The Argentine Defense Industry: Market Opportunities and Entry Strategies, Analyses and Forecasts to 2016

 Published On: Apr, 2012 |    No of Pages: 148 |  Published By: ICD Research | Format: PDF
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Synopsis


This report is the result of 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.


Summary


Why was the report written?

The Argentine Defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2016 offers the reader insights 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 stood at US$3.64 billion in 2011 and recorded a CAGR of 16.55% during the review period. This healthy growth is expected to continue with a CAGR of 16.40% during the forecast period. During the review period, capital expenditure was allocated an average of 3.6% 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.


What are the key drivers behind recent market changes?

The strong growth in the Argentine defense budget is mainly driven by modernization plans, participation in peacekeeping missions and disputes over the sovereignty of the Falkland Islands and their natural resources. The Argentine government has announced plans to increase defense expenditure, which stood at 0.7% of GDP in 2011, to 1.5% of GDP over an unspecified period.


What makes this report unique and essential to read?

The Argentine Defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2016 provides detailed analysis of the current industry size and growth expectations from 2011 to 2016, 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.


Scope


The report provides detailed analysis of the current industry size and growth expectations from 2011 to 2016, 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 its 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, 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.


Reasons To Buy


The report looks at historical performance as well as future industry projections using the in-house model. The report is a mixture of graphs, charts, tables and text in an effort to give the reader the maximum possible information in the most efficient and visually appealing manner.


The report helps marketing agencies in the industry to promote their business by aligning their capabilities and business practices with their customers’ changing needs, while it also helps suppliers to benchmark their efforts with those of their competitors.


Key Highlights


Argentina, similar to other Latin American countries, is increasing its defense budget at a robust pace. The defense budget, which stood at US$2.96 billion in 2011, recorded a CAGR of 16.55% during the review period, largely due to increased personnel salaries. The Argentine defense budget is expected to register a CAGR of 16.40% during the forecast period to reach US$6.68 billion by 2016.


Argentina mandates 100% offsets for its defense procurements. The country is in the process of reviving its domestic defense industry and encourages technology transfers, partnerships and research and development (R&D) as offsets. Foreign defense companies are free to invest in the Argentine defense sector and do not need to attain any prior approval from the government for investments.


Argentine homeland security expenditure is represented by the Ministry of Security, created in 2011 after the failure of domestic forces to control civil disturbances in December 2010. Argentine homeland security budget stood at US$2.3 billion in 2010. Civil disturbances in December 2010 highlighted the inefficiency of domestic forces, which resulted in an increase in homeland security expenditure of 40%, to US$3.2 billion, in 2011.


Defense companies can cater for the Argentine defense industry through Foreign Military Sales (FMS), which involve direct government-to-government transactions. Foreign companies can also establish partnerships and use technology transfers to gain access to the Argentine defense market.


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.

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 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 16.40% 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 1.2% by 2016

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 30.91% 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 16.40% during the forecast period

3.2.5 Army expenditure to cumulatively total US$10.7 billion during the forecast period

3.2.6 Air force expenditure to reach US$1.44 billion by 2016

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

3.3.2 Increasing poverty, illegal immigration and organized crime drives homeland security expenditure

3.3.3 Argentina faces a low risk of terror attacks

3.4 Benchmarking with Key Global Markets

3.4.1 Argentine defense budget expected to increase at a CAGR of 16.40%, lower than Brazil but higher than the UK…….

3.4.2 Argentine defense expenditure is the lowest in South America

3.4.3 Argentina’s defense budget as a percentage of GDP to increase

3.5 Market Opportunities: Key Trends and Growth Stimulators

3.5.1 Navy to acquire off-shore patrol vessels, transport ships and nuclear submarines

3.5.2 Argentine air force to procure fighter aircraft, transport aircraft and helicopters and upgrade its fleet of helicopters and military aircraft

3.5.3 Army to be equipped with advanced multi-purpose vehicles and C3I systems

4 Defense Procurement Market Dynamics

4.1 Import Market Dynamics

4.1.1 Defense imports expected to increase during the forecast period

4.1.2 The US is a major arms supplier to Argentina

4.1.3 Aircraft and sensors constitute a majority of Argentine arms imports

4.2 Export Market Dynamics

4.2.1 Argentina has negligible arms 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: low to high

5.1.5 Threat of substitution: high

6 Market Entry Strategy

6.1 Market Regulation

6.1.1 Offset policy aids development of domestic defense industry

6.1.2 Open foreign direct investment policy

6.2 Market Entry Route

6.2.1 FMS is an effective entry route for foreign defense companies

6.2.2 Technology transfers and partnerships encouraged by offset policy

6.2.3 Argentine defense industry open to foreign investment

6.3 Key Challenges

6.3.1 Defense budget fluctuations challenging the domestic defense industry

7 Competitive Landscape and Strategic Insights

7.1 Competitive Landscape Overview

7.2 Key Public sector companies

7.2.1 Fábrica Argentina de Aviones: overview

7.2.2 Fábrica Argentina de Aviones: defense products

7.2.3 Fábrica Argentina de Aviones: recent announcements and strategic initiatives

7.2.4 Fábrica Argentina de Aviones: alliances

7.2.5 Fábrica Argentina de Aviones: recent contract wins

7.2.6 Astillero Río Santiago: overview

7.2.7 Astillero Río Santiago: products and services

7.2.8 Astillero Río Santiago: recent announcements and strategic initiatives

7.2.9 Astillero Río Santiago: alliances

7.2.10 Citedef: overview

7.2.11 Citedef: products and services

7.2.12 Citedef: recent announcements and strategic initiatives

7.2.13 Tandanor: overview

7.2.14 Tandanor: products and services

7.2.15 Tandanor: recent announcements and strategic initiatives

7.2.16 Tandanor: recent contract wins

7.2.17 Dirección General de Fabricaciones Militares: overview

7.2.18 Dirección General de Fabricaciones Militares: defense products

7.2.19 Dirección General de Fabricaciones Militares: recent announcements and strategic initiatives

7.2.20 Dirección General de Fabricaciones Militares: alliances

7.2.21 INVAP SE: overview

7.2.22 INVAP SE: defense products

7.2.23 INVAP S.E.: recent announcements and strategic initiatives

7.2.24 INVAP S.E.: alliances

7.2.25 Nostromo Defensa SA: overview

7.2.26 Nostromo Defensa SA: products and services

7.2.27 Nostromo Defensa SA: recent announcements and strategic initiatives

7.2.28 Nostromo Defensa SA: alliances

7.2.29 Nostromo Defensa SA: recent contract wins

8 Business Environment and Country Risk

8.1 Business Confidence

8.1.1 Market capitalization trend – the Buenos Aires stock exchange, Argentina

8.1.2 FDI inflows

8.1.3 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 Agricultural net output at current prices (Argentine peso)

8.2.7 Agricultural net output at current prices (US dollars)

8.2.8 Agricultural net output at current prices as percentage of GDP

8.2.9 Manufacturing net output at current prices (Argentine peso)

8.2.10 Manufacturing net output at current prices (US dollars)

8.2.11 Manufacturing net output at current prices as percentage of GDP

8.2.12 Mining, manufacturing and utilities net output at current prices (Argentine peso)

8.2.13 Mining, manufacturing and utilities at current prices (US dollars)

8.2.14 Mining, manufacturing and utilities at current prices, as percentage of GDP

8.2.15 Construction net output at current prices, (Argentine peso)

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 Current account balance as a percentage of GDP

8.2.22 Exports as a percentage of GDP

8.2.23 Imports as a percentage of GDP

8.2.24 Exports growth

8.2.25 Imports growth

8.2.26 External debt as a percentage of GDP

8.2.27 Annual average exchange rate US$–ARS

8.2.28 End of the period exchange rate US$–ARS

8.3 Infrastructure Quality and Availability

8.3.1 Total airports and seaports

8.3.2 Railways and roadways system

8.3.3 Passenger vehicle production trends

8.3.4 Commercial vehicle production trends

8.3.5 Automotive components export trends

8.3.6 Automotive products import trends

8.3.7 Passenger vehicle export trends

8.3.8 Commercial vehicle export trends

8.3.9 Total installed capacity for electricity generation

8.3.10 Installed capacity for conventional thermal electricity generation

8.3.11 Electricity production

8.3.12 Electric power consumption

8.3.13 Installed capacity for hydro-electricity generation

8.3.14 Installed capacity for renewable electricity generation

8.3.15 Electricity exports

8.3.16 Electricity imports

8.3.17 Healthcare expenditure

8.3.18 Healthcare expenditure as a percentage of GDP

8.3.19 Healthcare expenditure per capita

8.3.20 R&D expenditure as a percentage of GDP

8.3.21 Total internet subscribers

8.3.22 Broadband internet subscribers

8.3.23 Personal computer penetration

8.3.24 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 Total population

8.5.6 Urban and rural population

8.5.7 Females as a percentage of population

8.5.8 Males as percentage of population

8.5.9 Mean age of population

8.5.10 Median age of population

8.5.11 Population density

8.5.12 Age distribution of the total population

8.5.13 Age distribution of the male population

8.5.14 Age distribution of the female population

8.5.15 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: Argentine Defense Expenditure, 2007–2011

Table 2: Argentine Defense Expenditure, 2012–2016

Table 3: Argentine GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2007–2011

Table 4: Argentine GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2012–2016

Table 5: Argentine Defense Budget Split Between Capital and Revenue Expenditure (%), 2007–2011

Table 6: Argentine Defense Budget Split Between Capital and Revenue Expenditure (%), 2012–2016

Table 7: Argentine Defense Capital Expenditure (US$ million), 2007–2011

Table 8: Argentine Defense Capital Expenditure (US$ million), 2012–2016

Table 9: Argentine Defense Function Expenditure Split (%), 2007–2011

Table 10: Argentine Defense Function Expenditure Split (%), 2012–2016

Table 11: Argentine Naval Expenditure (US$ million), 2007–2011

Table 12: Argentine Naval Expenditure (US$ million), 2012–2016

Table 13: Argentine Army Expenditure (US$ million), 2007–2011

Table 14: Argentine Army Expenditure (US$ million), 2012–2016

Table 15: Argentine Air Force Expenditure (US$ million), 2007–2011

Table 16: Argentine Air Force Expenditure (US$ million), 2012–2016

Table 17: Argentine Homeland Security Expenditure (US$ billion), 2007–2011

Table 18: Argentine Homeland Security Expenditure (US$ billion), 2012–2016

Table 19: ICD Research Terrorism Index

Table 20: Benchmarking with Key Markets – 2007–2011 vs. 2012–2016

Table 21: Offset Regulations in Argentina

Table 22: Fábrica Argentina de Aviones – Product Focus

Table 23: Fábrica Argentina de Aviones – Alliances

Table 24: Fábrica Argentina de Aviones - Recent Contract Wins

Table 25: Astillero Río Santiago – Product Focus

Table 26: Astillero Río Santiago – Alliances

Table 27: Citedef – Product Focus

Table 28: Tandanor – Product Focus

Table 29: Tandanor – Recent Contract Wins

Table 30: Dirección General de Fabricaciones Militares – Product Focus

Table 31: Dirección General de Fabricaciones Militares – Alliances

Table 32: INVAP SE – Product Focus

Table 33: INVAP S.E. – Alliances

Table 34: Nostromo Defensa SA – Product Focus

Table 35: Nostromo Defensa SA – Alliances

Table 36: Nostromo Defensa SA – Recent Contract Wins


List of Figures


Figure 1: Argentine Defense Expenditure, 2007–2011

Figure 2: Argentine Defense Expenditure, 2012–2016

Figure 3: Argentine GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2007–2011

Figure 4: Argentine GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as a Percentage of GDP Growth, 2012–2016

Figure 5: Argentine Defense Budget Split Between Capital and Revenue Expenditure (%), 2007–2011

Figure 6: Argentine Defense Budget Split Between Capital and Revenue Expenditure (%), 2012–2016

Figure 7: Argentine Defense Capital Expenditure (US$ million), 2007–2011

Figure 8: Argentine Defense Capital Expenditure (US$ million), 2012–2016

Figure 9: Argentine Defense Function Expenditure Split (%), 2007–2011

Figure 10: Argentine Defense Function Expenditure Split (%), 2012–2016

Figure 11: Argentine Naval Expenditure (US$ million), 2007–2011

Figure 12: Argentine Naval Expenditure (US$ million), 2012–2016

Figure 13: Argentine Army Expenditure (US$ million), 2007–2011

Figure 14: Argentine Army Expenditure (US$ million), 2012–2016

Figure 15: Argentine Air Force Expenditure (US$ million), 2007–2011

Figure 16: Argentine Air Force Expenditure (US$ million), 2012–2016

Figure 17: Argentine Homeland Security Expenditure (US$ billion), 2007–2011

Figure 18: Argentine Homeland Security Expenditure (US$ billion), 2012–2016

Figure 19: ICD Research Terrorism Heat Map, 2011

Figure 20: ICD Research Terrorism Index, 2011

Figure 21: Benchmarking with Key Markets – 2007–2011 vs. 2012–2016

Figure 22: Defense Expenditure of the Largest Military Spenders in the World (US$ billion), 2011 and 2016

Figure 23: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2011

Figure 24: Argentine Defense Imports (US$ million), 2007–2011

Figure 25: Argentine Defense Imports by Country (%), 2007–2011

Figure 26: Argentine Defense Imports by Category, 2007–2011

Figure 27: Industry Dynamics - Porter’s Five Forces Analysis

Figure 28: The Buenos Aries Stock Exchange Market Capitalization (US$ Billion), 2003–2009

Figure 29: Argentine FDI Inflows (US$ Billion), 2003–2009

Figure 30: Argentine Deployment of Credit by sector (US$ Billion), 2003–2009

Figure 31: Argentine GDP Value at Constant Prices (US$ Billion), 2003–2015

Figure 32: Argentine GDP Per Capita at Constant Prices (US$), 2003–2015

Figure 33: Argentine GDP at Current Prices (US$ Billion), 2003–2015

Figure 34: Argentine GDP Per Capita at Current Prices (US$), 2003–2015

Figure 35: Argentine GDP Split by Key Sectors (%), 2003 and 2009

Figure 36: Argentine Agricultural Net Output at Current Prices (ARS Billion), 2003–2015

Figure 37: Argentine Agricultural Net Output at Current Prices (US$ Billion), 2003–2015

Figure 38: Argentine Agricultural Net Output at Current Prices as a Percentage of GDP (%), 2003–2015

Figure 39: Argentine Manufacturing Net Output at Current Prices (ARS Billion), 2003–2015

Figure 40: Argentine Manufacturing Net Output at Current Prices (US$ Billion), 2003–2015

Figure 41: Argentine Manufacturing Net Output at Current Prices as a Percentage of GDP(%), 2003–2015

Figure 42: Argentine Mining, Manufacturing and Utilities Net Output, at Current Prices (ARS Billion), 2003–2015

Figure 43: Argentine Mining, Manufacturing and Utilities Output, at Current Prices (US$ Billion), 2003–2015

Figure 44: Argentine Mining, Manufacturing and Utilities Output, at Current Prices as a Percentage of GDP(%), 2003–2015

Figure 45: Argentine Construction Net Output, at Current Prices (ARS Billion), 2003–2015

Figure 46: Argentine Construction Net Output, at Current Prices (US$ Billion), 2003–2015

Figure 47: Argentine Construction Output, at Current Prices as a Percentage of GDP(%), 2003–2015

Figure 48: Argentine Crude Steel Production (Million Metric Tons), 2003–2015

Figure 49: Argentine Crude Oil Consumption (Million Tons), 2003–2015

Figure 50: Argentine Inflation Rate (%), 2003–2015

Figure 51: Argentine Current Account Balance as a percentage of GDP (%), 2003–2009

Figure 52: Argentine Exports as a Percentage of GDP (%), 2003–2015

Figure 53: Argentine Imports as a Percentage of GDP (%), 2003–2015

Figure 54: Argentine Exports Growth (%), 2003–2015

Figure 55: Argentine Imports Growth (%), 2003–2015

Figure 56: Argentine External Debt as a Percentage of GDP (%) 2003–2009

Figure 57: Argentine Annual Average Exchange Rate US$–ARS, 2003–2009

Figure 58: Argentine end of the period Exchange Rate US$–ARS, 2003–2009

Figure 59: Argentine Airports and Ports (Number of), 2009

Figure 60: Argentine Railways and Roadways (Kilometers), 2009

Figure 61: Argentine Passenger Vehicle Production (Units), 2003–2015

Figure 62: Argentine Commercial Vehicle Production (Units), 2003–2015

Figure 63: Argentine Automotive Components Exports (US$ Million), 2003–2015

Figure 64: Argentine Automotive Components Imports (US$ Million), 2003–2015

Figure 65: Argentine Passenger Vehicle Export (Units), 2003–2015

Figure 66: Argentine Commercial Vehicle Export (Units), 2003–2015

Figure 67: Argentine Total Installed Capacity for Electricity Generation (Million Kilowatts), 2003–2015

Figure 68: Argentine Installed Capacity for Conventional Thermal Electricity Generation (Million Kilowatts), 2003–2015

Figure 69: Argentine Electricity Production (Billion Kilowatt Hours), 2003–2015

Figure 70: Argentine Electric Power Consumption (Billion Kilowatt Hours), 2003–2015

Figure 71: Argentine Installed Capacity for Hydro-electricity Generation (Million Kilowatts), 2003–2015

Figure 72: Argentine Installed Capacity for Renewable Electricity Generation (Million Kilowatts) , 2003–2015

Figure 73: Argentine Electricity Exports (Billion Kilowatt Hours), 2003–2015

Figure 74: Argentine Electricity Imports (Billion Kilowatt Hours), 2003–2015

Figure 75: Argentine Healthcare Expenditure (US$ Billion), 2003–2015

Figure 76: Argentine Healthcare Expenditure as a percentage of GDP (%), 2003–2015

Figure 77: Argentine Per Capita Healthcare Expenditure (US$), 2003–2015

Figure 78: Argentine R&D Expenditure as a Percentage of GDP (%), 2003–2015

Figure 79: Argentine Internet Subscribers (Million), 2003–2015

Figure 80: Argentine Broadband Internet Subscribers (Million), 2003–2015

Figure 81: Argentine Personal Computer Usage (per 100 people) , 2003–2015

Figure 82: Argentine Mobile Phone Penetration per 100 people (%), 2003–2015

Figure 83: Argentine Size of Labor Force in 15–59 Age Group (Million), 2003–2015

Figure 84: Argentine Unemployment Rate (%), 2003–2015

Figure 85: Argentine Annual Disposable Income (US$ Billion), 2003–2015

Figure 86: Argentine Annual Per Capita Disposable Income (%), 2003–2015

Figure 87: Argentine Consumer Expenditure on Food (US$ Billion), 2003–2015

Figure 88: Argentine Annual Per Capita Consumer Expenditure on Food, 2003–2015

Figure 89: Argentine Total Population (Million), 2003–2015

Figure 90: Argentine Urban and Rural Population (%), 2003–2015

Figure 91: Argentine Female as Percentage of Population (%), 2003–2015

Figure 92: Argentine Males as a Percentage of Population (%), 2003–2015

Figure 93: Argentine Mean Age of Population (Years), 2003–2015

Figure 94: Argentine Median Age of Population (Years), 2003–2015

Figure 95: Argentine Population Density (Per Square Kilometer) 2003–2015

Figure 96: Argentine Population Age Distribution (%), 2003–2015

Figure 97: Argentine Male Population Age Distribution (%), 2003–2015

Figure 98: Argentine Female Population Age Distribution (%), 2003–2015

Figure 99: Argentine Number of Households (Million), 2003–2015

Figure 100: Global Terrorism Heat Map, 2011

Figure 101: Argentine Transparency Index, 2003–2009



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