The Missile Defence Agency, the branch of the Pentagon supervising ballistic missile defence initiatives, is currently pursuing several programmes aimed at destroying ballistic missiles during their boost, ascent, midcourse and terminal phases of flight.

Missile defence technology is only one area that the Pentagon is pouring significant funds. The Department of Defense continues to pursue several major defence acquisition projects, not least of which is the Lockheed Martin F-35 Lightning-II Joint Strike Fighter family of combat aircraft. This is in addition to scores of other programmes across all five US armed services. The abiding raison d’être of many of these initiatives is to make the force more agile and deployable, while at the same time improving the connectivity between soldiers, vehicles, weapons and command and control systems.

Companies Involved

– Boeing

– General Dynamics

– L Communications

– Lockheed Martin

– Northrop Grumman

– Raytheon

The Saudi Arabian Defense Industry: Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017

July 24, 2012 – The Saudi Arabian defense industry valued US$50.5 billion in 2012 and is one of the largest defense markets globally. During the review period, the country’s defense expenditure grew at a CAGR of 7.2%, and is expected to record a CAGR of 5.4% over the forecast period, to value US$65.9 billion by 2017.

Expenditure was supported by a modernization program, strained relationship with Iran, high spending power, and a lack of skilled personnel. In 2012 the Saudi Arabian defense budget stood at 7.8% of GDP, and is expected to increase to 8.6% of GDP by 2017. During the review period, Saudi Arabia’s capital expenditure allocation stood at 30% of the total defense budget and this is expected to remain at the same level over the forecast period.

Although the population is forecast to increase between 2013 and 2017, defense expenditure growth is expected to surpass population growth, resulting in an increase per capita in defense expenditure, from an average of US$1615 in the review period. to US$1938 in the forecast period.

The South African Defense Industry: The South African Homeland Security Market to Reach an Estimated US$7.86 Billion By 2012

July 25, 2012 – South Africa has Africa’s second-largest arms market, with the country’s total defense expenditure increasing at a CAGR of 9.55% in the review period, to value US$4.7 billion in 2012. The country spent a total of US$20.9 billion on defense during the review period.

Despite its challenges, South Africa remains one of Africa’s most attractive defense markets, with a defense spending capability that is expected to increase in the forecast period and, in 2012, comprised 19.2% of the country’s defense expenditure. Moreover, though the value of the budget allocation for military procurement decreased during the review period, it is expected to grow at a CAGR of 7.09% during the forecast period due to the expected need to replace outdated equipment.

Furthermore, South Africa’s participation in various peacekeeping operations in the region increases the attractiveness of the defense market to investors. Ultimately, it is expected that the majority of the South African defense budget will be spent on developing the army and air force during the forecast period.

The South African homeland security market valued at US$4.9 billion in 2008 and is expected to record a CAGR of 12.52%, to reach an estimated US$7.86 billion by 2012. The South African homeland security market valued at US$4.9 billion in 2008 and is expected to record a CAGR of 12.52%, to reach an estimated US$7.86 billion by 2012.

South Africa’s arms imports have increased significantly in the last three years due to government plans to modernize its armed forces. Additionally, the procurement by armed forces has increased during the review period.

Companies Involved:

– Denel

– Ansys Limited

– Reutech

– Saab Grintek

– Land Systems South Africa

– IVEMA (Pty) Ltd.

– Aerosud

– Turbomeca Africa

– Global Armour

– Milkor (Pty) Ltd.

– Advanced Technologies and Engineering

– Tellumat Defence

The Indian Defense Industry: The Indian Homeland Security Budget Reached US$10.1 Billion In 2012

July 23, 2012 – The Indian defense industry is one of the fastest-growing global defense markets. India’s defense capital expenditure, which refers to the part of the defense budget that is spent on the acquisition of all types of military hardware and technology, has grown at a CAGR of 16.22% over the review period. In 2012, India was allocated US$15.36 billion for defense capital expenditure in the budget. Defense expenditure is expected to record a CAGR of 13.35% during the forecast period, to reach an annual expenditure of US$69.41 billion by 2017.

The Indian defense market offers numerous market opportunities to both domestic and foreign manufacturers. As one of the largest defense equipment markets in the world, the country is expected to spend US$120.3 billion on capital acquisition alone during the forecast period. In the next two years, the country is forecast to spend a significant amount of money on homeland security, intelligence and cyber security, primarily due to an increasingly hazardous geopolitical environment, the threat of terrorism and internal security concerns.

Government spending on India’s homeland security market has increased significantly as a result of terrorist attacks, the smuggling of arms and explosives, and domestic insurgency. In 2012, the country’s homeland security budget registered an increase of 13.4% over the previous year, with the Central Reserve Police Force (CRPF) receiving the largest share of the budget. Due to the nature of the security threats which the country faces, the main opportunities for growth in homeland security are expected in the aviation, mass transportation and maritime security markets.

Companies Involved

– Lockheed Martin Corporation

– BAE Systems Plc.

– Thales

– Mazagon Docks Limited

– Hindustan Aeronautics Limited

– Bharat Electronics Limited

– Ordinance Factory Board

– BEML

– Goa Shipyard Limited

– Tata Advanced Systems Limited

– Mahindra Defense Systems

The Brazilian Defense Industry: Forecasts to 2017

July 25, 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 (2008-2012), 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 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.

A significant challenge faced by defense suppliers to Brazil is the time taken by the Ministry of Defense to ratify defense deals.

Companies Involved

– Aeroelectronica

– Companhia Brasileira de Cartuchos

– Defense and Space Co

– Empresa Brasileira de Aeronauticar

– European Aeronautic

– ForjasTauras SA, Avibras Industria Aerospacial

– Helibras

– Industria de Material Belico do Brasil

– Indústria Naval do Ceará

– Lockheed Martin

– Northrop Grumman

The South Korean Defense Industry: Forecasts to 2017

July 24, 2012 – During the review period, the South Korean defense budget increased at a CAGR of 4.01% to value US$28.6 billion in 2011. Moreover, the South Korean defense budget it is expected to record a stronger CAGR of 7.11% during the forecast period to reach US$43.3 billion by 2017. The contrast in defense spending during the review period is attributed to the change in dollar conversion value which is used in converting the local South Korean currency.

In 2012, the South Korean homeland security market was valued at US$324 million and is expected to grow at a rate of 9.01% during the forecast period. The growth is anticipated to reflect the threat from both indigenous terrorist groups and international terrorist organizations such as Al-Qaeda. Within the South Korean homeland security market, the aviation security market is forecast to grow at a CAGR of 9.86% from an estimated value of US$439.4 million in 2012 to US$703.2 million in 2017, as a result of the development of new airports, increased air traffic, terminal expansion plans and the globalization of terror activities.

Companies Involved

– Korea Aerospace Industries

– Samsung Techwin

– Hanwha Corporation

– Hyundai Heavy Industries

– Daewoo Shipbuilding and Marine Engineering

– Huneed Technologies

– STX Engine

– SandT Dynamics

– Poongsan Corporation

– Samsung Thales

– LIG NEX1

– Doosan DST

Vietnam Defence and Security Report Q2 2012

July 24, 2012 – Having already agreed to supply Vietnam with six Kilo-class submarines and additional Sukhoi fighter aircraft, Moscow announced in March 2012 that it had signed an agreement to jointly develop anti-ship missiles and unmanned aerial vehicles (UAV) with the Vietnamese defence industry. The anti-ship missile programme is expected to enable Vietnam to produce its own version of the Kh-35 Uran missile – a system that Vietnamese missile boats already field. The UAV tie-up will see Russia’s Irkut team with the Vietnam Aerospace Association to develop a new mini-UAV, which the Vietnamese military will use for surveillance purposes.

However, such is the international interest in partnering with Vietnam that Russia will almost inevitably lose some market share. In January 2012, Singapore agreed to pursue defence industry collaboration with Hanoi. The following month Israeli defence firm Rafael revealed that it was targeting Vietnam as a potential customer for its UAVs, while Israeli Aerospace Industries (IAI) announced in February that it had secured a US$150mn deal to supply an undisclosed Asian customer – which analysts speculated was likely to be Vietnam – with new radar systems.

Yet more Western defence firms will face frustration in Vietnam. The country’s true defence budget may be somewhat higher than the government’s stated allocation of around US$3.1bn for 2012, but its resources remain relatively modest, even by South East Asian standards. The Vietnamese economy is also still quite fragile, with large sectors of the state-owned economy in need of urgent reform and the country’s reliance on foreign investment still considerable. As a result, the opportunities for overseas defence companies in Vietnam may prove to be elusive, except in certain technology niches that the Vietnamese military is seeking to prioritise. A willingness to transfer technical knowhow to Vietnam’s defence industry is likely to be key to securing market access.

The Global UAV Market 2011-2021 – Competitive Landscape and Strategic Insights

July 20, 2012 – The UAV (Unmanned Aerial Vehicle, commonly known as a drone) market is relatively new when compared to other conventional weapon systems. However, it has developed considerably in the last decade, partly because of the demand fueled by its usefulness in the Iraq and Afghanistan campaigns. The market has high growth potential, providing lucrative opportunities for market participants over the forecast period, although it is already becoming increasingly competitive.

The report provides a detailed analysis of the competitive landscape of the UAV industry. It provides an overview of key UAV companies catering to the UAV sector, together with insights such as key alliances, strategic initiatives and a brief financial analysis

Companies Involved

– Israel Aerospace Industries

– BlueBird Aero Systems

– Aeronautics Ltd.

– Elbit Systems

– Singapore Technologies Aerospace

– AAI Corporation

– Boeing Military Aircraft

– General Atomics Aeronautical Systems Inc.

– AeroVironment

– Northrop Grumman Aerospace Systems

– Dassault Aviation

– Sagem

– Cassidian

– BAE Systems

– Saab

– Denel Dynamics

– Korean Aerospace Industries

– Alenia Aeronautica

– Selex Galileo

– EMT Ingenieurgesellschaft

The Global Naval Vessels and Surface Combatants Market 2011-2021

July 24, 2012 – The global surface combatant industry is highly competitive, with large numbers of suppliers catering to the requirements of countries around the globe. Defense companies are mainly concentrated in western countries, and are focusing on joint development programs to share development costs. These countries are then selling the technology to developing countries in Asia-Pacific, Africa and the Middle East.

Companies Involved

– Kockums

– Daewoo Shipbuilding & Marine Engineering

– Huntington Ingalls Industries

– Finactieri

– BAE Systems

– Hyundai Heavy Industries

– PO Sevmash

– ThyssenKrupp Marine Systems

– Thales

– Lockheed Martin

– ASC Pty ltd

– Damen Schelde Naval Shipbuilding (DSNS)

– Abu Dhabi Ship building

– Sagem

– DCNS

– Navantia

– General Dynamics

– Austal

– Rolls-Royce Plc

– Mazagon Docks

The Global Military Aviation MRO (Maintenance, Repair and Operations) Market 2012-2022

July 24, 2012 – The global economic slowdown has reduced the defense budgets of most leading spenders in the world, including the US, France, Germany, and the UK. These countries have cut back their spending on various defense sectors such as space, aircraft, and military vehicles. However, these budget cuts have propelled the military aviation MRO industry as countries now prefer to maintain, repair and upgrade their existing fleet instead of buying new equipment. High growth markets such as India and China have been formulating continuous programs to enhance their military aviation MRO sector, with the US too focusing on maintaining their existing fleet. This trend is also evident from the fact that even a small market like Africa is expected to show positive growth during the forecast period.

What are the key drivers behind recent market changes? The last decade has witnessed wars in Iraq, Afghanistan, Serbia and Libya which were primarily carried out by aerial attacks. Countries have been relying primarily on air power because it enables them to respond quickly to distant threats while putting relatively few lives at risk. However, this constant use has resulted in rapid aging and wearing out of the military aircraft fleet of the US and coalition allies, who are now spending considerably on their maintenance, repair and upgrading.

The US, which is the highest spender on military MRO globally, is currently facing a combined problem of the rising age of many of its combat aircraft and delays to the F-35A fighter aircraft fleet. In spite of budget cuts and with a view of mitigating these problems, the government has decided to increase its spending on military aircraft MRO. Moreover, global spending is also expected to increase as the worldwide military fleet will only get older and the cost of replacing them is far greater than the cost of their MRO.

Companies Involved

– Lockheed Martin

– Boeing

– BAE Systems

– DynCorp International

– Pratt and Whitney

– Honeywell International

– EADS

– SAAB

– Thales

– Northrop Grumman

– General Dynamics

– Raytheon

– Elbit Systems

– Rolls Royce

– Embraer SA

The Global Submarine Market 2011-2021

July 24, 2012 — Only a select group of countries possess SIBs, with a small number of countries set to attain this capability during the forecast period. The changes occurring in the submarine market are caused by the evolving global strategic security situation and the change in the balance of power between the countries in the West and countries in the Rest of the World, combined with the budget deficit and the global re-distribution of wealth.

This report shows the leading Submarine market segments in various regions across the world. Details of top companies active across the global Submarine market are provided, together with market size and forecast 2011-2021 for the main players across those areas.

Companies involved:

– Navantia

– Fincantieri

– DCNS

– Kockums

– BAE Systems

– Mazagon Docks

– Hyundai Heavy Industries

– Daewoo

– PO Sevmash

– Huntington Ingalls Industries

– General Dynamics-Electric Boat

– Admiralty Shipyards

– ThyssenKrupp Marine Systems

– ASC Pty

– Golcuk Naval Shipyard

– Mitsubishi Heavy Industries

– Kawasaki Shipbuilding

– Saab

– Thales

– Lockheed Martin

The Global Military Rotorcrafts Market 2011-2021

July 24, 2012 – The global rotorcraft industry is highly concentrated with the majority of the market captured by six players including Russian Helicopters, Bell helicopters, Sikorsky, Eurocopter, Boeing and AgustaWestland. The Latin American and Middle Eastern countries are primarily dependent on imports from European and North American companies. The countries in these regions generally develop a product in collaboration with European and North American companies.

Companies Involved

– Bell Helicopters Textron

– Eurocopter SAS

– Mil Moscow Helicopter plant JSC

– Hindustan Aeronautics Limited

– Korean Aerospace Industries, NH Industries

– Changhe Aircraft Group Co Ltd

– AugustaWestland

– Boeing

– Sikorsky

– Russian Helicopters JSC

– Rostvertol PLC

– MD Helicopters

– Turkish Aerospace Industries

– Enstrom helicopter Corporation

– Sagem

– Lockheed Martin Corporation

– Rolls Royce

– Helibras

– CAE Inc

“The Global Military Simulations and Virtual Training Market 2011-2021

July 24, 2012 – The global military simulation and virtual training industry is highly concentrated with the majority of the market captured by players in the US and Europe including Lockheed Martin, Boeing, CAE, Saab and L-3 Link Simulation and Training. These companies operate globally through established subsidiaries in major countries.

Companies Involved

– Lockheed Martin Corporation

– Boeing

– CAE

– Saab Sensis Corporation

– L-3 Link Simulation & Training

– AAI Corporation

– DCNS

– Cassidian

– Sikorsky Aircraft Corporation

– Rockwell Collins

– Kratos Defense and Security Solutions

– Teledyne Brown Engineering

– Inc

– Raytheon

– HAVELSAN

– DiSTI

– ZedaSoft Inc

– Fidelity Technologies Corporation

– Alenia Aeronautica

– VirTra Systems

– Meggitt Training Systems

Small Arms Manufacturing Industry in the U.S. and Its International Trade (2012 Q3 Edition)

July 25, 2012  – The industry’s revenue for the year 2011 was reported at $2.6 billion USD, with an estimated gross profit of 40.52%. Import was valued at $1.4 billion USD from 53 countries. The industry also exported $.6 billion USD worth of merchandise to 144 countries. Adding import value to and subtracting export value from the industry’s shipment value, the total domestic demand for the industry in 2011 was $3.3 billion USD.