Lewes, DE -- (ReleaseWire) -- 02/19/2014 -- This report is the extensive market and company research covering the Italian defense industry, and 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 Future of the Italian Defense Industry - Market Attractiveness, Competitive Landscape, and Forecasts to 2019 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 Italian defense industry.
What is the current market landscape and what is changing?
Italy which is one of the largest defense spenders in Europe and tenth largest spender in the world is projected to spend US$147.2 billion on its armed forces during the forecast period. In 2014, the Italian government allocated US$27.67 billion for the total defense budget which recorded a CAGR of 5.18% during 2010 to 2014. Defense expenditure is inclusive of the expenditure on the defense function, homeland security, and other expenses. Italian defense expenditure is primarily driven by increasing terrorist threats, participation in peacekeeping initiatives, replacing the ageing military equipment, and the modernization of defense forces with advanced technology equipment. The defense function stood at US$19.13 billion in 2014 and is expected to increase at a CAGR of 3.09% during the forecast period, to reach US$22.32 billion in 2019. Capital expenditure will also see a marginal increase which is anticipated to grow at 5.16% due to the country's heavy procurement pattern during the forecast period. The Italian defense industry is expected to focus on modernization of the armed forces by implementing various procurement programs that include F-35 Joint Strike Fighter project. Typhoon multirole combat aircraft, FREMM frigates, NH 90 helicopters, and Medium Extended Air Defense System (MEADS) program.
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What are the key drivers behind recent market changes?
Modernization of defense systems, participation in peacekeeping initiatives, and maintaining NATO, EU and UN stipulations expected to drive the Italian defense expenditure
What makes this report unique and essential to read?
The Future of the Italian Defense Industry - Market Attractiveness, Competitive Landscape, and Forecasts to 2019 provides detailed analysis of the current industry size and growth expectations from 2015 to 2019, 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 detailed analysis of the current industry size and growth expectations from 2015 to 2019, including highlights of key growth stimulators, and 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 Italian 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 Italy. 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
As per the SDI's business outlook survey, 84% of the European respondents have quoted that the biggest concern for the defense industry in the coming 5 years are the impending global defense budget cuts. The economic crisis in Italy and across Europe has led to reductions in the defense budgets of many countries, including France, Greece and Poland, which are some of the top importing countries of Italian defense products. The cuts will decrease the procurement expenditure of these countries and have a negative impact on the order book of the Italian defense industry. The key procurement cutbacks made by Italy's own MOD include:
As a member of the EU, the Italian government has a policy to give priority to European-manufactured defense goods, which makes it more difficult for non-European defense companies to supply to the Italian defense market. The high capability of, and the prohibition of foreign direct investment in, the defense industry further reduces the scope for non-European defense companies. Moreover, the participation of the domestic defense industry in international development programs helps the domestic defense industry to acquire advanced technologies, which further narrows the opportunities for foreign firms keen to enter the market through technology transfers.
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The country's defense budget declined during 2010 to 2014 due to various austerity measures implemented by the government, however, the country's procurement plans still remain ambitious and the government is keen to continue modernization albeit at a slower pace. For example: In 2012, Italy's initial procurement of 131 F-35 fighter jets was reduced to 90 aircraft. The country is anticipated to spend US$16 billion over the procurement of the aircrafts which include F-35 fighter and Eurofighter Typhoon over 45 years starting in 2015. Further; the Italian Navy has also obtained funding for building 10 naval vessels consisting of eight multipurpose ships, one amphibious ship and a logistics vessel over the next decade. The multipurpose ships are procured for combat purposes and to support humanitarian relief operations. Additionally to replace its ageing Fincantieri-built Lupo and Maestrale-class ships, Italy has undertaken the FREMM multi-mission ship program in collaboration with France to build 10 frigates to be delivered by 2022. The vessels will be equipped with the SAAM Aster 15 missile system, Teseo Mk2 sea-skimming anti-ship missiles to support anti-submarine warfare and anti-air warfare missions.
A rise in the number of internal security threats, terrorist attacks, the emergence of home-grown insurgency networks, a number of anarchist groups active in the country are factors driving homeland security expenditure in the country. Terrorist threats: Terrorism is a growing problem in the Italy and the government is increasing its efforts to dismantle terrorist-related groups within its borders, and maintain cooperation with international partners in this aspect. In January 2014, the Italian Olympics committee has received a terrorist threat concerning the Games due to start next month in Sochi, Russia. Further in 2013, the Italian police department arrested a group of Tunisian men who were creating an Islamic militant cell in the Southern Italian town. In 2009, the Italian government investigated 216 terror threats against the country, including the bombing of a northern police barrack in October. Italy perceives Islamist organizations, such as Al-Qaeda, as the biggest threat to its internal security. Italy is working closing with the US on countering terrorist financing and coordinating with other foreign participants as an active member of the Financial Action Task Force and the Egmont Group. Additionally Italy is a founding member of the Global Counterterrorism Forum (GCF), which is a multilateral platform focusing on addressing the challenges of counterterrorism.
Italian defense exports have increased significantly over 2010 to 2014 due to the various joint development programs such as the Joint Strike Fighter, Horizon-class Frigates programs, Eurofighter typhoon and the FREMM program etc. In addition, the Italian defense industry has collaborated with several other equipment manufacturers thereby boosting its export after the recession. Italy was the seventh largest exporter of arms over 2010 to 2014. However, in the forecast period, defense exports are expected to decline further due to the defense budget cuts of most European countries, such as France and Greece, which are the major defense trading partners of Italy. With the expansion of growing BRIC markets like India and Brazil the demand for defense goods is expected to be strong and Italy is expected to experience overall exports growth during the forecast period.
Spanning over 137 pages, 45 tables and 81 figures “Future of the Italian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2019” report covering The Market Attractiveness and Emerging Opportunities, Defense Procurement Market Dynamics, Industry Dynamics, Market Entry Strategy, Competitive Landscape and Strategic Insights, Business Environment and Country Risk, Appendix. The report covered 1 company – KADDB.
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