US defense expenditure is forecast to value US$670.9 billion in 2012, growing at a CAGR of 4.19% during the review period. However, due to the country’s growing fiscal deficit, domestic military expenditure is expected to register a CAGR of 0.63% over the forecast period, to reach a value of US$688 billion by 2016. Although the country’s total defense spending is likely to decrease, factors such as the potential nuclear threats posed by North Korea and Iran, modernization initiatives, ongoing military operations and strategies to maintain military supremacy and protect its allies will continue to drive the US defense budget. Cumulatively, the US is projected to spend US$3.3 trillion on its armed forces over the forecast period.

During the review period the US allocated 4.6% of its gross domestic product (GDP) on defense. However, this figure is forecast to decline to 3.8% by 2016, due to increasing financial constraints as a consequence of the global financial crisis.

This report offers insights into market opportunities and entry strategies adopted by foreign OEMs to gain a market share in the US defense industry. In particular, it offers in-depth analysis of the following:

• Market opportunity and attractiveness: Detailed analysis of the current market size and growth expectations during 2010–2016, including highlights of the key drivers, to aid understanding of the growth dynamics. It also benchmarks the sector against key global markets and provides detailed understanding of emerging opportunities in specific areas.

• Procurement dynamics: Trend analysis of imports and exports, along with their implications and impact on the US defense industry.

• Industry structure: Five forces analysis to identify various power centers in the industry and how these are likely to develop in the future.

• Market entry strategy: Analysis of possible ways to enter the market, along with knowledge of how existing companies have entered the market, including key contracts, alliances, and strategic initiatives.

• Competitive landscape and strategic insights: Analysis of the competitive landscape of defense manufacturers in the US. It provides an overview of the key defense companies (both domestic and foreign) along with insights such as key alliances, strategic initiatives and a brief financial analysis.

• Business environment and country risk: A range of drivers at country level, assessing business environment and country risk. It covers historical and forecast values for a range of indicators evaluating business confidence, economic performance, infrastructure quality and availability, labor force, demographics, and political and social risk.

Scope:

• Analysis of defense industry market size from 2007 through 2011 and forecasts till 2016
• Analysis of defense budget allocation
• Benchmarking with key global markets
• Market opportunities
• Defense procurement dynamics
• Industry dynamics
• Market entry strategy
• Competitive landscape and strategic insights
• Business environment and country risk

Resons To Buy

• Gain insight into the US defense industry with current, historic and forecast market values
• Gain insight into market opportunity and attractiveness
• Gain insight into industry procurement dynamics
• Gain insight into industry structure
• Gain insight into the regulations governing the US defense industry and the potential market entry strategies with an expert analysis of the competitive structure
• Identify top companies of the US defense industry along with profiles of all those companies

TABLE OF CONTENTS

1 Introduction          
        
2 Executive Summary          

3 Market Attractiveness and Emerging Opportunities          
3.1 Defense Market Size Historical and Forecast          
3.1.1 US defense expenditure forecast to decline to US$XX billion by 2016          
3.1.2 Threat from North Korea and Iran, modernization initiatives, arms race with China and Russia, ongoing military operations and protection of allies are expected to drive defense spending          
3.1.3 Defense expenditure as a percentage of GDP projected to decline over the forecast period          
3.1.4 Per capita defense spending forecast to decline over the forecast period          
3.2 Analysis of Defense Budget Allocation          
3.2.1 US defense budget forecast to register a decelerated growth rate over forecast period          
3.2.2 US defense base budget expected to increase US$XX billion by 2016          
3.2.3 Capital expenditure accounts for majority of defense expenditure          
3.2.4 Budget allocation for maritime forces expected to decrease          
3.2.5 Capital expenditure for army expected to increase over the forecast period          
3.2.6 Naval defense budget expected to grow at a CAGR of XX% over forecast period          
3.2.7 US forecast to spend US$XX billion on its air force over the forecast period          
3.2.8 Expenditure on other category of armed forces projected to grow at CAGR of XX% over forecast period          
3.3 Homeland Security Market Size and Forecast          
3.3.1 The US is projected to spend US$XX billion on homeland security over forecast period          
3.3.2 Homeland security market will record an increase in the demand for aviation and border security products          
3.3.3 The nation is at “some risk” of terrorism          
3.3.4 The US has a terrorism index score of 0.1          
3.4 Benchmarking with Key Global Markets          
3.4.1 US will dominate global military spending over forecast period          
3.4.2 US defense budget is much higher than other leading spenders          
3.4.3 US was largest global arms exporter during review period          
3.4.4 The US emerged as eighth-largest global arms importer during review period          
3.4.5 US defense expenditure as a percentage of GDP is third-highest in the world          
3.4.6 US faces “some risk” from terrorist organizations          
3.5 Market Opportunities: Key Trends and Drivers          
3.5.1 Demand for communication systems is expected to increase          
3.5.2 Modernization of aviation forces will create demand for air defense systems          
3.5.3 Demand for armored vehicles set to increase          
3.5.4 Nuclear defense modernization programs will drive the demand for missile defense systems          
3.5.5 Large investment in maritime defense equipment in 2011          

4 Defense Procurement Market Dynamics          
4.1 Import Market Dynamics          
4.1.1 US primarily imports defense equipment to build strategic relations          
4.1.2 Defense imports registered steady growth during review period          
4.1.3 UK supplies majority of US defense imports          
4.1.4 Aircraft account for majority of arms imports          
4.2 Export Market Dynamics          
4.2.1 US arms imports are driven by political and economic factors          
4.2.2 Arms exports continued to increase in 2010          
4.2.3 US has diverse export market          
4.2.4 Aircraft are most exported defense good          
4.2.5 US maintains controlled defense export policy          

5 Industry Dynamics          
5.1 Five Forces Analysis          
5.1.1 Bargaining power of supplier: medium to 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: low to high          

6 Market Entry Strategy          
6.1 Market Regulation          
6.1.1 The US defense industry is open to FDI          
6.1.2 No offset policy exists in US          
6.1.3 US arms trade is heavily regulated          
6.2 Market Entry Route          
6.2.1 Foreign OEMs can enter into US defense market through acquisition route          
6.2.2 Joint product development provides more stable market entry possibility          
6.2.3 Many foreign defense companies enter the market through the formation of partnerships with domestic defense firms          
6.2.4 Direct sale of defense equipment provides foreign OEMs an opportunity to enter the market          
6.3 Key Challenges          
6.3.1 Decreasing economies of scale and defense inflation          
6.3.2 Defense budget reductions result in project delays or cancellations          
6.3.3 Declining profit margins deter growth of domestic defense companies          

7 Competitive Landscape and Strategic Insights          
7.1 Competitive Landscape Overview          
7.2 Domestic Public Companies          
7.2.1 Lockheed Martin Corp.: overview          
7.2.2 Lockheed Martin Corp.: products and services          
7.2.3 Lockheed Martin Corp.: recent contracts and strategic initiatives          
7.2.4 Lockheed Martin Corp.: alliances          
7.2.5 Lockheed Martin Corp.: recent contract wins          
7.2.6 Lockheed Martin Corp.: financial analysis          
7.2.7 Raytheon: overview          
7.2.8 Raytheon: products and services          
7.2.9 Raytheon: recent contracts and strategic initiatives          
7.2.10 Raytheon: alliances          
7.2.11 Raytheon: recent contract wins          
7.2.12 Raytheon: financial analysis          
7.2.13 General Dynamics: overview          
7.2.14 General Dynamics: products and services          
7.2.15 General Dynamics: recent contracts and strategic initiatives          
7.2.16 General Dynamics: alliances          
7.2.17 General Dynamics: recent contract wins          
7.2.18 General Dynamics: financial analysis          
7.2.19 Boeing: overview          
7.2.20 Boeing: products and services          
7.2.21 Boeing: recent contracts and strategic initiatives          
7.2.22 Boeing: alliances          
7.2.23 Boeing: recent contract wins          
7.2.24 Boeing: financial analysis          
7.2.25 L-3 Communications Corp.: overview          
7.2.26 L-3 Communications Corp.: products and services          
7.2.27 L-3 Communications Corp.: recent contracts and strategic initiatives          
7.2.28 L-3 Communications Corp.: alliances          
7.2.29 L-3 Communications Corp.: recent contract wins          
7.2.30 L-3 Communications Corp.: financial analysis          
7.2.31 Northrop Grumman Corp.: overview          
7.2.32 Northrop Grumman Corp.: products and services          
7.2.33 Northrop Grumman Corp.: recent contracts and strategic initiatives          
7.2.34 Northrop Grumman Corporation: alliances          
7.2.35 Northrop Grumman Corp.: recent contract wins          
7.2.36 Northrop Grumman Corp.: financial analysis          
7.2.37 Science Application International Corp. (SAIC): overview          
7.2.38 Science Application International Corp. (SAIC): products and services          
7.2.39 Science Application International Corp. (SAIC): recent contracts and strategic initiatives          
7.2.40 Science Application International Corp. (SAIC): alliances          
7.2.41 Science Application International Corp. (SAIC): recent contract wins          
7.2.42 Science Application International Corp. (SAIC): financial analysis          
7.2.43 Honeywell International Inc.: overview          
7.2.44 Honeywell International Inc.: products and services          
7.2.45 Honeywell International Inc: recent announcements and strategic initiatives          
7.2.46 Honeywell International Inc.: alliances          
7.2.47 Honeywell International Inc.: recent contract wins          
7.2.48 Honeywell International Inc: financial analysis          
7.3 Domestic Private Companies          
7.3.1 Sikorsky Aircraft: overview          
7.3.2 Sikorsky Aircraft: products and services          
7.3.3 Sikorsky Aircraft: recent contracts and strategic initiatives          
7.3.4 Sikorsky Aircraft: alliances          
7.3.5 Sikorsky Aircraft: recent contract wins          
7.3.6 Sikorsky Aircraft: financial analysis          
7.3.7 General Electric Aviation: overview          
7.3.8 General Electric Aviation: products and services          
7.3.9 General Electric Aviation: recent contracts and strategic initiatives          
7.3.10 General Electric Aviation: alliances          
7.3.11 General Electric Aviation: recent contract wins          
7.3.12 General Electric Aviation: financial analysis          
7.3.13 Bell Helicopter Textron, Inc.: overview          
7.3.14 Bell Helicopter Textron, Inc.: products and services          
7.3.15 Bell Helicopter Textron, Inc.: recent announcements and strategic initiatives          
7.3.16 Bell Helicopter Textron, Inc.: alliances          
7.3.17 Bell Helicopter Textron, Inc.: recent contract wins          
7.3.18 Bell Helicopter Textron Inc: financial analysis          
7.3.19 Textron Marine and Land Systems: overview          
7.3.20 Textron Marine and Land Systems: products and services          
7.3.21 Textron Marine and Land Systems: recent contracts and strategic initiatives          
7.3.22 Textron Marine and Land Systems: alliances          
7.3.23 Textron Marine and Land Systems: recent contract wins          
7.3.24 Textron Marine and Land Systems: financial analysis          

8 Business Environment and Country Risk          
8.1 Business Confidence          
8.1.1 Business confidence indicator          
8.1.2 Market capitalization trend – New York stock exchange, US          
8.1.3 Market capitalization trend – NASDAQ stock market, United States of America          
8.1.4 FDI inflows by sector          
8.1.5 Deployment of credit by sector          
8.2 Economic Performance          
8.2.1 GDP at constant prices (US dollars)          
8.2.2 GDP per capita at constant prices (US dollars)          
8.2.3 GDP at current prices (US dollars)          
8.2.4 GDP per capita at current prices (US dollars)          
8.2.5 GDP split by key segments          
8.2.6 Agriculture net output at current prices (US dollars)          
8.2.7 Agriculture net output at current prices as a percentage of GDP          
8.2.8 Manufacturing net output at current prices (US dollars)          
8.2.9 Manufacturing net output at current prices as a percentage of GDP          
8.2.10 Mining, manufacturing and utilities at current prices (US dollars)          
8.2.11 Mining, manufacturing and utilities at current prices as a percentage of GDP          
8.2.12 Construction net output at current prices (US dollars)          
8.2.13 Construction net output at current prices as a percentage of GDP          
8.2.14 Crude steel production          
8.2.15 Crude oil consumption          
8.2.16 Inflation rate          
8.2.17 Fiscal balance as a percentage of GDP          
8.2.18 Current account balance as a percentage of GDP          
8.2.19 Exports as a percentage of GDP          
8.2.20 Imports as a percentage of GDP          
8.2.21 Exports growth          
8.2.22 Imports growth          
8.2.23 Annual average exchange rate EUR–US$          
8.2.24 End of the period exchange rate EUR–US$          
8.3 Infrastructure Quality and Availability          
8.3.1 Total airports and sea ports          
8.3.2 Railways and roads          
8.3.3 Passenger vehicle production volume          
8.3.4 Commercial vehicle production volume          
8.3.5 Automotive products exports trend          
8.3.6 Automotive products imports trend          
8.3.7 Passenger car penetration          
8.3.8 Total installed capacity for electricity generation          
8.3.9 Installed capacity for the generation of conventional thermal electricity          
8.3.10 Electricity production          
8.3.11 Installed capacity for the generation of hydro-electricity          
8.3.12 Installed capacity for renewable electricity generation          
8.3.13 Electricity consumption          
8.3.14 Electricity exports          
8.3.15 Electricity imports          
8.3.16 Healthcare expenditure          
8.3.17 Healthcare expenditure as percentage of GDP          
8.3.18 Healthcare expenditure per capita          
8.3.19 Total internet subscribers          
8.3.20 Broadband internet subscribers          
8.3.21 Personal computer penetration rate          
8.3.22 Mobile phone penetration rate          
8.3.23 R&D expenditure as a percentage of GDP          
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 the US population          
8.5.8 Males as a percentage of the US 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          
   
LIST OF TABLES

Table 1: US Defense Expenditure, 2007–2011       
Table 2: US Defense Expenditure, 2012–2016       
Table 3: US Defense Expenditure as a Percentage of GDP, 2007–2011       
Table 4: US Defense Expenditure as a Percentage of GDP, 2012–2016       
Table 5: US Per Capita Defense Expenditure, 2007–2011       
Table 6: US Per Capita Defense Expenditure, 2012–2016       
Table 7: US Defense Budget Split by Base Budget, OCO and Other Funds(US$ Billion), 2007–2011       
Table 8: US Defense Budget Split by Base Budget, OCO and Other Funds(US$ Billion), 2012–2016       
Table 9: US Defense Budget Allocation for Capital and Revenue Expenditure (%), 2007–2011       
Table 10: US Defense Budget Allocation for Capital and Revenue Expenditure (%), 2012–2016       
Table 11: US Defense Expenditure Allocation for Army, Air Force, Navy and Others (%), 2007–2011       
Table 12: US Defense Expenditure Allocation for Army, Air Force, Navy and Others (%), 2012–2016       
Table 13: US Defense Budget Allocation for Army (US$ Billion), 2007–2011       
Table 14: US Defense Budget Allocation for Army (US$ Billion), 2012–2016       
Table 15: US Defense Budget Allocation for Navy (US$ Billion), 2007–2011       
Table 16: US Defense Budget Allocation for Navy (US$ Billion), 2012–2016       
Table 17: US Defense Budget Allocation for Air Force(US$ Billion), 2007–2011       
Table 18: US Defense Budget Allocation for Air Force (US$ Billion), 2012–2016       
Table 19: US Defense Budget Allocation for Other Expenditure(US$ Billion), 2007–2011       
Table 20: US Defense Budget Allocation for Other Expenditure (US$ Billion), 2012–2016       
Table 21: US Homeland Security Budget (US$ Billion), 2007–2011       
Table 22: US Homeland Security Budget (US$ Billion), 2012–2016       
Table 23: Benchmarking with Key Markets – 2007–2011 vs 2012–2016       
Table 24: Benchmarking with World’s Largest Defense Spenders – 2011 and 2016       
Table 25: Country Ranking by Arms Exports (Volume), 2007–2011       
Table 26: Country Ranking by Arms Imports (in volume terms), 2007–2011       
Table 27: ICD Research Terrorism Index, 2011       
Table 28: US Defense Aircraft Projects, 2011       
Table 29: US Ground Programs Undertaken by US Department of Defense, 2011       
Table 30: US Nuclear Modernization Programs       
Table 31: US Defense Shipbuilding Projects Undertaken by the Department of Defense, 2011       
Table 32: Lockheed Martin Corp – product focus       
Table 33: Lockheed Martin Corp. – Alliances       
Table 34: Lockheed Martin Corp. – Recent Contract Wins       
Table 35: Raytheon – Product Focus       
Table 36: Raytheon – Alliances       
Table 37: Raytheon – Recent Contract Wins       
Table 38: General Dynamics – product focus       
Table 39: General Dynamics – Alliances       
Table 40: General Dynamics – Recent Contract Wins       
Table 41: Boeing – product focus       
Table 42: Boeing – Alliances       
Table 43: Boeing – Recent Contract Wins       
Table 44: L-3 Communications Corp. – Product Focus       
Table 45: L-3 Communications Corp. – Alliances       
Table 46: L-3 Communications Corp. – Recent Contract Wins       
Table 47: Northrop Grumman Corp.– Product Focus       
Table 48: Northrop Grumman Corporation – Alliances       
Table 49: Northrop Grumman Corp. – Recent Contract Wins       
Table 50: Science Application International Corp. (SAIC) – Product Focus       
Table 51: Science Application International Corp. (SAIC) – Alliances       
Table 52: Science Application International Corp. (SAIC) – Recent Contract Wins       
Table 53: Honeywell International Inc. – product focus       
Table 54: Honeywell International Inc. – Alliances       
Table 55: Honeywell International Inc – Recent Contract Wins       
Table 56: Sikorsky Aircraft – Product Focus       
Table 57: Sikorsky Aircraft – Alliances       
Table 58: Sikorsky Aircraft – Recent Contract Wins       
Table 59: General Electric Aviation – Product Focus       
Table 60: General Electric Aviation – Alliances       
Table 61: General Electric Aviation – Recent Contract Wins       
Table 62: Bell Helicopter Textron, Inc – Product Focus       
Table 63: Bell Helicopter Textron, Inc. – Alliances       
Table 64: Bell Helicopter Textron, Inc. – Recent Contract Wins       
Table 65: Textron Marine and Land Systems – Product Focus       
Table 66: Textron Marine and Land Systems – Alliances       
Table 67: Textron Marine and Land Systems – Recent Contract Wins