The South African Defense Industry - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2016
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Synopsis
• Top level overview of the South African defense industry
• A breakdown of the South African defense industry by spend pattern valued from 2005 through 2010 and forecasted from 2011 through 2016
• A breakdown of the markets by segment valued from 2005 through 2010 and forecasted from 2011 through 2016
• Details of top companies active across the South African defense industry
• Emerging trends and opportunities in the South African defense industry in the last 12 months
Summary
This report offers insights into market opportunities and entry strategies adopted by foreign OEMs to gain a market share in the South African defense industry. In particular, it offers in-depth analysis of the following:
• Market opportunity and attractiveness: Detailed analysis of the current market size and growth expectations during 2010–2016, including highlights of the key drivers, to aid understanding of the growth dynamics. It also benchmarks the sector against key global markets and provides detailed understanding of emerging opportunities in specific areas.
• Procurement dynamics: Trend analysis of imports and exports, along with their implications and impact on the South African defense industry.
• Industry structure: Five forces analysis to identify various power centers in the industry and how these are likely to develop in the future.
• Market entry strategy: Analysis of possible ways to enter the market, along with knowledge of how existing companies have entered the market, including key contracts, alliances, and strategic initiatives.
• Competitive landscape and strategic insights: Analysis of the competitive landscape of defense manufacturers in South Africa. It provides an overview of the key defense companies (both domestic and foreign) along with insights such as key alliances, strategic initiatives and a brief financial analysis.
• Business environment and country risk: A range of drivers at country level, assessing business environment and country risk. It covers historical and forecast values for a range of indicators evaluating business confidence, economic performance, infrastructure quality and availability, labor force, demographics, and political and social risk.
Scope
• Analysis of defense industry market size from 2005 through 2010 and forecasts till 2016
• Analysis of defense budget allocation
• Benchmarking with key global markets
• Market opportunities
• Defense procurement dynamics
• Industry dynamics
• Market entry strategy
• Competitive landscape and strategic insights
• Business environment and country risk
Reasons to Buy
• Gain insight into the South African defense industry with current, historic and forecast market values
• Gain insight into market opportunity and attractiveness
• Gain insight into industry procurement dynamics
• Gain insight into industry structure
• Gain insight into regulations governing the South African defense industry and the potential market entry strategies with an expert analysis of the competitive structure
• Identify top companies of the South African defense industry along with profiles of all those companies
Key Highlights
The South African defense market, though not particularly large, is growing moderately, with a defense expenditure allocation of US$XX billion for 2010. Post-apartheid, the country witnessed a significant decline in its defense budget, both in terms of value and as a percentage of GDP. Furthermore, the lack of military aggression by neighboring countries and very low terrorist activity levels has contributed to the recent overall reductions in defense spending.
Although the threat from external aggression is low, South Africa does have one of the world's highest crime rates and this has raised questions regarding the country's future prospects and has prompted the South African Government to intensify its focus on tackling crime. Furthermore, as the country is engaged in various peacekeeping missions as a result of its membership of the United Nations, African Union and Southern African Development Community, external funding for these missions also increases the defense budget.
By 2016, ICD Research estimates that South Africa's defense expenditure as a percentage of its gross domestic product (GDP) will rise from its 2011 level of XX.XX% to XX.XX%. This translates to a budget increase from US$XX.XX billion in 2010 to US$XX.XX billion in 2016, and a compound annual growth rate (CAGR) of XX.XX%. Currently, XX.XX% of the defense budget is allocated for revenue expenditure, and the remaining for capital expenditure, a trend that is not expected to vary significantly by 2016.
As a result of the challenges caused by increased crime levels, it is expected that there will be a greater immediate demand for monitoring and security check equipment in the forecast period, including CCTV. During the forecast period, ICD also expects a rise in demand for UAVs (unmanned aerial vehicles), military transport fleet, maritime surveillance equipment, patrol aircraft, landward defense systems, and survey vessels.
Keywords
South African defense, Denel, Ansys Limited, Reutech, Saab Grintek, Land Systems South Africa, IVEMA, Aerosud, Turbomeca Africa, Global Armour, Milkor (Pty) Ltd, Advanced Technologies and Engineering, Tellumat Defense, Defense, budget, offset, regulation, capital expenditure, army, navy, air force, homeland, drivers, market opportunities, procurement, entry route, key challenge, announcements, alliances, contract awards, financial analysis, business environment
Companies Mentioned
Denel, Ansys Limited, Reutech, Saab Grintek, Land Systems South Africa, IVEMA, Aerosud, Turbomeca Africa, Global Armour, Milkor (Pty) Ltd, Advanced Technologies and Engineering, Tellumat Defense
Table of Contents
1 Introduction
1.1 What is this Report About?
1.2 Definitions
1.3 Summary Methodology
1.4 ICD Research Terrorism Index
1.5 About ICD Research
1.6 About Strategic Defense Intelligence
2 Executive Summary
3 Market Attractiveness and Emerging Opportunities
3.1 Defense Market Size Historical and Forecast
3.1.1 Singapore allocates XX% of its budget for defense expenditure
3.1.2 Terrorist organizations, piracy and the small size and costly training requirements of the Singapore army are expected to drive defense expenditure
3.2 Analysis of Defense Budget Allocation
3.2.1 Majority of defense budget allocated for the acquisition of advanced technology and equipment
3.2.2 Research and development accounts for XX% of Singapore's defense budget
3.2.3 Defense expenditure expected to increase from XX% to XX% of GDP by 2016
3.3 Homeland Security Market Size and Forecast
3.3.1 Homeland security market expected to increase to US$XX billion by 2016
3.3.2 Border protection, terrorism, improved identification systems and rising drug abuse are driving the country's homeland security budget
3.4 Benchmarking with Key Global Markets
3.4.1 Singapore has the highest defense expenditure in the South East Asian region
3.4.2 Terrorism is a major threat to Singapore's security
3.4.3 Singapore was the world's seventh-largest defense importer during the review period
3.4.4 Singapore was world's twenty-seventh-largest arms exporter during the review period
3.5 Market Opportunities: Key Trends and Drivers
3.5.1 Demand for unmanned technology expected to increase
3.5.2 Stand-off precision guided munitions to register increased demand
3.5.3 Demand for stealth technology expected to increase during the forecast period
3.5.4 Opportunities in information technology expected to increase during the forecast period
3.5.5 Demand projected to increase for high endurance transport vehicles
4 Defense Procurement Market Dynamics
4.1 Import Market Dynamics
4.1.1 Defense imports fuelled by increased focus on the acquisition of advanced technology
4.1.2 Defense imports recorded robust growth during the last three years
4.1.3 The US's position as the primary arms exporter to Singapore is being challenged by other countries such as Germany and France
4.1.4 Ships and aircraft constitute the majority of Singapore's defense imports
4.2 Export Market Dynamics
4.2.1 Singapore's defense export market is negligible
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: high
5.1.5 Threat of substitution: high
6 Market Entry Strategy
6.1 Market Regulation
6.1.1 Defense policy requires technology transfer and training to develop domestic capabilities
6.1.2 Favorable foreign direct investment policies attract foreign OEMs
6.2 Market Entry Route
6.2.1 Technology transfer and training is key entry strategy for foreign OEMs
6.2.2 Defense ministry issues suppliers with smart cards to enable internet registration for procurement
6.2.3 Lease-to-own arrangements improve speed and cost effectiveness of procurements
6.3 Key Challenges
6.3.1 Low availability of production factors discourage foreign investment
7 Competitive Landscape and Strategic Insights
7.1 Competitive Landscape Overview
7.2 Key Foreign Companies
7.2.1 Boeing: overview
7.2.2 Boeing: products and services
7.2.3 Boeing: recent announcements and strategic initiatives
7.2.4 Boeing: alliances
7.2.5 Boeing: recent contract wins
7.2.6 Boeing: financial analysis
7.2.7 Thales: overview
7.2.8 Thales: products and services
7.2.9 Thales: recent announcements and strategic initiatives
7.2.10 Thales: alliances
7.2.11 Thales: recent contracts wins
7.2.12 Thales: financial analysis
7.2.13 Lockheed Martin: overview
7.2.14 Lockheed Martin: products and services
7.2.15 Lockheed Martin: recent announcements and strategic initiatives
7.2.16 Lockheed Martin: alliances
7.2.17 Lockheed Martin: recent contract wins
7.2.18 Lockheed Martin: financial analysis
7.3 Key Public Sector Companies
7.3.1 Singapore Technologies Aerospace: overview
7.3.2 Singapore Technologies Aerospace: products and services
7.3.3 Singapore Technologies Aerospace: recent announcements and strategic initiatives
7.3.4 Singapore Technologies Aerospace: alliances
7.3.5 Singapore Technologies Aerospace: recent contract wins
7.3.6 Singapore Technologies Aerospace: financial analysis
7.3.7 Singapore Technologies Marine: overview
7.3.8 Singapore Technologies Marine: products and services
7.3.9 Singapore Technologies Marine: recent announcements and strategic initiatives
7.3.10 Singapore Technologies Marine: alliances
7.3.11 Singapore Technologies Marine: recent contract wins
7.3.12 Singapore Technologies Marine: financial analysis
7.3.13 Singapore Technologies Electronics: overview
7.3.14 Singapore Technologies Electronics: products and services
7.3.15 Singapore Technologies Electronics: recent announcements and strategic initiatives
7.3.16 Singapore Technologies Electronics: alliances
7.3.17 Singapore Technologies Electronics: recent contract wins
7.3.18 Singapore Technologies Electronics: financial analysis
7.3.19 Singapore Technologies Kinetics: overview
7.3.20 Singapore Technologies Kinetics: products and services
7.3.21 Singapore Technologies Kinetics: recent announcements and strategic initiatives
7.3.22 Singapore Technologies Kinetics: alliances
7.3.23 Singapore Technologies Kinetics: recent contract wins
7.3.24 Singapore Technologies Kinetics: financial analysis
8 Business Environment and Country Risk
8.1 Business Confidence
8.1.1 Business expectations index for the manufacturing sector
8.1.2 Market capitalization trend – the Singapore Stock Exchange, Singapore
8.1.3 FDI inflow by sector
8.1.4 Deployment of credit by sector
8.2 Economic Performance
8.2.1 GDP at constant prices
8.2.2 GDP per capita at constant prices
8.2.3 GDP at current prices
8.2.4 GDP per capita at current prices
8.2.5 GDP split by key sectors
8.2.6 Agriculture net output at current prices (Singapore dollar)
8.2.7 Agriculture net output at current prices (US dollar)
8.2.8 Agriculture net output at current prices as percentage of GDP
8.2.9 Manufacturing net output at current prices (Singapore dollar)
8.2.10 Manufacturing net output at current prices (US dollar)
8.2.11 Manufacturing net output at current prices as a percentage of GDP
8.2.12 Mining, manufacturing and utilities net output at current prices (Singapore dollar)
8.2.13 Mining, manufacturing and utilities net output at current prices (US dollars)
8.2.14 Mining, manufacturing and utilities net output at current prices as percentage of GDP
8.2.15 Construction net output at current prices (Singapore dollar)
8.2.16 Construction net output at current prices (US dollar)
8.2.17 Construction net output at current prices as a percentage of GDP
8.2.18 Crude steel production
8.2.19 Crude oil consumption
8.2.20 Inflation rate
8.2.21 Fiscal balance as a percentage of GDP
8.2.22 Trade balance as a percentage of GDP
8.2.23 Exports as a percentage of GDP
8.2.24 Imports as a percentage of GDP
8.2.25 Exports growth
8.2.26 Imports growth
8.2.27 Annual average exchange rate US$–SGD
8.2.28 End of fiscal year exchange rate US$–SGD
8.3 Infrastructure Quality and Availability
8.3.1 Total airports and ports
8.3.2 Highways
8.3.3 Automotive components exports
8.3.4 Automotive products imports
8.3.5 Passenger car penetration
8.3.6 Total installed capacity for electricity generation
8.3.7 Installed capacity for the generation of conventional thermal electricity
8.3.8 Electricity production
8.3.9 Electricity consumption
8.3.10 Healthcare expenditure
8.3.11 Healthcare expenditure as a percentage of GDP
8.3.12 Healthcare expenditure per capita
8.3.13 Research and development expenditure as a percentage of GDP
8.3.14 Total internet subscriptions
8.3.15 Broadband internet subscriptions
8.3.16 Personal computer penetration
8.3.17 Mobile phone penetration rate
8.4 Labor Force
8.4.1 Labor force
8.4.2 Unemployment rate
8.5 Demographics
8.5.1 Annual disposable income
8.5.2 Annual per capita disposable income
8.5.3 Annual consumer expenditure on food
8.5.4 Annual per capita consumer expenditure on food
8.5.5 Urban and rural population
8.5.6 Female percentage of population
8.5.7 Male percentage of population
8.5.8 Mean age of population
8.5.9 Median age of population
8.5.10 Population density
8.5.11 Age distribution – total population
8.5.12 Age distribution – male population
8.5.13 Age distribution – female population
8.5.14 Number of households
8.6 Political and Social Risk
8.6.1 Political stability
8.6.2 Terrorism index
8.6.3 Transparency index
9 Appendix
9.1 Contact Us
9.2 About ICD Research
9.3 Disclaimer
List of Tables
Table 1: Singaporean Defense Expenditure, 2007–2011
Table 2: Singaporean Defense Expenditure, 2012–2016
Table 3: Singaporean Defense Budget Split Between Capital, Revenue and Research and Development expenditure, 2007–2011
Table 4: Singaporean Defense Budget Split Between Capital, Revenue and Research and Development expenditure, 2012–2016
Table 5: Singaporean Defense Research and Development Expenditure (US$ Million), 2007–2011
Table 6: Singaporean Defense Research and Development Expenditure (US$ Million), 2012–2016
Table 7: Singaporean Defense Expenditure as a Percentage of GDP, 2007–2011
Table 8: Singaporean Defense Expenditure as a Percentage of GDP, 2012–2016
Table 9: Singapore's Homeland Security Expenditure (US$ billion), 2007–2011
Table 10: Singapore's Homeland Security Expenditure (US$ billion), 2012–2016
Table 11: Benchmarking with Key Markets – 2007–2011 vs 2012–2016
Table 12: Benchmarking with World's Largest Defense Spenders – 2011 and 2016
Table 13: ICD Research Terrorism Index
Table 14: Top Country Ranking by Value of Arms Imports, 2005–2010*
Table 15: Top Country Ranking by Arms Exports, 2005–2010*
Table 16: Boeing – product focus
Table 17: Boeing – Alliances
Table 18: Thales – product focus
Table 19: Thales – Alliances
Table 20: Thales - Recent Contract Wins
Table 21: Lockheed Martin – product focus
Table 22: Lockheed Martin - Alliances
Table 23: Singapore Technologies Aerospace – product focus
Table 24: Singapore Technologies Aerospace - Alliances
Table 25: Singapore Technologies Aerospace - Recent Contract Wins
Table 26: Singapore Technologies Marine – product focus
Table 27: Singapore Technologies Marine - Alliances
Table 28: Singapore Technologies Marine - Recent Contract Wins
Table 29: Singapore Technologies Electronics – product focus
Table 30: Singapore Technologies Electronics - Recent Contract Wins
Table 31: Singapore Technologies Kinetics – product focus
Table 32: Singapore Technologies Kinetics - Alliances
Table 33: Singapore Technologies Kinetics - Recent Contract Wins
List of Figures
Figure 1: Singaporean Defense Expenditure, 2007–2011
Figure 2: Singaporean Defense Expenditure, 2012–2016
Figure 3: Singaporean Defense Budget Split Between Capital, Revenue and Research and Development expenditure, 2007–2011
Figure 4: Singaporean Defense Budget Split Between Capital, Revenue and Research and Development expenditure, 2012–2016
Figure 5:Singaporean Defense Research and Development Expenditure(US$ Million), 2007–2011
Figure 6: Singaporean Defense Research and Development Expenditure(US$ Million),2012–2016
Figure 7: Singaporean Defense Expenditure as a Percentage of GDP, 2007–2011
Figure 8: Singaporean Defense Expenditure as a Percentage of GDP, 2012–2016
Figure 9: Singapore's Homeland Security Expenditure (US$ billion), 2007–2011
Figure 10: Singapore's Homeland Security Expenditure (US$ billion), 2012–2016
Figure 11: ICD Research Terrorism Heat Map
Figure 12: ICD Research Terrorism Heat Index, 2011
Figure 13: Benchmarking with Key Markets – 2007–2011 vs 2012–2016
Figure 14: Benchmarking with World's Largest Defense Spenders–2011 and 2016
Figure 15: Benchmarking with Large Defense Spenders as % of GDP – 2011
Figure 16: Singapore Defense Imports (US$ Million), 2005–2010
Figure 17: Singapore Defense Imports by Country (%), 2005–2010
Figure 18: Singapore Defense Imports by Weapon Category (%), 2005–2010
Figure 19: Industry Dynamics – Porter's Five Forces Analysis
Figure 20: Singapore Technologies Aerospace – Revenue Trend Analysis (SGD Million),2005–2009
Figure 21: Singapore Technologies Aerospace – Operating Profit Trend Analysis (SGD Million), 2005–2009
Figure 22: Singapore Technologies Aerospace – Net Profit Trend Analysis (SGD Million),2005–2009
Figure 23: Singapore Technologies Marine – Revenue Trend Analysis (SGD Million), 2005 – 2009
Figure 24: Singapore Technologies Marine – Operating Profit Trend Analysis (SGD Million),2005–2009
Figure 25: Singapore Technologies Marine – Net Profit Trend Analysis (SGD Million), 2005–2009
Figure 26: Singapore Technologies Electronics – Revenue Trend Analysis (SGD Million),2005–2009
Figure 27: Singapore Technologies Electronics – Operating Profit Trend Analysis (SGD Million), 2005–2009
Figure 28: Singapore Technologies Electronics – Net Profit Trend Analysis (SGD Million), 2005–2009
Figure 29: Singapore Technologies Kinetics – Revenue Trend Analysis (SGD Million), 2005 – 2009
Figure 30: Singapore Technologies Kinetics – Operating Profit Trend Analysis (SGD Million), 2005–2009
Figure 31: Singapore Technologies Kinetics – Net Profit Trend Analysis (SGD Million), 2005–2009
Figure 32: Singapore Business Expectations Index for Manufacturing Sector, 2008–2010
Figure 33: The Singapore Stock Exchange Market Capitalization (US$ Billion), 2003–2009
Figure 34: Singapore FDI Inflow by Sector (US$ Billion), 2003–2008
Figure 35: Singapore Deployment of Credit by Sector (US$ Billion), 2003–2009
Figure 36: Singapore GDP Value at Constant Prices (US$ Billion), 2003–2015
Figure 37: Singapore GDP Per Capita at Constant Prices (US$), 2003–2015
Figure 38: Singapore GDP at Current Prices (US$ Billion), 2003–2015
Figure 39: Singapore GDP Per Capita at Current Prices (US$), 2003–2015
Figure 40: Singapore GDP Split by Key Sectors (%), 2003 Vs. 2009
Figure 41: Singapore Agriculture Net Output at Current Prices (SGD Billion), 2003–2015
Figure 42: Singapore Agriculture Net Output at Current Prices (US$ Million), 2003–2015
Figure 43: Singapore Agriculture Net Output at Current Prices as a Percentage of GDP (%), 2003–2015
Figure 44: Singapore Manufacturing Net Output at Current Prices (SGD Billion), 2003–2015
Figure 45: Singapore Manufacturing Net Output at Current Prices (US$ Billion), 2003–2015
Figure 46: Singapore Manufacturing Net Output at Current Prices as a Percentage of GDP (%), 2003–2015
Figure 47: Singapore Mining, Manufacturing and Utilities Net Output at Current Prices (SGD Billion), 2003–2015
Figure 48: Singapore Mining, Manufacturing and Utilities Net Output at Current Prices (US$ Billion), 2003–2015
Figure 49: Singapore Mining, Manufacturing and Utilities Net Output at Current Prices as a Percentage of GDP, 2003–2015
Figure 50: Singapore Construction Net Output at Current Prices (SGD Billion), 2003–2015
Figure 51: Singapore Construction Net Output at Current Prices (US$ Billion), 2003–2015
Figure 52: Singapore Construction Net Output at Current Prices as a Percentage of GDP (%), 2003–2015
Figure 53: Singapore Crude Steel Production (Thousand Metric Tons), 2003–2015
Figure 54: Singapore Crude Oil Consumption (Million Tons), 2003–2015
Figure 55: Singapore Inflation Rate (%), 2003–2015
Figure 56: Singapore Fiscal Balance as a Percentage of GDP (%), 2003–2009
Figure 57: Singapore Trade Balance as a Percentage of GDP (%), 2003–2009
Figure 58: Singapore Exports as a Percentage of GDP (%), 2003–2015
Figure 59: Singapore Imports as a Percentage of GDP (%), 2003–2015
Figure 60: Singapore Exports Growth (%), 2003–2015
Figure 61: Singapore Imports Growth (%), 2003–2015
Figure 62: Singapore Annual Average Exchange Rate US$–SGD, 2003–2009
Figure 63: Singapore End of Fiscal Year Exchange Rate, 2003–2009
Figure 64: Singapore Airports and Ports (Number of), 2009
Figure 65: Singapore Highways (Kilometers), 2009
Figure 66: Singapore Automotive Components Exports (US$ Million), 2003–2015
Figure 67: Singapore Automotive Components Imports (US$ Million), 2003–2015
Figure 68: Singapore Passenger Car Penetration (per 1,000 People), 2003–2015
Figure 69: Singapore Total Installed Capacity for Electricity Generation (Million Kilowatts),2003–2015
Figure 70: Singapore Installed Capacity for the Generation of Conventional Thermal Electricity (Million Kilowatts), 2003–2015
Figure 71: Singapore Electricity Production (Billion Kilowatt Hours), 2003–2015
Figure 72: Singapore Electricity Consumption (Billion Kilowatt Hours), 2003–2015
Figure 73: Singapore Healthcare Expenditure (US$ Billion), 2003–2015
Figure 74: Singapore Healthcare Expenditure as a Percentage of GDP (%), 2003–2015
Figure 75: Singapore Per Capita Healthcare Expenditure (US$), 2003–2015
Figure 76: Singapore Research and Development Expenditure as a Percentage of GDP (%),2003–2015
Figure 77: Singapore Internet Subscriptions (Thousand), 2003–2015
Figure 78: Singapore Broadband Internet Subscriptions (Thousand), 2003–2015
Figure 79: Singapore Personal Computer Penetration (per 100 People), 2003–2015
Figure 80: Singapore Mobile Phone Penetration Rate (%), 2003–2015
Figure 81: Singapore Size of Labor Force in 15-59 age group (Million), 2003–2015
Figure 82: Singapore Unemployment Rate (%), 2003–2015
Figure 83: Singapore Annual Disposable Income (US$ Billion), 2003–2015
Figure 84: Singapore Annual Per Capita Disposable Income (US$), 2003–2015
Figure 85: Singapore Consumer Expenditure on Food (US$ Billion), 2003–2015
Figure 86: Singapore Annual Per Capita Consumer Expenditure on Food (US$), 2003–2015
Figure 87: Singapore Urban and Rural Population (%), 2003–2015
Figure 88: Singapore Female Percentage of Population (%), 2003–2015
Figure 89: Singapore Male Percentage of Population (%), 2003–2015
Figure 90: Singapore Mean Age of Population (Years), 2003–2015
Figure 91: Singapore Median Age of Population (Years), 2003–2015
Figure 92: Singapore Population Density (per Square Kilometer) 2003–2015
Figure 93: Singapore Population Distribution by Age (%), 2003–2015
Figure 94: Singapore Male Population Distribution by Age (%), 2003–2015
Figure 95: Singapore Female Population Distribution by Age (%), 2003–2015
Figure 96: Singapore Number of Households (Million), 2003–2015
Figure 97: Global Terrorism Heat Map, 2009
Figure 98: Singapore Transparency Index, 2003–2009
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