This report is the result of ICD Research / Strategic Defence Intelligence's extensive market and company research covering the global naval vessels MRO industry. It provides detailed analysis of both historic and forecast global industry values, factors influencing demand, the challenges faced by industry participants, analysis of the leading companies in the industry, and key news.
Introduction and Landscape
Why was the report written?
"The Global Naval Vessels MRO Market 2012-2022" offers the reader detailed analysis of the global naval vessels MRO market over the next ten years, alongside potential market opportunities to enter the industry, using detailed market size forecasts.
What is the current market landscape and what is changing?
The demand for naval vessel MRO services is anticipated to be driven by ageing naval vessels globally, technological innovations in the industry, internal and external security threats, territorial disputes and modernization initiatives undertaken by navies across the world. The market is expected to be dominated by North America, followed by Asia Pacific and Europe. Despite the economic crisis in Europe, Europe's share of the global market is projected to increase during the forecast period, albeit marginally due to the scheduled deployment of various modernization programs which had been initiated in previous years
What are the key drivers behind recent market changes?
The navies of today's especially the US and those of the commonwealth nations rely extensively on a suite of technologies that support command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR). According to military scholar Dr. Norman Friedman, the various C4ISR technologies on offer provide navies with the capability to conduct picture based warfare which is based on using an almost real-time picture of what is happening. Moreover with reduced fleet sizes, new threats and the volume of ocean-borne trade, the importance of partnerships in the naval realm has significantly increased. Therefore, defense ministries are now inclined towards investing robustly in developing new C4ISR capabilities for their respective navies and help co-evolve these systems for the AUSCANZUKUS (Australia, Canada, New Zealand, UK and US) states
What makes this report unique and essential to read?
"The Global Naval Vessels MRO Market 2012-2022" provides detailed analysis of the current industry size and growth expectations from 2012 to 2022, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides detailed understanding of emerging opportunities in specific areas.
Key Features and Benefits
Detailed market analysis
The report provides detailed analysis of the market for naval vessels MRO during 2012-2022, including the factors that influence why countries are investing or cutting defense expenditure. It provides detailed expectations of growth rates and projected total expenditure.
The main providers in the industry
Lockheed Martin, BAE Systems, SAIC, Northrop Grumman, General Dynamics, Elbit Systems, Abu Dhabi Ship Building, Kongsberg, Saab, Huntington Ingalls Industries, Teledyne Brown Engineering, DCNS, Babcock International Group, URS Corporation
Market entry opportunities and entry strategies
Military nations across the globe are currently in a state where most of their active fleets are aging and with most nations opting for defense budget cuts, MRO activities are expected to rise substantially during the forecast report. The US has the world's largest fleet of naval vessels and the age of fleet is a major factor that has been considered by the Pentagon while formulating the fiscal 2013 budget request which has given high priority to the Army's reset and new build initiatives. Other than the reset programs, the US is also investing significantly in major naval vessel electronic upgrades as these systems are a necessity in aging vessels, some of which still rely upon motor based systems to operate the gunnery and locomotion systems. A recent example is the US Navy's Submarine Electronics System Engineering program which aims to enable troubleshooting, assessments, installation, test, certification, repair, system troubleshooting, refurbishment and logistics support to submarine combat, electronic systems and mechanical systems support.
Key Market Issues
Countries looking to install ballistic missile defense capabilities
Recent years has witnessed various countries upgrading their fleet of naval warships including frigates, cruisers, destroyers and amphibious ships with ballistic missile defense capabilities. With various countries currently involved in border disputes and other geo-political conflicts, governments are now upgrading their naval vessels with anti-ballistic missiles to combat existing threats. Specifically, a ballistic missile threat currently exists in Europe, Asia and the Middle East and the governments of these countries are spending robustly to equip their warships with integrated air defense combat systems
Navies outsourcing MRO work to decrease response time
Navies around the world are increasingly outsourcing the maintenance and logistics support contracts, both to maintenance specialists and original equipment manufacturers (OEMs). This is primarily to increase their ability to respond to crisis situations and adapt to the dynamic nature of technology changes in the industry. The various blue water navies such as the Royal Navy, US Navy, Royal Australian, Hellenic and Royal Norwegian navies, as well as others in South America, have decided to adopt a strategy to focus their budgets on their field of expertise which includes managing fleet deployment and ensuring ships have a technological edge.
Companies expected to consolidate in the face of global defense budget cuts
The naval vessels MRO sector is currently witnessing a phase of moderate MandA activity in keeping with the trend of sector consolidation when military demand falls. As defense spending has leveled off in recent years, companies operating in all areas of defense are looking to diversify their offerings in order to compete for the various contracts on offer, and add more revenue streams to their existing lines of business. Additionally, growing financial pressure, an overabundance of MRO companies and pressure from original equipment manufacturers (OEMs), is also expected to force a consolidation of the industry and a change in the MRO business model.
Procurement of used naval vessels to result in increased naval MRO expenditure
In recent years many developing countries across the world have started acquiring used ships from navies of other more developed countries. These vessels are then refitted and overhauled to adapt to the needs of the acquiring country's navy. This approach has delivered benefits to the navies of several nations such as Chile, Egypt, Poland, Romania and Bulgaria among many. As such, the trend has picked pace and with fleet reduction measures that have been implemented as a result of cost reduction, more and more countries are willing to sell off their aging naval vessels.
North America to continue to dominate the market
Despite budget cuts, North America is expected to account for the largest share of the total global expenditure on naval vessels MRO, with 73% share during the forecast period. High demand in the region is primarily driven by the region's modernization programs and the overseas war against global terrorism.
Technological innovations driving the naval vessels MRO market
One of the major drivers of the military MRO market is the advent of various technological developments in the field. Recent years have witnessed a transformation in military MRO brought about primarily by the increasing use of military equipment in the wars in Iraq, Afghanistan, Serbia and Libya. Moreover, the recent nuclear proliferation being carried out by Iran has heightened military tensions between Iran, the US and Israel. The possible conflict has resulted in the US spending heavily on getting its existing naval vessels ready for battle, which in turn is driving the MRO industry
Joint programs expected to increase over the forecast period
A significant number of countries are investing in the development of their domestic naval vessels MRO capabilities by establishing strategic alliances and technology transfer agreements with established global manufacturers. In addition to improving the indigenous capabilities of a domestic firm, this provides the foreign company with an opportunity to cater to a new market. This is especially true in today's economic scenario when companies are looking to maximize efficiencies and cut costs.