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

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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.

Scope

• 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

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

BAE Systems Plc. (BAE)
GKN Aerospace Services
Rolls-Royce
Babcock International Group Plc.
AgustaWestland
Thales UK
General Dynamics UK Ltd
Boeing UK
L-3 Communications Group Plc.
Northrop Grumman Corporation
Lockheed Martin UK
The European Aeronautic Def

Table of Contents

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 Defense 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

Table

Table 1: UK Defense Expenditure (GBP billion & 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 &US$ 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

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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