2014-04-24 20:25:01 - Future of the Australian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 - a new market research report on companiesandmarkets.com
Australian defense expenditure increased at a CAGR of 6.03% during the review period and values US$26.3 billion in 2013. The focus of the Australian government will be on the modernization of its armed forces, participation in peacekeeping operations, and counterterrorism activities.
Recently, the DMO has taken criticism for the project delays and cost overruns associated with its domestic defense procurements, several of which have cost double the original estimations. Currently, the Australian defense industry is facing cost overruns and delays in its project to acquire 100 F-35 joint strike fighters. As a result, similar opportunities may be offered to foreign firms, rather than domestic firms, during the forecast period.
The AIC program supports the domestic defense industry by encouraging foreign OEMs to
grant domestic access to the global supply chain in exchange for market entry. Global supply chain deeds can be entered into voluntarily or as part of a procurement contract, and insist that the foreign OEM procures its equipment or components from a domestic company. While global supply chain deeds offer substantial export opportunities to domestic firms, they can pose major concerns for foreign OEMs, as Australian defense products are often expensive due to high labor costs and expensive logistics related to the country´s geographical location. The government is, however, making an effort to train domestic defense employees by schemes such as Skilling Australia´s Defense Industry (SADI).
Each defense contract valuing AUD50 million (US$43.8 million) or more must have an AIC plan as part of the tender, which facilitates the participation of the domestic defense industry by determining a set of activities that must be performed by sub-contracted domestic firms. The AIC will then evaluate the bid of each participant, and select the one that will offer the maximum opportunity to the domestic industry at the lowest cost. The participant may also offer domestic companies access to its global supply chain.
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