This report analyzes the global defense industry’s view point on decreasing defense budgets. This report examines the effects of decrease in defense expenditure on the global defense industry and identifies its impact on revenue expectations of  global defense suppliers . It also analyzes business strategies of defense contractors and other suppliers, identifies new business opportunities and priorities, and forecasts  demand for key products and services. It also projects  expected change in global defense expenditure, region-level military budgets, merger and acquisition expectations, collaborative projects and outsourcing trends.

Key Highlights

• Delivering high customer service or satisfaction, increasing sales, establishing new relationships with governments and establishing new relationships in the commercial industry are the most important business priorities for defense companies.
• Survey results show that 74% of respondents expect to see an increase in merger and acquisition activity due to a decrease in defense expenditure
• Italy, Canada and the UK regions are expected to experience the greatest decline in the defense expenditure in the next two years.

Companies

ITT Corporation, ITT Exelis, Raytheon, Lockheed Martin, US Department of Defense, General Dynamics, Northrop Grumman, Boeing, Thales, Elbit systems, Merill Technologies, Safran, Advanced Military Maintenance, Repair and Overhaul Center (AMMROC), Mubadala Aerospace, Sikorsky Aircraft Corporation, BAE systems, Huntington Ingalls Industries (HII), L-3 communications, Scientific, Engineering, Technical and Analytical (SETA), Hindustan Aeronautics Limited (HAL), Defense Land Systems India, Mahindra and Mahindra, Sapura Thales Electronics (STE), Finmeccanica group, Pratt & Whitney, ETI, United Technologies Corporation, Goodrich Corporation, Babcock International, VT group, Engine Holding, Rolls-Royce, Daimler Tognum AG, SRA international, Providence Equity Partners, Eurofighter, Dassault Rafale, Micreo, AW Bell, Ferra Engineering, Levett Engineering, TAE, BAE Systems Nashua,  SEC Plating, CAE

TABLE OF CONTENTS

1 Introduction
1.1.1 What is this Report About?
1.2 Definitions
1.3 Summary Methodology
1.4 Profile of survey respondents
1.4.1 Profile of buyer respondents
1.4.2 Profile of supplier respondents

2 Executive Summary

3 Decreasing Defense Expenditure
3.1 Change in Global Defense Expenditure 2012–2013
3.1.1 Change in global defense expenditure 2012–2013 – buyers
3.1.2 Change in global defense expenditure 2012–2013 – suppliers
3.1.3 Change in global defense expenditure 2012–2013 – region
3.1.4 Change in global defense expenditure 2012–2013 – turnover
3.2 Decline in Markets 2012–2013
3.2.1 Decline in markets 2012–2013 – buyers
3.2.2 Decline in markets 2012–2013 – suppliers
3.2.3 Decline in markets 2012–2013 – turnover
3.3 Key Factors Affecting Defense Expenditure
3.3.1 Key factors affecting defense expenditure
3.3.2 Key factors affecting defense expenditure – region
3.3.3 Key factors affecting defense expenditure vs. change in global expenditure

4 Impact of Decreasing Expenditure on Defense Suppliers
4.1 Critical Impacts on Suppliers
4.1.1 Critical impacts on suppliers – supplier type
4.1.2 Critical impacts on suppliers – region
4.1.3 Critical impacts on suppliers – turnover
4.2 Revenue Change Expectations
4.2.1 Revenue change expectations – suppliers
4.2.2 Revenue change expectations – region
4.2.3 Revenue change expectations – turnover
4.2.4 Revenue change expectations vs. Change in defense expenditure
4.3 Effect of Budget Cuts on Key Projects
4.3.1 Effect of budget cuts on key projects – buyers
4.3.2 Effect of budget cuts on major projects – suppliers
4.3.3 Effect of budget cuts on key projects – region
4.4 Availability of Skilled Staff
4.4.1 Availability of skilled staff – suppliers
4.4.2 Availability of skilled staff – region
4.4.3 Availability of skilled staff – turnover

5 Global Defense Industry Actions - Coping with Decrease in Expenditure
5.1 Business Strategies to Counter Decreasing Expenditure
5.1.1 Business strategies to counter decreasing expenditure – buyers
5.1.2 Business strategies to counter decreasing expenditure – suppliers
5.1.3 Business strategies to counter decreasing expenditure – region
5.1.4 Business strategies to counter decreasing expenditure – turnover
5.2 Business Priorities for Suppliers in 2012
5.2.1 Business priorities for suppliers in 2012 – suppliers
5.2.2 Business priorities for suppliers in 2012 – region
5.2.3 Business priorities for suppliers in 2012 – turnover
5.3 Key Opportunities for Suppliers
5.3.1 Key opportunities for suppliers – buyers
5.3.2 Key opportunities for suppliers – suppliers
5.3.3 Key opportunities for suppliers – region
5.3.4 Key opportunities for suppliers – turnover
5.4 Demand for Products and Services in 2012
5.4.1 Demand for products and services in 2012 – buyers
5.4.2 Demand for products and services in 2012 – suppliers
5.4.3 Demand for products and services in 2012 – region
5.4.4 Demand for products and services in 2012 – turnover

6 Industry Dynamics
6.1 Change in M&A Expectations
6.1.1 Change in M&A expectations – buyers
6.1.2 Change in M&A expectations – suppliers
6.1.3 Change in M&A expectations – region
6.1.4 Change in M&A expectations – turnover
6.2 Collaborative Projects in 2012
6.2.1 Collaborative projects in 2012 – buyers
6.2.2 Collaborative projects in 2012 – suppliers
6.2.3 Collaborative projects in 2012 – region
6.2.4 Collaborative projects in 2012 – turnover
6.3 Key Measures to Decrease Program Overruns
6.3.1 Key measures to decrease program overruns – buyers
6.3.2 Key measures to decrease program overruns – suppliers
6.3.3 Key measures to decrease program overruns – region
6.3.4 Key measures to decrease program overruns – turnover

7 Change in Outsourcing
7.1 Change in Outsourcing
7.1.1 Change in outsourcing – buyers
7.1.2 Change in outsourcing – suppliers
7.1.3 Change in outsourcing – region
7.1.4 Change in outsourcing – turnover
7.2 Potential Outsourcing Activities
7.2.1 Potential outsourcing activities – suppliers
7.2.2 Potential outsourcing activities – region
7.2.3 Potential outsourcing activities – turnover
7.3 Key Advantages of Outsourcing
7.3.1 Key advantages of outsourcing
7.3.2 Key advantages of outsourcing – region
7.3.3 Key advantages of outsourcing – turnover

8 Appendix

LIST OF TABLES

Table 1: Total Global Defense Industry Survey Respondents by Company Type, 2012
Table 2: Buyer Respondents by Job Role (%), 2012
Table 3: Buyer Respondents by Region (%), 2012
Table 4: Supplier Respondents by Job Role (%), 2012
Table 5: Supplier Respondents by Global Company Turnover (%), 2012
Table 6: Supplier Respondents by Region (%), 2012
Table 7: Change in Global Defense Expenditure: Buyers (%), 2012–2013
Table 8: Change in Global Defense Expenditure: Suppliers (%), 2012–2013
Table 9: Change in Global Defense Expenditure: Region (%), 2012–2013
Table 10: Change in Global Defense Expenditure: Turnover (%), 2012–2013
Table 11: Decline in Markets: Defense Organizations (%), 2012–2013
Table 12: Decline in Markets: Defense Contractors (%), 2012–2013
Table 13: Decline in Markets: Other Service Providers (%), 2012–2013
Table 14: Key Factors Affecting Defense Expenditure (%), 2011–2012
Table 15: Key Factors Affecting Defense Expenditure: Region (%), 2011–2012
Table 16: Key Factors Affecting Defense Expenditure vs. Change in Global Expenditure (%), 2011–2012
Table 17: Critical Impacts on Suppliers (%), 2012
Table 18: Critical Impacts on Suppliers: Region (%), 2012
Table 19: Critical Impacts on Suppliers: Turnover (%), 2012
Table 20: Revenue Change Expectations: Suppliers (%), 2012
Table 21: Revenue Change Expectations: Region (%), 2012
Table 22: Revenue Change Expectations: Turnover (%), 2012
Table 23: Revenue Change Expectations vs. Change in Defense Expenditure (%), 2012
Table 24: Effect of Budget Cuts on Key Projects: Buyers (%), 2012
Table 25: Effect of Budget Cuts on Key Projects: Suppliers (%), 2012
Table 26: Effect of Budget Cuts on Key Projects: Region (%), 2012
Table 27: Availability of Skilled Staff: Suppliers (%), 2011–2012
Table 28: Availability of Skilled Staff: Region (%), 2011–2012
Table 29: Availability of Skilled Staff: Turnover (%), 2011–2012
Table 30: Business Strategies to Counter Decreasing Expenditure: Buyers (%), 2012
Table 31: Business Strategies to Counter Decreasing Expenditure: Suppliers (%), 2012
Table 32: Business Strategies to Counter Decreasing Expenditure: Region (%), 2012
Table 33: Business Strategies to Counter Decreasing Expenditure: Turnover (%), 2012
Table 34: Business Priorities: Suppliers (%), 2012
Table 35: Business Priorities: Region (%), 2012
Table 36: Business Priorities: Turnover (%), 2012
Table 37: Key Opportunities: Buyers (%), 2012
Table 38: Key Opportunities: Suppliers (%), 2012
Table 39: Key Opportunities: Region (%), 2012
Table 40: Key Opportunities: Turnover (%), 2012
Table 41: Demand for Products and Services: Defense Organizations (%), 2012
Table 42: Demand for Products and Services: Defense Contractors (%), 2012
Table 43: Demand for Products and Services: Other Service Providers(%), 2012
Table 44: Change in M&A Expectations: Defense Organizations (%), 2012
Table 45: Change in M&A Expectations: Suppliers (%), 2012
Table 46: Change in M&A Expectations: Region (%), 2012
Table 47: Change in M&A Expectations: Turnover (%), 2012
Table 48: Collaborative Projects: Defense Organizations (%), 2012
Table 49: Collaborative Projects: Suppliers (%), 2012
Table 50: Collaborative projects: Region (%), 2012
Table 51: Collaborative projects: Turnover (%), 2012
Table 52: Key Measures to Decrease Program Overruns: Defense Organizations (%), 2012
Table 53: Key Measures to Decrease Program Overruns: Suppliers (%), 2012
Table 54: Key Measures to Decrease Program Overruns: Region (%), 2012
Table 55: Key Measures to Decrease Program Overruns: Turnover (%), 2012
Table 56: Change in Outsourcing: Buyers (%), 2012
Table 57: Change in Outsourcing: Suppliers (%), 2012
Table 58: Potential Outsourcing Activities: Defense Contractors (%), 2012
Table 59: Potential Outsourcing Activities: Other Service Providers (%), 2012
Table 60: Potential Outsourcing Activities: Region (%), 2012
Table 61: Potential Outsourcing Activities: Turnover (%), 2012
Table 62: Key Advantages of  Outsourcing (%), 2012
Table 63: Key Advantages of  Outsourcing: Region (%), 2012
Table 64: Key Advantages of  Outsourcing: Turnover (%), 2012
Table 65: Full Survey Results