Armored Vehicle Manufacturing December 2018 1
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WWW.IBISWORLD.COM Armored Vehicle Manufacturing December 2018 1 Defense mechanism: Rising defense spending and geopolitical tensions will boost industry demand IBISWorld Industry Report OD5855 Armored Vehicle Manufacturing December 2018 Maksim Soshkin 2 About this Industry 15 International Trade 31 Technology & Systems 2 Industry Definition 18 Business Locations 32 Revenue Volatility 2 Main Activities 32 Regulation & Policy 2 Similar Industries 20 Competitive Landscape 33 Industry Assistance 2 Additional Resources 20 Market Share Concentration 20 Key Success Factors 34 Key Statistics 3 Industry at a Glance 21 Cost Structure Benchmarks 34 Industry Data 22 Basis of Competition 34 Annual Change 4 Industry Performance 23 Barriers to Entry 34 Key Ratios 4 Executive Summary 24 Industry Globalization 4 Key External Drivers 35 Jargon & Glossary 6 Current Performance 25 Major Companies 8 Industry Outlook 25 BAE Systems PLC 10 Industry Life Cycle 26 General Dynamics Corporation 27 Oshkosh Corporation 12 Products & Markets 28 Navistar International Corporation 12 Supply Chain 29 Textron Inc. 12 Products & Services 14 Demand Determinants 30 Operating Conditions 14 Major Markets 30 Capital Intensity www.ibisworld.com | 1-800-330-3772 | [email protected] WWW.IBISWORLD.COM Armored Vehicle Manufacturing December 2018 2 About this Industry Industry Definition This industry includes establishments used in combat to transport infantry engaged in manufacturing, modifying, and munitions or to provide combat repairing and servicing military support. Tanks are not included in armored vehicles. These vehicles are this industry. Main Activities The primary activities of this industry are Manufacturing armored vehicles and parts Manufacturing self-propelled weapons Modification of armored vehicles Repair of armored vehicles The major products and services in this industry are Mobile artillery vehicles Tracked armored vehicles Wheeled armored vehicles Similar Industries 33611b SUV & Light Truck Manufacturing in the US This industry manufactures unarmored military universal carriers. 33641a Aircraft, Engine & Parts Manufacturing in the US This industry manufactures complete military aircraft, auxiliary equipment and parts. 33641b Space Vehicle & Missile Manufacturing in the US This industry manufactures complete missiles, military space vehicles, auxiliary equipment and parts. 33699b Tank & Armored Vehicle Manufacturing in the US This industry manufactures armored vehicles as well as tanks. Additional Resources For additional information on this industry www.loc.gov Library of Congress comptroller.defense.gov Under Secretary of Defense www.usitc.gov US International Trade Commission WWW.IBISWORLD.COM Armored Vehicle Manufacturing December 2018 3 Industry at a Glance Armored Vehicle Manufacturing in 2018 Key Statistics Revenue Annual Growth 13–18 Annual Growth 18–23 Snapshot $2.8bn -4.5% 6.6% Profit Exports Businesses $336.9m $1.3bn 58 Revenue vs. employment growth Federal funding for defense Market Share BAE Systems PLC 50 10 27.9% 25 5 General Dynamics Corporation 0 0 23.6% % change % change Oshkosh -25 -5 Corporation -50 -10 19.8% Year 10 12 14 16 18 20 22 24 Year 11 13 15 17 19 21 23 Navistar Revenue Employment International SOURCE: WWW.IBISWORLD.COM Corporation Products and services segmentation (2018) 5.0% p. 25 22.4% Mobile artillery vehicles 45.8% Key External Drivers Tracked armored vehicles Federal funding for defense Non-NATO defense spending Price of steel Trade-weighted index 31.8% p. 4 Wheeled armored vehicles SOURCE: WWW.IBISWORLD.COM Industry Structure Life Cycle Stage Mature Regulation Level Heavy Revenue Volatility Very High Technology Change High Capital Intensity Medium Barriers to Entry High Industry Assistance Medium Industry Globalization Medium Concentration Level High Competition Level Medium FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 34 WWW.IBISWORLD.COM Armored Vehicle Manufacturing December 2018 4 Industry Performance Executive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage Executive The Armored Vehicle Manufacturing pick-up in defense spending and the Summary industry experienced significant declines development and production of over the five years to 2018. Industry programs such as the Armored Multi- operators research, develop, Purpose Vehicle (AMPV) and the Joint manufacture, modify and repair military Light Tactical Vehicle (JLTV) have led armored vehicles, including infantry to an increase in US spending on fighting vehicles, armored personnel armored vehicles. Moreover, surging carriers, mine-resistant ambush international demand for US armored protected (MRAP) vehicles, self- vehicles driven by increased global propelled artillery and armored utility defense spending, tensions and vehicles. Prior to the five-year period, US conflict has helped offset weaker combat operations in the Middle East demand at home. Nevertheless, after and a climbing defense budget created a years of abnormal growth, exports are expected to fall in 2018. Consequently, industry revenue is expected to decline Surging international demand for US 7.3% in 2018, despite growing armored vehicles has helped offset weaker domestic demand. Over the five years to 2023, industry demand at home revenue is forecast to climb at an annualized rate of 6.6% to $3.9 billion. boom in demand for armored vehicles. The defense budget is anticipated to However, this trend reversed just before grow, and the development and the current five-year period. The United production of programs such as the States began to wind down combat AMPV and the JLTV should increase operations in the Middle East, the demand for industry products. defense budget was cut and sequestration Moreover, rising geopolitical tensions eventually kicked in. Consequently, the are anticipated to help operators industry is expected to decline at an maintain relatively high export orders annualized rate of 4.5% to $2.8 billion as more nations demand armored over the five years to 2018. vehicles to stay ahead of their rivals. However, much of this decline Operators will also benefit from occurred during the first half of the continued modification programs for five-year period. In more recent years, a the existing armored vehicle fleet. Key External Drivers Federal funding for defense Non-NATO defense spending The industry is highly sensitive to defense Non-NATO defense spending includes all spending. More specifically, the amount global defense spending, excluding the set aside solely for the procurement and members of the North Atlantic Treaty maintenance of armored vehicles is the Organization. As global defense spending most important driver of industry increases, many foreign governments revenue. When the procurement purchase US armored vehicles. In 2018, allocation falls, fewer contracts with non-NATO defense spending is expected manufacturers are signed and industry to increase. revenue declines. Federal funding for defense is expected to increase in 2018, Price of steel representing a potential opportunity for Steel is one of the primary inputs in the the industry. production of armored vehicles. When WWW.IBISWORLD.COM Armored Vehicle Manufacturing December 2018 5 Industry Performance Key External Drivers steel prices increase, operators can try to largest trading partners. A decreasing continued transfer the cost to customers. However, TWI leads to relatively less expensive if competition is strong and demand is exports and more expensive imports. weak, operators may have to absorb the Therefore, industry operators benefit increased costs, reducing profit. The price from a weak US dollar through of steel is expected to increase in 2018. increased demand for exports as well as weaker import competition for the Trade-weighted index same goods. The trade-weighted index The trade-weighted index (TWI) is expected to decrease in 2018, but it measures the value of the US dollar remains at an elevated level that poses relative to the currencies of the country’s a threat to the industry. Federal funding for defense Non-NATO defense spending 10 1.2 1.1 5 1.0 0 0.9 $ trillion % change 0.8 -5 0.7 -10 0.6 Year 11 13 15 17 19 21 23 Year 9 11 13 15 17 19 21 23 SOURCE: WWW.IBISWORLD.COM WWW.IBISWORLD.COM Armored Vehicle Manufacturing December 2018 6 Industry Performance The Armored Vehicle Manufacturing Current industry began to drive out of a ditch Industry revenue over the past five years. Industry players Performance 50 research, develop, manufacture, modify and repair military armored vehicles including infantry fighting vehicles, 25 armored personnel carriers, mine- resistant ambush protected (MRAP) 0 vehicles, self-propelled artillery and % change armored utility vehicles. During the first -25 half of the five-year period, industry revenue plunged as US military spending -50 on industry products dropped from a Year 10 12 14 16 18 20 22 24 boom prior to the period. In more recent years, a pick-up in US defense spending, SOURCE: WWW.IBISWORLD.COM a ramp-up of key industry programs and an overall rise in exports helped industry to 2018, industry revenue is expected to revenue to partially recover from earlier fall at an annualized rate of 4.5% to declines. Nevertheless, over the five years $2.8 billion. Start of a recovery The primary driver of industry in Afghanistan created a surge in performance is demand from the US demand for frontline armored vehicles. military. The industry’s recent increase in In particular, the heavy use of