Tuesday, 5 February 2013

New Study On 2017 Future of the Israeli Defense Industry Market


Product Synopsis

This report is the result of SDI's extensive market and company research covering the Israeli defense industry, and 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.

Introduction and Landscape

Why was the report written?

Future of the Israeli Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2017 offers the reader an insight into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain market share in the Israeli defense industry.

What is the current market landscape and what is changing?


In 2012, the Israeli defense market valued US$13.10 billion, which represented the third largest military expenditure in the Middle East. During the review period, Israeli defense expenditure declined at a CAGR of -0.94% but is expected to record growth at a CAGR of 2.97% during the forecast period. The growth can be partially attributed to the US$15.5 billion of military aid from the US scheduled between 2013 and 2017; moreover, the continued security threats from Iran, Syria, and other neighboring Arab countries is forecast to result in Israel spending US$71.3 billion on defense during the forecast period.

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What are the key drivers behind recent market changes?


The security threats posed by Iran and Syria, hostility from neighboring countries, and Israel's inadequate troop size as a result of the country's small population, are expected to drive the country's defense expenditure during the forecast period. During the same period, the continued military aid of US$3.1 billion per year from the US will continue to increase the spending power of the country. Between 2013 and 2017, Israel is expected to accelerate its defense procurement plans to prepare for potential confrontations with Iran or Syria.

What makes this report unique and essential to read?

Future of the Israeli Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2017 provides detailed analysis of the current industry size and growth expectations from 2013 to 2017, 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.

Key Features and Benefits

The report provides detailed analysis of the current industry size and growth expectations from 2013 to 2017, including highlights of key growth stimulators, and 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 their implications and impact on the Israeli 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 the market, including key contracts, alliances, and strategic initiatives.
The report helps the reader to understand the competitive landscape of the defense industry in Israel. 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.

Key Market Issues

The Israeli government has introduced mandatory offsets for all defense transactions exceeding US$5 million. As Israel is intent on forging long-term relations between domestic firms and foreign investors, no penalties or clause for liquidated damages are imposed on defaulters. Indeed, one of the most important principles underlying the offset policies is that the activities pursued by domestic and foreign firms should be beneficial to both parties.
The military aid Israel has received from the US through government-to-government agreements has significantly supported the development the Israeli defense industry, and as a result, a significant portion of the equipment used by the Israel Defense Forces (IDF) is of US origin, which provides US defense manufacturers with opportunities to enter the Israeli defense industry. For example, The Boeing Company, Bell Textron, Lockheed Martin, Raytheon, Sikorsky Aircraft Corporation, and Hughes are all US defense firms that have entered the Israeli defense market through extensive military sales programs. Israel also stocks US military hardware such as armored vehicles and artillery shells, which can be used in the case of an emergency.
In the last fifty years, Israel has developed a largely self-sufficient domestic defense industry, which satisfies the majority of its defense requirements; however, the nation continues to rely on external technologies to fulfill its more advanced requirements, such as aircraft, air defense systems, and submarines. As a result, the majority of foreign OEMs keen to enter the Israeli defense industry form an alliance with Israeli defense firms to jointly develop and market defense equipment in the international market, which is also beneficial to foreign companies as many are able to capitalize on Israeli expertise in unmanned aerial vehicles, missile defense systems, and defense electronics. The partnership between General Dynamics and Aeronautics Defense Systems, formed in 2004, is an example of market entry through such an alliance; the two companies established a joint venture to develop and manufacture defense and homeland security products, unmanned multi-application systems (UMAS) in particular. These products are sold in the US and other international defense markets.
Although the Israeli economy encourages foreign investment in other industries, investment into its defense sector continues to be prohibited; Israeli government officials cite national security as the reason for this prohibition.

Key Highlights

The security threats posed by Iran and Syria, hostility from neighboring countries, and Israel's inadequate troop size as a result of the country's small population are expected to drive the country's defense expenditure during the forecast period. During the same period, the military aid of US$3.1 billion per year from the US will continue to increase the spending power of the country. Between 2013 and 2017, Israel is expected to accelerate its defense procurement plans to prepare for potential confrontations with Iran or Syria. Iran's refusal to accept Israel as an independent country, combined with its potential nuclear capabilities and acquisition of long-range missiles, poses a serious security risk to Israel. Of immediate threat to Israel's security is Iran's quest for nuclear power. Moreover, Israel shares its border with four hostile nations: Syria, Egypt, Lebanon, and Jordan.
Israel exports a wide range of defense products including ammunition, defense electronics, small arms, artillery, armored vehicles, and sophisticated land and air defense systems. During 2007-2011, sensors, armored vehicles, and missiles were the three most exported defense goods, with market shares of 32%, 22.8%, and 22.8% respectively. During the forecast period, the global demand for UAVs is expected to rise in order to increase surveillance in an effort to prevent terrorist activities and the accumulation of weapons of mass destruction. To meet the global demand for UAVs, Israel has increased its investment in the research and development of unmanned platforms.
During the forecast period, the Israeli homeland security budget is expected to increase considerably due to the high level of threats posed by Islamic terrorist organizations and other geopolitical factors. Due to its turbulent relationship with the Palestinian region, Israel is at risk of attack from terrorist groups such as Hamas, Palestine Islamic Jihad, Kahane Chai (KACH), the Popular Front for the Liberation of Palestine, the Palestine Liberation Front (PLF), and Al Qaida. In 2012, it was reported by Israel Security Agency that a total of 1,351 terrorist incidents took place in Israel, and the increasing number of terrorist activities has further compelled the nation to enhance its homeland security. Between 2005 and 2008, illegal immigration into Israel rose by almost 1000%, with approximately 7,500 people known to have infiltrated the country via its southern border in 2008 alone. As the majority of these immigrants work as illegal laborers within the country, with little access to healthcare or permanent housing, and no access to welfare, it has been reported that many are forced to make a living from an underground economy.

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