2014-02-04 03:31:02 - The Global Naval Vessels and Surface Combatants Market 2013-2023 - a new market research report on companiesandmarkets.com
The global naval vessels market is suggested to have reached a value of around $28.9 billion at the beginning of 2013, and is forecast to grow to a value of $29.3 billion by 2023. This suggests a CAGR growth rate of 0.2% between 2013 and 2023.
The market is primarily driven by the need to replace the existing aging fleet in North America and Europe, the aggressive modernization strategies adopted by developing economies such as India, China, and Brazil drive the market in Asia-Pacific and Latin America. The global market is expected to achieve a cumulative value of US$300.7 billion during the forecast period, and the Naval Vessels and Surface Combatants market is expected to be dominated by North America, followed
by Asia Pacific and Europe.
An increase in coalition missions, such as international peacekeeping missions, offshore operations, and disaster relief operations, have created a need for interoperable weapon systems that adhere to the standards set by NATO and other organizations. An increase in out-of-area operations has also created a need for participating nations to acquire interoperability with key coalition partners. At the same time, Foreign shipbuilding companies looking for export opportunities are establishing local subsidiaries to enable them to cater to local markets, offering opportunities to domestically established companies. Repair and maintenance contracts can also be undertaken by these companies, increasing business volumes.
North America and Europe account for around 80% of global defense spending; however, the global economic downturn and European debt crisis have negatively impacted defense spending, and allocation for naval surface combatants is expected to decline during the forecast period. For example, the US, the world´s largest defense spender, announced defense budget cuts of US$178 billion during 2011-2015; the UK government also announced defense budget cuts, and reduced its number of frigates by four and decided to decommission its aircraft carrier, HMS Ark Royal, earlier than previously planned.
The spending capability of governments around the globe has been affected by the economic slowdown, which is forcing governments to look for alternative ways to equip their armed forces. Defense ministries are spending on modernizing and extending the working lives of existing naval fleets rather than buying new equipment; these mid-life upgrade programs enable governments with constrained financial resources to postpone expenditure on new systems until economic growth is restored and fiscal debt is under control. These upgrade and mid-life extension programs have led to the dampening of demand for new naval surface combatants.
Demand to integrate weapon systems to enable navy fleets to perform multi-role operations will result in cost overruns. Additionally, an increase in the cost of weapon systems and other parts due to program delays will also increase overall program costs. Negotiations regarding costs between a country planning an equipment program and the program´s main contractor typically take several years to finalize, during which time the costs of the various weapon systems and other parts to be installed will also rise, leading to further cost overruns.
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