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Future of the US Defense Industry-Market Attractiveness, Competitive Landscape and Forecasts to 2023

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Future of the US Defense Industry-Market Attractiveness, Competitive Landscape and Forecasts to 2023

Summary

The Future of the US Defense Industry-Market Attractiveness, Competitive Landscape and Forecasts to 2023, published by Strategic Defence Intelligence, provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

Synopsis

This report offers detailed analysis of the US defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.

In particular, it provides an in-depth analysis of the following-

- The US defense industry market size and drivers: detailed analysis of the US defense industry during 2019-2023, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country's expenditure and modernization patterns

- Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country

- Porter's Five Force analysis of the US defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry

- Import and Export Dynamics: analysis of prevalent trends in the country's imports and exports over the last five years

- Market opportunities: details of the top five defense investment opportunities over the next 10 years

- Competitive landscape and strategic insights: analysis of the competitive landscape of the US defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

Scope

- Being the largest defense spender in the world, with a budget of USD 639.2 billion in 2018, the US is expected to sustain its superiority over other nations in the coming years. During the historic period, the total defense budget, including funding for Overseas Contingency Operations (OCO), was relatively high, registering a CAGR of 2.39% due to the increasing instability fuelled by events such as the Russian annexation of Crimea, the festering status quo in civil war Ukraine and the devolving security situation in Syria.

- Between 2014 and 2018, the US allocated an average of 35% of its total defense budget to capital expenditure, primarily to fulfill the equipment needs of its overseas contingency during the Iraq and Afghanistan wars. However, with the country expected to focus on the replacement of damaged and obsolete defense equipment rather than on war needs, the capital expenditure is estimated to average 37.5% over the forecast period. Consequently, the share of revenue expenditure is expected to average 62.5% during the forecast period as compared to 65% during 2014-2018.

- Oppurtunities are expected to emerge in Land-Based C4ISR, Critical Infrastructure Protection-Physical Security and Network Security, Multirole Aircraft and Airborne C4ISR

Reasons to buy

- This report will give the user confidence to make the correct business decisions based on a detailed analysis of the US defense industry market trends for the coming five years

- The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period

- Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector

- A deep qualitative analysis of the US defense industry covering sections including demand drivers, Porter's Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts

READ MORE

Table Of Content

Scope

Table of Contents

1. Introduction 12

1.1. What is this Report bout? 12

1.2. Definitions 12

1.3. Summary Methodology 14

1.4. About Strategic Defence Intelligence 15

2. Executive Summary 16

3. Market Attractiveness and Emerging Opportunities 18

3.1. Current Market Scenario 19

3.1.1. Primary Threat Perception 19

3.1.2. Military Doctrine & Strategy 20

3.1.3. Military Fleet Size 29

3.1.4. Procurement Programs 35

3.1.5. Top Procurement Programs by Value (USD Million) 2018-2023 39

3.1.6. Social, Political and Economic Environment & Support for Defense Projects 40

3.1.7. Political and Strategic Alliances 41

3.2. Defense Market Size Historical and Forecast 43

3.2.1. US defense expenditure expected to increase at a CAGR of 1.98% over the forecast period 43

3.2.2. Defense spending drivers-initiatives to retain military edge, subsequent military modernization, instability in Middle East and rivalry with Russia & China 46

3.2.3. Defense expenditure as a percentage of GDP estimated to decline over the forecast period 48

3.2.4. Per capita defense spending projected to decline over the forecast period 50

3.3. Analysis of Defense Budget Allocation 52

3.3.1. Total Department of Defense (DoD) budget forecasted to grow at a CAGR of 1.98% 52

3.3.2. Share of revenue expenditure expected to increase over the forecast period 54

3.3.3. US defense capital expenditure expected to increase at a CAGR of 3.95% over the forecast period 56

3.3.4. Navy to receive the major allocation of the defense budget over the forecast period 60

3.3.5. Allocation for defense expenditure on army expected to increase over the forecast period 62

3.4. Homeland Security Market Size and Forecast 69

3.4.1. The US homeland security expenditure to reach USD84.2 billion by 2023 69

3.4.2. Prevention of terrorism, securing and managing borders, safeguarding cyberspace and disaster management to drive homeland security expenditure over the forecast period 71

3.4.3. The nation is at highly affected category of terrorism 73

3.4.4. The US faces high level of threats from terrorist organizations 74

3.4.5. The US has a terrorism index score of 5.4 76

3.5. Benchmarking with Key Global Markets 77

3.5.1. The US will dominate global military spending over the forecast period 77

3.5.2. US defense budget is much higher than other leading spenders 79

3.5.3. US is one of the top defense spenders in terms of expenditure as a percentage of GDP 80

3.6. Market Opportunities: Key Trends and Growth Stimulators 81

3.6.1. Top Defense Market Sectors by Value (USD Million)-Projections over 2018-2023 81

3.6.2. Land Based-C4ISR 82

3.6.3. Critical Infrastructure Protection (CIP)-Physical Security 84

3.6.4. Critical Infrastructure Protection (CIP)-Network Security 85

3.6.5. Multirole Aircraft 86

3.6.6. Airborne-C4ISR 87

4. Defense Procurement Market Dynamics 88

4.1. Import Market Dynamics 90

4.1.1. US primarily imports defense equipment to build strategic relations 90

4.1.2. Defense imports expected to increase over the forecast period 91

4.1.3. The Germany and UK dominated the US defense imports during the historic period 92

4.1.4. Aircraft account for majority of arms imports 93

4.2. Export Market Dynamics 94

4.2.1. US arms exports are driven by political and economic factors 94

4.2.2. Arms exports expected to increase in the period 2019-2023 96

4.2.3. US defense exports to increase during the forecast period 97

4.2.4. Aircraft are the most exported defense equipment 98

4.2.5. The US maintains controlled defense export policy 99

5. Industry Dynamics 100

5.1. Five Forces Analysis 100

5.1.1. Bargaining power of Supplier: Low to Medium 101

5.1.2. Bargaining power of Buyer: High 101

5.1.3. Barrier to entry: Medium 101

5.1.4. Intensity of rivalry: Low to high 101

5.1.5. Threat of Substitution: Low to high 102

6. Market Entry Strategy 103

6.1. Market Regulation 103

6.1.1. The US defense industry is open to FDI 103

6.1.2. No offset policy exists in the US 104

6.1.3. US arms trade is heavily regulated 104

6.2. Market Entry Route 105

6.2.1. Budgeting Process 105

6.2.2. Procurement Policy & Process 107

6.2.3. Foreign OEMs enter the market through the acquisition of domestic defense companies 111

6.2.4. Joint product development programs, an attractive market entry route 111

6.2.5. Formation of partnerships with domestic defense firms provide good market entry opportunities 111

6.2.6. Direct sale of defense equipment provides foreign OEMs with an opportunity to enter the market 112

6.3. Key Challenges 113

6.3.1. Decreasing economies of scale and defense inflation 113

7. Competitive Landscape and Strategic Insights 114

7.1. Competitive Landscape Overview 114

7.2. Domestic Public Companies 117

7.2.1. Lockheed Martin Corp.: overview 117

7.2.2. Lockheed Martin Corp.: products 117

7.2.3. Lockheed Martin Corp.: recent announcements and strategic initiatives 122

7.2.4. Lockheed Martin Corp.: alliances 126

7.2.5. Lockheed Martin Corp.: recent contract wins 128

7.2.6. Lockheed Martin Corp.: financial analysis 134

7.2.7. Raytheon: overview 136

7.2.8. Raytheon: products 136

7.2.9. Raytheon: recent announcements and strategic initiatives 136

7.2.10. Raytheon: alliances 139

7.2.11. Raytheon: recent contract wins 141

7.2.12. Raytheon: financial analysis 147

7.2.13. General Dynamics: overview 149

7.2.14. General Dynamics: products 149

7.2.15. General Dynamics: recent announcements and strategic initiatives 150

7.2.16. General Dynamics: alliances 152

7.2.17. General Dynamics: recent contract wins 153

7.2.18. General Dynamics: financial analysis 158

7.2.19. Boeing: overview 160

7.2.20. Boeing: products 160

7.2.21. Boeing: recent announcements and strategic initiatives 161

7.2.22. Boeing: alliances 163

7.2.23. Boeing: recent contract wins 165

7.2.24. Boeing: financial analysis 169

7.2.25. L-3 Technologies, Inc.: overview 171

7.2.26. L-3 Technologies Inc.: products 171

7.2.27. L-3 Technologies, Inc.: recent announcements and strategic initiatives 172

7.2.28. L-3 Technologies Inc.: alliances 174

7.2.29. L-3 Technologies Inc.: recent contract wins 175

7.2.30. L-3 Technologies: financial analysis 178

7.2.31. Northrop Grumman Corp.: overview 180

7.2.32. Northrop Grumman Corp.: products 180

7.2.33. Northrop Grumman Corp.: recent contracts and strategic initiatives 180

7.2.34. Northrop Grumman Corporation: alliances 182

7.2.35. Northrop Grumman Corp.: recent contract wins 184

7.2.36. Northrop Grumman Corp.: financial analysis 188

7.2.37. Science Application International Corp. (SAIC): overview 190

7.2.38. Science Application International Corp. (SAIC): products 190

7.2.39. Science Application International Corp. (SAIC): recent contracts and strategic initiatives 191

7.2.40. Science Application International Corp. (SAIC): alliances 192

7.2.41. Science Application International Corp. (SAIC): recent contract wins 193

7.2.42. Science Application International Corp. financial analysis 197

7.2.43. Honeywell International Inc.: overview 199

7.2.44. Honeywell International Inc.: products and services 199

7.2.45. Honeywell International Inc.: recent announcements and strategic initiatives 200

7.2.46. Honeywell International Inc.: alliances 201

7.2.47. Honeywell International Inc.: recent contract wins 202

7.3. Domestic Private Companies 205

7.3.1. Sikorsky Aircraft: overview 205

7.3.2. Sikorsky Aircraft: products 205

7.3.3. Sikorsky Aircraft: recent announcements and strategic initiatives 205

7.3.4. Sikorsky Aircraft: alliances 207

7.3.5. Sikorsky Aircraft: recent contract wins 209

7.3.6. General Electric Aviation: overview 212

7.3.7. General Electric Aviation: products 212

7.3.8. General Electric Aviation: recent contracts and strategic initiatives 213

7.3.9. General Electric Aviation: alliances 214

7.3.10. General Electric Aviation: recent contract wins 215

7.3.11. Bell: overview 217

7.3.12. Bell: products and services 217

7.3.13. Bell: recent announcements and strategic initiatives 217

7.3.14. Bell Helicopter Textron, Inc.: alliances 218

7.3.15. Bell Helicopter Textron, Inc.: recent contract wins 219

7.3.16. Textron Marine and Land Systems: overview 221

7.3.17. Textron Marine and Land Systems: products 221

7.3.18. Textron Marine and Land Systems: recent announcements and strategic initiatives 222

7.3.19. Textron Marine and Land Systems: alliances 223

7.3.20. Textron Marine and Land Systems: recent contract wins 224

8. Business Environment and Country Risk 226

8.1. Economic Performance 226

8.1.1. GDP Per Capita 226

8.1.2. GDP, Current Prices 227

8.1.3. Exports of goods and services in local currency 228

8.1.4. Imports of goods and services in local currency 229

8.1.5. Gross National Disposable Income (USD Billion) 230

8.1.6. Market Capitalization of Listed Companies 231

8.1.7. Market Capitalization of Listed Companies (% of GDP) 232

8.1.8. Government Cash Surplus/Deficit as % of GDP 233

8.1.9. Goods exports as % of GDP 234

8.1.10. Goods imports as % of GDP 235

8.1.11. Service Imports as % of GDP 236

8.1.12. Service Exports as % of GDP 237

8.1.13. Foreign Direct Investment 238

8.1.14. Net foreign direct investment as % of GDP 239

8.1.15. Mining, Manufacturing, Utilities Output 240

9. Appendix 241

9.1. About SDI 241

9.2. Disclaimer 241


List Of Figure

List of Figures

Figure 1: US Defense Expenditure (USD Billion), 2014-2023 44

Figure 2: US GDP Growth vs. Defense Expenditure as Percentage of GDP, 2013-2022 49

Figure 3: US Per Capita Defense Expenditure (USD), 2014-2023 51

Figure 4: US Defense Budget Split by Base Budget, OCO, and Other Funds (USD Billion), 2014-2023 53

Figure 5: US Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 55

Figure 6: US Defense Capital Expenditure (USD Billion), 2014-2023 57

Figure 7: US Defense Expenditure Allocation for Army, Air Force, Navy, and Defense-wide (%), 2014-2023 61

Figure 8: US Defense Expenditure Allocation By Military Services-Split by Army, Navy, Air Force and Defense-Wide Spending (USD Billion), 2014-2023 63

Figure 9: US Homeland Security Expenditure (USD billion), 2014-2023 70

Figure 10: Terrorism Heat Map, 2018 73

Figure 11: Terrorism Index, 2018 76

Figure 12: Benchmarking with Key Markets-2014-2018 vs. 2019-2023 78

Figure 13: Defense Expenditure of the World's Largest Military Spenders (USD Billion), 2018 and 2023 79

Figure 14: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2018 80

Figure 15: Land Based C4ISR Market Size (USD Million), 2018-2023 83

Figure 16: Critical Infrastructure Protection (CIP)-Physical Security Market Size (USD Million), 2018-2023 84

Figure 17: Critical Infrastructure Protection (CIP)-Network Security Market Size (USD Million), 2018-2023 85

Figure 18: Multirole Aircraft Market Size (USD Billion), 2018-2023 86

Figure 19: Airborne C4ISR Market Size (USD Million), 2018-2023 87

Figure 20: Top US Defense Procurements in Terms of Their Supplier Relationships 89

Figure 21: US Defense Import Trend (USD Million), 2013-2017 (TIV Values) 91

Figure 22: US Defense Imports by Country (%), 2013-2017 92

Figure 23: US Defense Imports by Category (%), 2013-2017 93

Figure 24: US Defense Exports (USD Million), 2013-2017 96

Figure 25: US Defense Exports by Country (%), 2013-2017 97

Figure 26: US Defense Exports by Category (%), 2013-2017 98

Figure 27: Industry Dynamics-Porter's Five Forces Analysis 100

Figure 28: Lockheed Martin Corp.-Revenue Trend Analysis (USD billion), 2013-2017 134

Figure 29: Lockheed Martin Corp.-Operating Profit Trend Analysis (USD billion), 2013-2017 135

Figure 30: Lockheed Martin Corp.-Net Profit Trend Analysis (USD billion), 2013-2017 135

Figure 31: Raytheon-Revenue Trend Analysis (USD billion), 2013-2017 147

Figure 32: Raytheon-Operating Profit Trend Analysis (USD billion), 2012-2016 148

Figure 33: Raytheon-Net Profit Trend Analysis (USD billion), 2012-2016 148

Figure 34: General Dynamics-Revenue Trend Analysis (USD Billion), 2013-2017 158

Figure 35: General Dynamics-Operating Profit Trend Analysis (USD Billion), 2013-2017 159

Figure 36: General Dynamics-Net Profit Trend Analysis (USD Billion), 2013-2017 159

Figure 37: Boeing-Revenue Trend Analysis (USD billion), 2013-2017 169

Figure 38: Boeing-Operating Profit Trend Analysis (USD Billion), 2013-2017 170

Figure 39: Boeing-Net Profit Trend Analysis (USD Billion), 2013-2017 170

Figure 40: L-3 Technologies-Revenue Trend Analysis (USD billion), 2013-2017 178

Figure 41: L-3 Technologies-Operating Profit Trend Analysis (USD Billion), 2013-2017 179

Figure 42: L-3 Technologies-Net Profit Trend Analysis (USD Billion), 2013-2017 179

Figure 43: Northrop Grumman Corp.-Revenue Trend Analysis (USD billion), 2013-2017 188

Figure 44: Northrop Grumman Corp.-Operating Profit Trend Analysis (USD billion), 2013-2017 189

Figure 45: Northrop Grumman Corp.-Net Profit Trend Analysis (USD billion), 2013-2017 189

Figure 46: Science Application International-Revenue Trend Analysis (USD Billion), 2013-2017 197

Figure 47: Science Application International-Operating Profit Trend Analysis (USD Million), 2013-2017 198

Figure 48: Science Application International-Net Profit Trend Analysis (USD Million), 2013-2017 198

Figure 49: US GDP Per Capita, 2015-2025 226

Figure 50: US GDP, Current Prices (USD Billion), 2015-2025 227

Figure 51: US Exports of goods and services (USD Billion), 2005-2013 228

Figure 52: US Imports of goods and services (USD Billion), 2005-2013 229

Figure 53: US Gross National Disposable Income (USD Billion), 2005-2013 230

Figure 54: US Market Capitalization of Listed Companies (USD Billion), 2005-2012 231

Figure 55: US Market Capitalization of Listed Companies (% of GDP), 2005-2012 232

Figure 56: US Government Cash Surplus/Deficit as % of GDP, 2005-2013 233

Figure 57: US Goods Exports as % of GDP, 2005-2014 234

Figure 58: US Goods Imports as % of GDP, 2005-2014 235

Figure 59: US Service Imports as % of GDP, 2005-2014 236

Figure 60: US Service Exports as % of GDP, 2005-2014 237

Figure 61: US Foreign Direct Investment (USD Billion), 2005-2014 238

Figure 62: US Net foreign direct investment as % of GDP, 2005-2014 239

Figure 63: US Mining, Manufacturing, Utilities Output (USD Billion), 2005-2014 240


List Of Table

List of Tables

Table 1: The US Army Strength 29

Table 2: The US Navy (USN) Strength 31

Table 3: The US Air Force (USAF) Strength 33

Table 4: The US-Ongoing Development and Procurement Programs 35

Table 5: The US-Future Procurement Programs 38

Table 6: Top US Defense Procurement Programs by Value (USD Million) 2018-2023 39

Table 7: US Defense Expenditure (USD Billion), 2014-2023 44

Table 8: US GDP Growth vs. Defense Expenditure as Percentage of GDP, 2014-2023 48

Table 9: US Per Capita Defense Expenditure (USD), 2014-2023 50

Table 10: US Defense Budget Split by Base Budget, OCO, and Other Funds (USD Billion), 2014-2023 52

Table 11: US Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 54

Table 12: US Defense Capital Expenditure (USD Billion), 2014-2023 56

Table 13: US Defense Expenditure Allocation for Army, Air Force, Navy, and Defense-wide (%), 2014-2023 60

Table 14: The US Defense Budget in USD Billion-Breakdown by Services (Army, Navy, Air Force and Defense-Wide) 2014-2023 62

Table 15: The US Funding Allocations for Military's Key Weapon Acquisition Programs-FY2018 64

Table 16: The US Requested Funding for Military's Key Weapon Acquisition Programs-FY2019 65

Table 17: The US Requested Funding for Unmanned Systems by Departments (Air Force, Army, Navy and Defense Wide)-FY2019 67

Table 18: The US Requested Funding for Unmanned Systems by Categories-FY2019 68

Table 19: US Homeland Security Expenditure (USD Billion), 2014-2023 69

Table 20: Terrorism Index, 2018 74

Table 21: Benchmarking with Key Markets: 2014-2018 vs. 2019-2023 77

Table 22: Top US Defense Market Sectors by Value (USD Million)-2018-2023 81

Table 23: The US Budget Formulation Process: 105

Table 24: The US Budget Enactment Timetable: 106

Table 25: Direct Commercial Sales (DCS) V/S Foreign military Sales (FMS)-A Comparative Analysis 110

Table 26: Top Defense Suppliers in The US Defense Industry-By Value (USD Million) 2018-2023 114

Table 27: Competitive Landscape of the US Defense Industry 115

Table 28: Lockheed Martin Corp-product focus 117

Table 29: Lockheed Martin Corp.-Alliances 126

Table 30: Lockheed Martin Corp.-Recent Contract Wins 128

Table 31: Raytheon-Product Focus 136

Table 32: Raytheon-Alliances 139

Table 33: Raytheon-Recent Contract Wins 141

Table 34: General Dynamics-product focus 149

Table 35: General Dynamics-Alliances 152

Table 36: General Dynamics-Recent Contract Wins 153

Table 37: Boeing-product focus 160

Table 38: Boeing-Alliances 163

Table 39: Boeing-Recent Contract Wins 165

Table 40: L-3 Technologies, Inc.-Product Focus 171

Table 41: L-3 Technologies Inc.-Alliances 174

Table 42: L-3 Technologies Inc.-Recent Contract Wins 175

Table 43: Northrop Grumman Corp.- Product Focus 180

Table 44: Northrop Grumman Corporation-Alliances 182

Table 45: Northrop Grumman Corp.-Recent Contract Wins 184

Table 46: Science Application International Corp. (SAIC)-Product Focus 190

Table 47: Science Application International Corp. (SAIC)-Alliances 192

Table 48: Science Application International Corp. (SAIC)-Recent Contract Wins 193

Table 49: Honeywell International Inc.-product focus 199

Table 50: Honeywell International Inc.-Alliances 201

Table 51: Honeywell International Inc.- Recent Contract Wins 202

Table 52: Sikorsky Aircraft-Product Focus 205

Table 53: Sikorsky Aircraft-Alliances 207

Table 54: Sikorsky Aircraft-Recent Contract Wins 209

Table 55: General Electric Aviation-Product Focus 212

Table 56: General Electric Aviation-Alliances 214

Table 57: General Electric Aviation-Recent Contract Wins 215

Table 58: Bell-Product Focus 217

Table 59: Bell Helicopter Textron, Inc.-Alliances 218

Table 60: Bell Helicopter Textron, Inc.-Recent Contract Wins 219

Table 61: Textron Marine and Land Systems-Product Focus 221

Table 62: Textron Marine and Land Systems-Alliances 223

Table 63: Textron Marine and Land Systems-Recent Contract Wins 224

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Products and Companies

Products

Defense, budget, offset, regulation, capital expenditure, homeland, drivers, market opportunities, procurement, entry route, key challenge, announcements, alliances, contract awards, financial analysis, business environment


Companies

Lockheed Martin

Raytheon

General Dynamics

Boeing

L-3 Technologies Inc.

Northrop Grumman Corp.

Science Application International Corp. (SAIC)

Honeywell International Inc.

Sikorsky Aircraft

General Electric (GE) Aviation

Bell

Textron Marine and Land Systems

Future of the US Defense Industry-Market Attractiveness, Competitive Landscape and Forecasts to 2023

Summary

The Future of the US Defense Industry-Market Attractiveness, Competitive Landscape and Forecasts to 2023, published by Strategic Defence Intelligence, provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

Synopsis

This report offers detailed analysis of the US defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.

In particular, it provides an in-depth analysis of the following-

- The US defense industry market size and drivers: detailed analysis of the US defense industry during 2019-2023, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country's expenditure and modernization patterns

- Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country

- Porter's Five Force analysis of the US defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry

- Import and Export Dynamics: analysis of prevalent trends in the country's imports and exports over the last five years

- Market opportunities: details of the top five defense investment opportunities over the next 10 years

- Competitive landscape and strategic insights: analysis of the competitive landscape of the US defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

Scope

- Being the largest defense spender in the world, with a budget of USD 639.2 billion in 2018, the US is expected to sustain its superiority over other nations in the coming years. During the historic period, the total defense budget, including funding for Overseas Contingency Operations (OCO), was relatively high, registering a CAGR of 2.39% due to the increasing instability fuelled by events such as the Russian annexation of Crimea, the festering status quo in civil war Ukraine and the devolving security situation in Syria.

- Between 2014 and 2018, the US allocated an average of 35% of its total defense budget to capital expenditure, primarily to fulfill the equipment needs of its overseas contingency during the Iraq and Afghanistan wars. However, with the country expected to focus on the replacement of damaged and obsolete defense equipment rather than on war needs, the capital expenditure is estimated to average 37.5% over the forecast period. Consequently, the share of revenue expenditure is expected to average 62.5% during the forecast period as compared to 65% during 2014-2018.

- Oppurtunities are expected to emerge in Land-Based C4ISR, Critical Infrastructure Protection-Physical Security and Network Security, Multirole Aircraft and Airborne C4ISR

Reasons to buy

- This report will give the user confidence to make the correct business decisions based on a detailed analysis of the US defense industry market trends for the coming five years

- The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period

- Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector

- A deep qualitative analysis of the US defense industry covering sections including demand drivers, Porter's Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts

READ MORE

Scope

Table of Contents

1. Introduction 12

1.1. What is this Report bout? 12

1.2. Definitions 12

1.3. Summary Methodology 14

1.4. About Strategic Defence Intelligence 15

2. Executive Summary 16

3. Market Attractiveness and Emerging Opportunities 18

3.1. Current Market Scenario 19

3.1.1. Primary Threat Perception 19

3.1.2. Military Doctrine & Strategy 20

3.1.3. Military Fleet Size 29

3.1.4. Procurement Programs 35

3.1.5. Top Procurement Programs by Value (USD Million) 2018-2023 39

3.1.6. Social, Political and Economic Environment & Support for Defense Projects 40

3.1.7. Political and Strategic Alliances 41

3.2. Defense Market Size Historical and Forecast 43

3.2.1. US defense expenditure expected to increase at a CAGR of 1.98% over the forecast period 43

3.2.2. Defense spending drivers-initiatives to retain military edge, subsequent military modernization, instability in Middle East and rivalry with Russia & China 46

3.2.3. Defense expenditure as a percentage of GDP estimated to decline over the forecast period 48

3.2.4. Per capita defense spending projected to decline over the forecast period 50

3.3. Analysis of Defense Budget Allocation 52

3.3.1. Total Department of Defense (DoD) budget forecasted to grow at a CAGR of 1.98% 52

3.3.2. Share of revenue expenditure expected to increase over the forecast period 54

3.3.3. US defense capital expenditure expected to increase at a CAGR of 3.95% over the forecast period 56

3.3.4. Navy to receive the major allocation of the defense budget over the forecast period 60

3.3.5. Allocation for defense expenditure on army expected to increase over the forecast period 62

3.4. Homeland Security Market Size and Forecast 69

3.4.1. The US homeland security expenditure to reach USD84.2 billion by 2023 69

3.4.2. Prevention of terrorism, securing and managing borders, safeguarding cyberspace and disaster management to drive homeland security expenditure over the forecast period 71

3.4.3. The nation is at highly affected category of terrorism 73

3.4.4. The US faces high level of threats from terrorist organizations 74

3.4.5. The US has a terrorism index score of 5.4 76

3.5. Benchmarking with Key Global Markets 77

3.5.1. The US will dominate global military spending over the forecast period 77

3.5.2. US defense budget is much higher than other leading spenders 79

3.5.3. US is one of the top defense spenders in terms of expenditure as a percentage of GDP 80

3.6. Market Opportunities: Key Trends and Growth Stimulators 81

3.6.1. Top Defense Market Sectors by Value (USD Million)-Projections over 2018-2023 81

3.6.2. Land Based-C4ISR 82

3.6.3. Critical Infrastructure Protection (CIP)-Physical Security 84

3.6.4. Critical Infrastructure Protection (CIP)-Network Security 85

3.6.5. Multirole Aircraft 86

3.6.6. Airborne-C4ISR 87

4. Defense Procurement Market Dynamics 88

4.1. Import Market Dynamics 90

4.1.1. US primarily imports defense equipment to build strategic relations 90

4.1.2. Defense imports expected to increase over the forecast period 91

4.1.3. The Germany and UK dominated the US defense imports during the historic period 92

4.1.4. Aircraft account for majority of arms imports 93

4.2. Export Market Dynamics 94

4.2.1. US arms exports are driven by political and economic factors 94

4.2.2. Arms exports expected to increase in the period 2019-2023 96

4.2.3. US defense exports to increase during the forecast period 97

4.2.4. Aircraft are the most exported defense equipment 98

4.2.5. The US maintains controlled defense export policy 99

5. Industry Dynamics 100

5.1. Five Forces Analysis 100

5.1.1. Bargaining power of Supplier: Low to Medium 101

5.1.2. Bargaining power of Buyer: High 101

5.1.3. Barrier to entry: Medium 101

5.1.4. Intensity of rivalry: Low to high 101

5.1.5. Threat of Substitution: Low to high 102

6. Market Entry Strategy 103

6.1. Market Regulation 103

6.1.1. The US defense industry is open to FDI 103

6.1.2. No offset policy exists in the US 104

6.1.3. US arms trade is heavily regulated 104

6.2. Market Entry Route 105

6.2.1. Budgeting Process 105

6.2.2. Procurement Policy & Process 107

6.2.3. Foreign OEMs enter the market through the acquisition of domestic defense companies 111

6.2.4. Joint product development programs, an attractive market entry route 111

6.2.5. Formation of partnerships with domestic defense firms provide good market entry opportunities 111

6.2.6. Direct sale of defense equipment provides foreign OEMs with an opportunity to enter the market 112

6.3. Key Challenges 113

6.3.1. Decreasing economies of scale and defense inflation 113

7. Competitive Landscape and Strategic Insights 114

7.1. Competitive Landscape Overview 114

7.2. Domestic Public Companies 117

7.2.1. Lockheed Martin Corp.: overview 117

7.2.2. Lockheed Martin Corp.: products 117

7.2.3. Lockheed Martin Corp.: recent announcements and strategic initiatives 122

7.2.4. Lockheed Martin Corp.: alliances 126

7.2.5. Lockheed Martin Corp.: recent contract wins 128

7.2.6. Lockheed Martin Corp.: financial analysis 134

7.2.7. Raytheon: overview 136

7.2.8. Raytheon: products 136

7.2.9. Raytheon: recent announcements and strategic initiatives 136

7.2.10. Raytheon: alliances 139

7.2.11. Raytheon: recent contract wins 141

7.2.12. Raytheon: financial analysis 147

7.2.13. General Dynamics: overview 149

7.2.14. General Dynamics: products 149

7.2.15. General Dynamics: recent announcements and strategic initiatives 150

7.2.16. General Dynamics: alliances 152

7.2.17. General Dynamics: recent contract wins 153

7.2.18. General Dynamics: financial analysis 158

7.2.19. Boeing: overview 160

7.2.20. Boeing: products 160

7.2.21. Boeing: recent announcements and strategic initiatives 161

7.2.22. Boeing: alliances 163

7.2.23. Boeing: recent contract wins 165

7.2.24. Boeing: financial analysis 169

7.2.25. L-3 Technologies, Inc.: overview 171

7.2.26. L-3 Technologies Inc.: products 171

7.2.27. L-3 Technologies, Inc.: recent announcements and strategic initiatives 172

7.2.28. L-3 Technologies Inc.: alliances 174

7.2.29. L-3 Technologies Inc.: recent contract wins 175

7.2.30. L-3 Technologies: financial analysis 178

7.2.31. Northrop Grumman Corp.: overview 180

7.2.32. Northrop Grumman Corp.: products 180

7.2.33. Northrop Grumman Corp.: recent contracts and strategic initiatives 180

7.2.34. Northrop Grumman Corporation: alliances 182

7.2.35. Northrop Grumman Corp.: recent contract wins 184

7.2.36. Northrop Grumman Corp.: financial analysis 188

7.2.37. Science Application International Corp. (SAIC): overview 190

7.2.38. Science Application International Corp. (SAIC): products 190

7.2.39. Science Application International Corp. (SAIC): recent contracts and strategic initiatives 191

7.2.40. Science Application International Corp. (SAIC): alliances 192

7.2.41. Science Application International Corp. (SAIC): recent contract wins 193

7.2.42. Science Application International Corp. financial analysis 197

7.2.43. Honeywell International Inc.: overview 199

7.2.44. Honeywell International Inc.: products and services 199

7.2.45. Honeywell International Inc.: recent announcements and strategic initiatives 200

7.2.46. Honeywell International Inc.: alliances 201

7.2.47. Honeywell International Inc.: recent contract wins 202

7.3. Domestic Private Companies 205

7.3.1. Sikorsky Aircraft: overview 205

7.3.2. Sikorsky Aircraft: products 205

7.3.3. Sikorsky Aircraft: recent announcements and strategic initiatives 205

7.3.4. Sikorsky Aircraft: alliances 207

7.3.5. Sikorsky Aircraft: recent contract wins 209

7.3.6. General Electric Aviation: overview 212

7.3.7. General Electric Aviation: products 212

7.3.8. General Electric Aviation: recent contracts and strategic initiatives 213

7.3.9. General Electric Aviation: alliances 214

7.3.10. General Electric Aviation: recent contract wins 215

7.3.11. Bell: overview 217

7.3.12. Bell: products and services 217

7.3.13. Bell: recent announcements and strategic initiatives 217

7.3.14. Bell Helicopter Textron, Inc.: alliances 218

7.3.15. Bell Helicopter Textron, Inc.: recent contract wins 219

7.3.16. Textron Marine and Land Systems: overview 221

7.3.17. Textron Marine and Land Systems: products 221

7.3.18. Textron Marine and Land Systems: recent announcements and strategic initiatives 222

7.3.19. Textron Marine and Land Systems: alliances 223

7.3.20. Textron Marine and Land Systems: recent contract wins 224

8. Business Environment and Country Risk 226

8.1. Economic Performance 226

8.1.1. GDP Per Capita 226

8.1.2. GDP, Current Prices 227

8.1.3. Exports of goods and services in local currency 228

8.1.4. Imports of goods and services in local currency 229

8.1.5. Gross National Disposable Income (USD Billion) 230

8.1.6. Market Capitalization of Listed Companies 231

8.1.7. Market Capitalization of Listed Companies (% of GDP) 232

8.1.8. Government Cash Surplus/Deficit as % of GDP 233

8.1.9. Goods exports as % of GDP 234

8.1.10. Goods imports as % of GDP 235

8.1.11. Service Imports as % of GDP 236

8.1.12. Service Exports as % of GDP 237

8.1.13. Foreign Direct Investment 238

8.1.14. Net foreign direct investment as % of GDP 239

8.1.15. Mining, Manufacturing, Utilities Output 240

9. Appendix 241

9.1. About SDI 241

9.2. Disclaimer 241


List Of Figure

List of Figures

Figure 1: US Defense Expenditure (USD Billion), 2014-2023 44

Figure 2: US GDP Growth vs. Defense Expenditure as Percentage of GDP, 2013-2022 49

Figure 3: US Per Capita Defense Expenditure (USD), 2014-2023 51

Figure 4: US Defense Budget Split by Base Budget, OCO, and Other Funds (USD Billion), 2014-2023 53

Figure 5: US Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 55

Figure 6: US Defense Capital Expenditure (USD Billion), 2014-2023 57

Figure 7: US Defense Expenditure Allocation for Army, Air Force, Navy, and Defense-wide (%), 2014-2023 61

Figure 8: US Defense Expenditure Allocation By Military Services-Split by Army, Navy, Air Force and Defense-Wide Spending (USD Billion), 2014-2023 63

Figure 9: US Homeland Security Expenditure (USD billion), 2014-2023 70

Figure 10: Terrorism Heat Map, 2018 73

Figure 11: Terrorism Index, 2018 76

Figure 12: Benchmarking with Key Markets-2014-2018 vs. 2019-2023 78

Figure 13: Defense Expenditure of the World's Largest Military Spenders (USD Billion), 2018 and 2023 79

Figure 14: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2018 80

Figure 15: Land Based C4ISR Market Size (USD Million), 2018-2023 83

Figure 16: Critical Infrastructure Protection (CIP)-Physical Security Market Size (USD Million), 2018-2023 84

Figure 17: Critical Infrastructure Protection (CIP)-Network Security Market Size (USD Million), 2018-2023 85

Figure 18: Multirole Aircraft Market Size (USD Billion), 2018-2023 86

Figure 19: Airborne C4ISR Market Size (USD Million), 2018-2023 87

Figure 20: Top US Defense Procurements in Terms of Their Supplier Relationships 89

Figure 21: US Defense Import Trend (USD Million), 2013-2017 (TIV Values) 91

Figure 22: US Defense Imports by Country (%), 2013-2017 92

Figure 23: US Defense Imports by Category (%), 2013-2017 93

Figure 24: US Defense Exports (USD Million), 2013-2017 96

Figure 25: US Defense Exports by Country (%), 2013-2017 97

Figure 26: US Defense Exports by Category (%), 2013-2017 98

Figure 27: Industry Dynamics-Porter's Five Forces Analysis 100

Figure 28: Lockheed Martin Corp.-Revenue Trend Analysis (USD billion), 2013-2017 134

Figure 29: Lockheed Martin Corp.-Operating Profit Trend Analysis (USD billion), 2013-2017 135

Figure 30: Lockheed Martin Corp.-Net Profit Trend Analysis (USD billion), 2013-2017 135

Figure 31: Raytheon-Revenue Trend Analysis (USD billion), 2013-2017 147

Figure 32: Raytheon-Operating Profit Trend Analysis (USD billion), 2012-2016 148

Figure 33: Raytheon-Net Profit Trend Analysis (USD billion), 2012-2016 148

Figure 34: General Dynamics-Revenue Trend Analysis (USD Billion), 2013-2017 158

Figure 35: General Dynamics-Operating Profit Trend Analysis (USD Billion), 2013-2017 159

Figure 36: General Dynamics-Net Profit Trend Analysis (USD Billion), 2013-2017 159

Figure 37: Boeing-Revenue Trend Analysis (USD billion), 2013-2017 169

Figure 38: Boeing-Operating Profit Trend Analysis (USD Billion), 2013-2017 170

Figure 39: Boeing-Net Profit Trend Analysis (USD Billion), 2013-2017 170

Figure 40: L-3 Technologies-Revenue Trend Analysis (USD billion), 2013-2017 178

Figure 41: L-3 Technologies-Operating Profit Trend Analysis (USD Billion), 2013-2017 179

Figure 42: L-3 Technologies-Net Profit Trend Analysis (USD Billion), 2013-2017 179

Figure 43: Northrop Grumman Corp.-Revenue Trend Analysis (USD billion), 2013-2017 188

Figure 44: Northrop Grumman Corp.-Operating Profit Trend Analysis (USD billion), 2013-2017 189

Figure 45: Northrop Grumman Corp.-Net Profit Trend Analysis (USD billion), 2013-2017 189

Figure 46: Science Application International-Revenue Trend Analysis (USD Billion), 2013-2017 197

Figure 47: Science Application International-Operating Profit Trend Analysis (USD Million), 2013-2017 198

Figure 48: Science Application International-Net Profit Trend Analysis (USD Million), 2013-2017 198

Figure 49: US GDP Per Capita, 2015-2025 226

Figure 50: US GDP, Current Prices (USD Billion), 2015-2025 227

Figure 51: US Exports of goods and services (USD Billion), 2005-2013 228

Figure 52: US Imports of goods and services (USD Billion), 2005-2013 229

Figure 53: US Gross National Disposable Income (USD Billion), 2005-2013 230

Figure 54: US Market Capitalization of Listed Companies (USD Billion), 2005-2012 231

Figure 55: US Market Capitalization of Listed Companies (% of GDP), 2005-2012 232

Figure 56: US Government Cash Surplus/Deficit as % of GDP, 2005-2013 233

Figure 57: US Goods Exports as % of GDP, 2005-2014 234

Figure 58: US Goods Imports as % of GDP, 2005-2014 235

Figure 59: US Service Imports as % of GDP, 2005-2014 236

Figure 60: US Service Exports as % of GDP, 2005-2014 237

Figure 61: US Foreign Direct Investment (USD Billion), 2005-2014 238

Figure 62: US Net foreign direct investment as % of GDP, 2005-2014 239

Figure 63: US Mining, Manufacturing, Utilities Output (USD Billion), 2005-2014 240


List Of Table

List of Tables

Table 1: The US Army Strength 29

Table 2: The US Navy (USN) Strength 31

Table 3: The US Air Force (USAF) Strength 33

Table 4: The US-Ongoing Development and Procurement Programs 35

Table 5: The US-Future Procurement Programs 38

Table 6: Top US Defense Procurement Programs by Value (USD Million) 2018-2023 39

Table 7: US Defense Expenditure (USD Billion), 2014-2023 44

Table 8: US GDP Growth vs. Defense Expenditure as Percentage of GDP, 2014-2023 48

Table 9: US Per Capita Defense Expenditure (USD), 2014-2023 50

Table 10: US Defense Budget Split by Base Budget, OCO, and Other Funds (USD Billion), 2014-2023 52

Table 11: US Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 54

Table 12: US Defense Capital Expenditure (USD Billion), 2014-2023 56

Table 13: US Defense Expenditure Allocation for Army, Air Force, Navy, and Defense-wide (%), 2014-2023 60

Table 14: The US Defense Budget in USD Billion-Breakdown by Services (Army, Navy, Air Force and Defense-Wide) 2014-2023 62

Table 15: The US Funding Allocations for Military's Key Weapon Acquisition Programs-FY2018 64

Table 16: The US Requested Funding for Military's Key Weapon Acquisition Programs-FY2019 65

Table 17: The US Requested Funding for Unmanned Systems by Departments (Air Force, Army, Navy and Defense Wide)-FY2019 67

Table 18: The US Requested Funding for Unmanned Systems by Categories-FY2019 68

Table 19: US Homeland Security Expenditure (USD Billion), 2014-2023 69

Table 20: Terrorism Index, 2018 74

Table 21: Benchmarking with Key Markets: 2014-2018 vs. 2019-2023 77

Table 22: Top US Defense Market Sectors by Value (USD Million)-2018-2023 81

Table 23: The US Budget Formulation Process: 105

Table 24: The US Budget Enactment Timetable: 106

Table 25: Direct Commercial Sales (DCS) V/S Foreign military Sales (FMS)-A Comparative Analysis 110

Table 26: Top Defense Suppliers in The US Defense Industry-By Value (USD Million) 2018-2023 114

Table 27: Competitive Landscape of the US Defense Industry 115

Table 28: Lockheed Martin Corp-product focus 117

Table 29: Lockheed Martin Corp.-Alliances 126

Table 30: Lockheed Martin Corp.-Recent Contract Wins 128

Table 31: Raytheon-Product Focus 136

Table 32: Raytheon-Alliances 139

Table 33: Raytheon-Recent Contract Wins 141

Table 34: General Dynamics-product focus 149

Table 35: General Dynamics-Alliances 152

Table 36: General Dynamics-Recent Contract Wins 153

Table 37: Boeing-product focus 160

Table 38: Boeing-Alliances 163

Table 39: Boeing-Recent Contract Wins 165

Table 40: L-3 Technologies, Inc.-Product Focus 171

Table 41: L-3 Technologies Inc.-Alliances 174

Table 42: L-3 Technologies Inc.-Recent Contract Wins 175

Table 43: Northrop Grumman Corp.- Product Focus 180

Table 44: Northrop Grumman Corporation-Alliances 182

Table 45: Northrop Grumman Corp.-Recent Contract Wins 184

Table 46: Science Application International Corp. (SAIC)-Product Focus 190

Table 47: Science Application International Corp. (SAIC)-Alliances 192

Table 48: Science Application International Corp. (SAIC)-Recent Contract Wins 193

Table 49: Honeywell International Inc.-product focus 199

Table 50: Honeywell International Inc.-Alliances 201

Table 51: Honeywell International Inc.- Recent Contract Wins 202

Table 52: Sikorsky Aircraft-Product Focus 205

Table 53: Sikorsky Aircraft-Alliances 207

Table 54: Sikorsky Aircraft-Recent Contract Wins 209

Table 55: General Electric Aviation-Product Focus 212

Table 56: General Electric Aviation-Alliances 214

Table 57: General Electric Aviation-Recent Contract Wins 215

Table 58: Bell-Product Focus 217

Table 59: Bell Helicopter Textron, Inc.-Alliances 218

Table 60: Bell Helicopter Textron, Inc.-Recent Contract Wins 219

Table 61: Textron Marine and Land Systems-Product Focus 221

Table 62: Textron Marine and Land Systems-Alliances 223

Table 63: Textron Marine and Land Systems-Recent Contract Wins 224

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Products

Defense, budget, offset, regulation, capital expenditure, homeland, drivers, market opportunities, procurement, entry route, key challenge, announcements, alliances, contract awards, financial analysis, business environment


Companies

Lockheed Martin

Raytheon

General Dynamics

Boeing

L-3 Technologies Inc.

Northrop Grumman Corp.

Science Application International Corp. (SAIC)

Honeywell International Inc.

Sikorsky Aircraft

General Electric (GE) Aviation

Bell

Textron Marine and Land Systems