This report is the result of SDI's extensive market and company research covering the Argentine defense industry. It 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 Argentine defense Industry - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 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 Argentine defense industry.
What is the current market landscape and what is changing?
The Argentine defense budget stands at US$3.64 billion in 2012 and recorded a CAGR of 15.77% during the review period. This healthy growth is expected to continue with a CAGR of 19.22% over the forecast period, which is mainly driven by modernization plans, participation in peacekeeping missions, and disputes over the sovereignty of the Falkland Islands and their natural resources. During the review period, capital expenditure was allocated an average of 4% of the defense budget and this low allocation was due to the high expenditure on salaries and pensions, which account for 70% of the defense budget. However, modernization plans are expected to increase capital expenditure to an average of 7.8% of the defense budget during the forecast period.
What are the key drivers behind recent market changes?
Defense expenditure will be driven by modernization programs, contributions to international peacekeeping missions and the Falkland Islands dispute with the UK. The Argentine government is expected to increase its defense budget at a robust pace in order to modernize its defense equipment and support its domestic defense industry. As part of the United Nations (UN), the Argentine government began to contribute to peacekeeping missions in 1958 and since then has contributed over 35,000 troops for various peacekeeping missions around the world.
What makes this report unique and essential to read?
The Argentine defense Industry - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 provides detailed analysis of the current industry size and growth expectations from 2013to 2017, 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 a detailed analysis of the current industry size and growth expectations from 2013to 2017, 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.
The report includes trend analysis of imports and exports, together with their implications and impact on the Argentine 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 Argentina. 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
The domestic defense industry supplies the majority of its production to the Argentine government and is therefore dependent upon it for its order book. The Argentine defense budget fluctuates as the government faces varying financial constraints, which affects supplier's planning and resource management.
The Argentine defense industry does not have the requisite technological capability to competitively develop advanced defense equipment and compete with the global arms industry. The defense industry, which was previously mostly state owned, was privatized due to public financial constraints. However, the country has started developing its domestic defense industry and is attempting to improve it through industrial participation policies. The government is also participating in international development projects such as the Embraer KC-390, which will create export opportunities and produce a stable order book.
The Argentine defense budget stands at US$3.64 billion in 2012, the result of a CAGR of 15.77% during the review period, and this robust growth was primarily driven by high personnel turnover in the armed forces. The government announced a 21% wage increase in the salaries of the armed forces in 2010. In 2013 the defense budget is estimated to be US$4.22 billion and is expected to register a CAGR of 19.22% during the forecast period to reach US$8.53 billion by 2017. This strong growth is a result of the need to modernize the Argentine armed forces following decades of underinvestment after defeat in the Falklands war in 1982 and the collapse of the Argentine economy in 2001. The government intends to increase the defense budget of the country from 0.8% of GDP in 2012 to 1.1% of GDP and, while the time period for doing so is unclear, it is estimated that the defense budget will increase to 1.5% of GDP by 2017.
Homeland security expenditure recorded a CAGR of 25.84% during the review period and is expected to increase at a CAGR of 3.83% during the forecast period, to reach US$5.2 billion by 2017. Homeland security expenditure is computed by combining the budget for the federal police, national gendarmerie, navy coast guard, and the airport security police budget. The federal police received the highest budget allocation with 40.5% of the total homeland security expenditure during the review period, followed by national gendarmerie, which accounted for an average of 35.6%, while the coast guard received an average of 19.9%, and airport security police accounted for the remaining 4.1% of the homeland security budget. The Ministry of Security is expected to procure advanced communication devices, safety equipment, and both land and air transport equipment.
Argentine arms imports reached their peak in 2007, when the Argentine military announced a multi-year funding program to restore and enhance the operational capabilities of its armed forces. However, in 2009, the economic constraints faced by the country forced it to postpone its military modernization plans. In 2011, the government announced plans to increase its defense expenditure in order to enhance its military hardware and support its domestic defense industry. These government initiatives to support its domestic defense industry are expected to result in increased imports as Argentina aims to gain advance technology for its domestic defense industry.
Table of Contents
1.1 What is this Report About?
1.3 Summary Methodology
1.4 SDI Terrorism Index
1.5 About Strategic Defence Intelligence (www.strategicdefenceintelligence.com)
2 Executive Summary
3 Market Attractiveness and Emerging Opportunities
3.1 Defense Market Size Historical and Forecast
3.1.1 Argentine defense budget to grow at a CAGR of XX% during the forecast period
3.1.2 Defense expenditure to be driven by modernization programs, contributions to international peacekeeping missions and the Falkland Islands dispute with the UK
3.1.3 Defense expenditure as a percentage of GDP to reach XX% by 2017
3.2 Analysis of Defense Budget Allocation
3.2.1 Capital expenditure allocation expected to increase during the forecast period
3.2.2 Capital expenditure expected to register a CAGR of XX% during the forecast period
3.2.3 The army accounted for the largest share of the defense budget during the review period
3.2.4 Navy budget expected to increase at a CAGR of XX% during the forecast period
3.2.5 Army expenditure to cumulatively total US$XX billion during the forecast period
3.2.6 Air force expenditure to reach US$XX billion by 2017
3.3 Homeland Security Market Size and Forecast
3.3.1 Homeland security market expected to grow with the creation of a new ministry dedicated to homeland security