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The Global Naval Vessels MRO Market
2012-2022
The Global Military MRO Market2012–2022
The Global Naval Vessels MRO Market 2012–2022
www.strategicdefenceintelligence.com [email protected]
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TABLE OF CONTENTS
1 Introduction ......................................................................................................................... 12
1.1 What is this Report About? ..............................................................................................................12
1.2 Definitions .......................................................................................................................................12
1.3 Summary Methodology ...................................................................................................................14
1.4 About Strategic Defence Intelligence (www.strategicdefenceintelligence.com) ...............................15
2 Executive Summary ............................................................................................................ 16
3 Global Naval Vessels MRO Market Size and Drivers ........................................................ 17
3.1 Naval Vessels MRO Market Size and Forecast 2012–2022 ............................................................17
3.1.1 Global naval vessels MRO market to show positive growth during the forecast period .......................... 17
3.2 Global naval vessels MRO Market – Regional Analysis ..................................................................18
3.2.1 North America dominates the global naval vessels MRO market ............................................................ 18
3.2.2 Demand for Destroyer MRO in the US to support the global naval vessels MRO market ....................... 21
3.2.3 Naval Vessels MRO market to be robust in Europe due to planned budget cuts .................................... 22
3.2.4 The naval vessels MRO market in the Asia-Pacific to be driven by spending in China, India, and
Australia ................................................................................................................................................................ 23
3.2.5 Naval Vessels MRO market in the Middle East to increase during the forecast period ........................... 24
3.2.6 Brazil expected to be the highest spender in the Naval Vessels MRO sector in the Latin American
region 25
3.2.7 Markets in Africa expected to increase over the forecast period ............................................................. 26
3.3 Naval Vessels MRO Sub–Sector Market Size Composition ............................................................27
3.3.1 Destroyers MRO segment expected to attract the most expenditure during the forecast period ............ 27
3.3.2 Market for Frigates MRO to account for the second largest segment in this sector ................................ 29
3.3.3 Submarines MRO to account for the third largest segment in this sector ................................................ 30
3.4 Demand Drivers and Growth Stimulators ........................................................................................32
3.4.1 Demand for naval vessels to be equipped with C4ISR systems .............................................................. 32
3.4.2 Technological innovations driving the naval vessels MRO market .......................................................... 32
3.5 Defense Budget Spending Review ..................................................................................................34
3.5.1 European capital expenditure expected to increase during the forecast period ...................................... 34
3.5.2 Asian defense budgets expected to increase at a robust pace ................................................................ 35
3.5.3 North American defense expenditure projected to decline marginally during the forecast period ........... 36
3.5.4 Modernization programs likely to drive defense expenditure in South American countries ..................... 37
3.5.5 Military budgets of African countries expected to increase during the forecast period ............................ 38
3.5.6 Defense budgets of Middle Eastern countries likely to increase during the forecast period .................... 39
3.6 Defense Modernization Review .......................................................................................................40
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3.6.1 Financial constraints causing delays in European defense modernization programs ............................. 40
3.6.2 Defense budgets of Asian countries likely to be driven by competitive arms acquisitions ....................... 40
3.6.3 Global economic slowdown leading to defense budget cuts in the North American region ..................... 40
3.6.4 Need to replace aging equipment driving South American defense expenditure .................................... 41
3.6.5 Security threats increasing the defense budget of African countries ....................................................... 41
3.6.6 Demand for air defense systems is likely to increase in the Middle East ................................................. 41
4 Industry Trends, Recent Developments and Challenges ................................................ 42
4.1 Technological Developments ..........................................................................................................42
4.1.1 Mature Air Independent Propulsion systems seen as a must have capability ......................................... 42
4.1.2 Size and capability of naval surface combatants driving demand for hybrid electric propulsion systems 42
4.1.3 Increased use of stealth technology expected in naval warships ............................................................ 43
4.2 Market Trends .................................................................................................................................44
4.2.1 Countries looking to install ballistic missile defense capabilities in their naval warships ......................... 44
4.2.2 Navies outsourcing MRO work to decrease response time ..................................................................... 44
4.2.3 Aluminum replacing steel as the preferred material in naval applications ............................................... 45
4.3 Industry Consolidation .....................................................................................................................46
4.3.1 Joint programs expected to increase over the forecast period................................................................. 46
4.3.2 Companies are expected to consolidate in the face of global defense budget cuts ................................ 46
4.4 Key Challenges ...............................................................................................................................47
4.4.1 High taxes hamper indigenous growth in some countries ........................................................................ 47
4.4.2 Controlling upgrade costs for C4ISR systems .......................................................................................... 47
5 SWOT Analysis of the Naval Vessels MRO Market .......................................................... 48
5.2 Strengths.........................................................................................................................................49
5.2.1 Fleet readiness initiatives by major defense spenders driving expenditure on maintenance of naval
vessels 49
5.2.2 Modernization of existing naval vessels along with advanced MRO capabilities driving the market ....... 49
5.2.3 Procurement of used naval vessels to result in increased naval MRO expenditure ................................ 49
5.3 Weaknesses ...................................................................................................................................50
5.3.1 Lack of domestic MRO capabilities in some countries ............................................................................. 50
5.3.2 Extended cycle times often lead to a reduction in number of operational vessels ................................... 50
5.4 Opportunities ...................................................................................................................................51
5.4.1 Aging fleets of naval vessels expected to boost expenditure in the MRO market ................................... 51
5.4.2 Defense budget cuts expected to channel more funds towards the naval vessels MRO sector ............. 51
5.4.3 Installation of advanced C4ISR systems on naval vessels expected to support increased investment in
this sector .............................................................................................................................................................. 51
5.5 Threats ............................................................................................................................................52
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5.5.1 A large portion of the MRO workload brought under the ambit of government depots in US .................. 52
5.5.2 The US and European economic crisis .................................................................................................... 52
6 Country Analysis – Naval Vessels MRO Market ............................................................... 53
6.1 United States Market Size and Forecast 2012–2022 .......................................................................54
6.1.1 Destroyers MRO expected to account for the largest share of US naval vessels MRO expenditure ...... 57
6.1.2 Submarine MRO segment to exhibit a CAGR of 8.83% during the forecast period ................................. 59
6.1.3 Frigates MRO segment of naval vessels MRO expected to constitute the third largest market share in
the US 61
6.2 France Market Size and Forecast 2012–2022 .................................................................................62
6.2.1 Aircraft carriers MRO market to be attractive in France during the forecast period ................................. 65
6.2.2 Horizon class frigates upgrade program to drive the frigates MRO market during the forecast period ... 66
6.3 Russia Market Size and Forecast 2012–2022 .................................................................................67
6.3.1 Expenditure on destroyers MRO to be robust during the forecast period ................................................ 70
6.3.2 Overhaul of corvettes and maintenance of rescue ship to constitute Russian frigates MRO market ...... 71
6.4 The United Kingdom Market Size and Forecast 2012–2022 ............................................................72
6.4.1 Submarines MRO market in the UK to decline during the forecast period ............................................... 75
6.4.2 Destroyers MRO market to register robust growth during 2012–2015 ..................................................... 76
6.4.3 Aircraft carriers MRO market to increase during the forecast period ....................................................... 77
6.5 UAE Market Size and Forecast 2012–2022 .....................................................................................78
6.5.1 Frigates MRO market expected to increase during the forecast period ................................................... 80
6.6 Australia Market Size and Forecast 2012–2022 ..............................................................................81
6.6.1 MRO contracts for Anzac frigates to drive naval vessels MRO expenditure ............................................ 84
6.7 China Market Size and Forecast 2012–2022 ...................................................................................85
6.7.1 China is expected to invest heavily in destroyers MRO primarily to enhance its military capability in the
South China Sea ................................................................................................................................................... 88
6.7.2 China expected to allocate US$1.1 billion towards aircraft carrier MRO ................................................. 89
6.8 India Market Size and Forecast 2012–2022 ....................................................................................90
6.8.1 India’s naval vessels MRO market driven by the significant investment in upgrading the INS
Vikramaditya aircraft carrier .................................................................................................................................. 93
6.8.2 India expected to spend US$540million on submarine MRO over the forecast period ............................ 94
6.9 Brazil Market Size and Forecast 2012–2022 ...................................................................................95
6.9.1 Frigates MRO expected to be the highest segment of expenditure by Brazil on naval vessels MRO ..... 97
6.9.2 Submarines MRO segment expected to account for the second largest segment of expenditure in the
Brazilian naval vessels MRO market .................................................................................................................... 98
6.10 Peru Market Size and Forecast 2012–2022 ....................................................................................99
6.10.1 Peru to direct maximum expenditure towards submarines MRO segment ............................................ 101
6.11 Algeria Market Size and Forecast 2012–2022 ............................................................................... 102
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6.11.1 Frigates MRO market to decline during the forecast period ................................................................... 104
7 Major Naval Vessels MRO Programs ............................................................................... 105
7.1 Frigates MRO ................................................................................................................................ 105
7.1.1 Upgrade of E-71 frigates......................................................................................................................... 105
7.1.2 SeaPort-e Enhancement program .......................................................................................................... 106
7.1.3 Group Maintenance Contract (GMC) ...................................................................................................... 107
7.2 Destroyers MRO ........................................................................................................................... 108
7.2.1 Japanese Navy Aegis weapon system upgrade program ...................................................................... 108
7.2.2 Admiral Nakhimov, Nuclear cruiser modernization ................................................................................ 109
7.2.3 US Navy Aegis Cruiser and Destroyer Modernization ........................................................................... 110
7.3 Aircraft Carriers MRO .................................................................................................................... 111
7.3.1 Overhaul of Zubr-Class Air-Cushion Landing Ships ............................................................................... 111
7.3.2 Combat Management System program .................................................................................................. 112
7.3.3 Command and Control System upgrade for Thai Aircraft Carrier .......................................................... 113
7.4 Submarines MRO .......................................................................................................................... 114
7.4.1 Revenge nuclear-armed submarine upgrade ......................................................................................... 114
7.4.2 Submarine Technology Upgrade program ............................................................................................. 115
7.4.3 Submarine Repair and Advanced Technology Development Program .................................................. 116
8 Competitive Landscape and Strategic Insights .............................................................. 117
8.1 Competitive Landscape overview .................................................................................................. 117
8.1.1 BAE Systems: Overview ......................................................................................................................... 118
8.1.2 BAE Systems: Products and Services .................................................................................................... 118
8.1.3 BAE Systems: Alliances ......................................................................................................................... 118
8.1.4 BAE Systems: Recent Contract Wins ..................................................................................................... 118
8.1.5 BAE Systems: Financial Analysis ........................................................................................................... 119
8.1.6 SAIC: Overview ...................................................................................................................................... 121
8.1.7 SAIC: Products and Services ................................................................................................................. 121
8.1.8 SAIC: Alliances ....................................................................................................................................... 121
8.1.9 SAIC: Recent Contract Wins .................................................................................................................. 121
8.1.10 SAIC: Financial Analysis......................................................................................................................... 122
8.1.11 Northrop Grumman: Overview ................................................................................................................ 124
8.1.12 Northrop Grumman: Products and Services........................................................................................... 124
8.1.13 Northrop Grumman: Alliances ................................................................................................................ 124
8.1.14 Northrop Grumman: Recent Contract Wins............................................................................................ 124
8.1.15 Northrop Grumman: Financial Analysis .................................................................................................. 125
8.1.16 General Dynamics: Overview ................................................................................................................. 127
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8.1.17 General Dynamics: Products and Services ............................................................................................ 127
8.1.18 General Dynamics: Alliances .................................................................................................................. 127
8.1.19 General Dynamics: Recent Contract Wins ............................................................................................. 127
8.1.20 General Dynamics: Financial Analysis ................................................................................................... 128
8.1.21 Abu Dhabi Ship Building: Overview ........................................................................................................ 130
8.1.22 Abu Dhabi Ship Building: Products and Services ................................................................................... 130
8.1.23 Abu Dhabi Ship Building: Alliances ........................................................................................................ 130
8.1.24 Abu Dhabi Ship Building: Recent Contract Wins .................................................................................... 131
8.1.25 Abu Dhabi Ship Building: Financial Analysis ......................................................................................... 131
8.1.26 Kongsberg: Overview ............................................................................................................................. 131
8.1.27 Kongsberg: Products and Services ........................................................................................................ 131
8.1.28 Kongsberg: Alliances .............................................................................................................................. 132
8.1.29 Kongsberg: Recent Contract Wins ......................................................................................................... 132
8.1.30 Kongsberg: Financial Analysis .............................................................................................................. 132
8.1.31 Lockheed Martin: Overview .................................................................................................................... 132
8.1.32 Lockheed Martin: Products and Services ............................................................................................... 133
8.1.33 Lockheed Martin: Alliances ..................................................................................................................... 133
8.1.34 Lockheed Martin: Recent Contract Wins ................................................................................................ 133
8.1.35 Lockheed Martin: Financial Analysis ...................................................................................................... 134
8.1.36 Saab: Overview ...................................................................................................................................... 136
8.1.37 Saab: Products and Services ................................................................................................................. 136
8.1.38 Saab: Alliances ....................................................................................................................................... 136
8.1.39 Saab: Recent Contract Wins .................................................................................................................. 137
8.1.40 Saab: Financial Analysis......................................................................................................................... 137
8.1.41 Elbit Systems: Overview ......................................................................................................................... 139
8.1.42 Elbit Systems: Products and Services .................................................................................................... 139
8.1.43 Elbit Systems: Alliances.......................................................................................................................... 139
8.1.44 Elbit Systems: Recent Contract Wins ..................................................................................................... 139
8.1.45 Elbit Systems: Financial Analysis ........................................................................................................... 140
8.1.46 Huntington Ingalls Industries (HII): Overview ......................................................................................... 142
8.1.47 Huntington Ingalls Industries (HII): Products and Services .................................................................... 142
8.1.48 Huntington Ingalls Industries (HII): Alliances .......................................................................................... 142
8.1.49 Huntington Ingalls Industries (HII): Recent Contract Wins ..................................................................... 143
8.1.50 Huntington Ingalls Industries (HII): Financial Analysis ........................................................................... 143
8.1.51 Teledyne Brown Engineering: overview ................................................................................................. 145
8.1.52 Teledyne Brown Engineering: products and services ............................................................................ 145
8.1.53 Teledyne Brown Engineering: Alliances ................................................................................................. 145
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8.1.54 Teledyne Brown Engineering: recent contract wins ............................................................................... 145
8.1.1 Teledyne Brown Engineering: Financial Analysis .................................................................................. 145
8.1.2 Direction des Constructions Navales Services (DCNS): overview ......................................................... 146
8.1.3 Direction des Constructions Navales Services (DCNS): products and services .................................... 146
8.1.4 Direction des Constructions Navales Services (DCNS): recent contract wins ....................................... 146
8.1.5 Direction des Constructions Navales Services (DCNS): financial analysis ............................................ 147
8.1.6 Babcock International Group: overview .................................................................................................. 149
8.1.7 Babcock International Group: products and services ............................................................................. 149
8.1.8 Babcock International Group: alliances .................................................................................................. 149
8.1.9 Babcock International Group: recent contract wins ................................................................................ 149
8.1.10 Babcock International Group: financial analysis ..................................................................................... 150
8.1.11 URS Corporation: overview .................................................................................................................... 152
8.1.12 URS Corporation: products and services ............................................................................................... 152
8.1.13 URS Corporation: alliances .................................................................................................................... 152
8.1.14 URS Corporation: recent contract wins .................................................................................................. 152
8.1.15 URS Corporation: financial analysis ....................................................................................................... 153
9 Appendix ............................................................................................................................ 155
9.1 Methodology ................................................................................................................................. 155
9.2 Contact us ..................................................................................................................................... 155
9.3 About SDI...................................................................................................................................... 155
9.4 Disclaimer ..................................................................................................................................... 155
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LIST OF FIGURES
Figure 1: Global Naval Vessels MRO Market (US$ Billion), 2012–2022 .............................................................................................................. 17 Figure 2: Naval Vessels MRO Market Breakdown by Region (%), 2012–2022 .................................................................................................... 20 Figure 3: North American naval vessels MRO Market (US$ Billion), 2012–2022 ................................................................................................. 21 Figure 4: European Naval Vessels MRO Market (US$ Million), 2012–2022 ........................................................................................................ 22 Figure 5: Asia-Pacific naval vessels MRO Market (US$ Billion), 2012–2022 ....................................................................................................... 23 Figure 6: Middle East Naval Vessels MRO Market (US$ Million), 2012–2022 ..................................................................................................... 24 Figure 7: Latin American Naval Vessels MRO Market (US$ Million), 2012–2022 ................................................................................................ 25 Figure 8: African Naval Vessels MRO Market (US$ Million), 2012–2022 ............................................................................................................ 26 Figure 9: Naval Vessels MRO Market Breakdown by Segment (%), 2012–2022 ................................................................................................. 28 Figure 10: Destroyers MRO Market Size (US$ Billion), 2012–2022 .................................................................................................................... 29 Figure 11: Frigates MRO Market Size (US$ Billion), 2012–2022 ......................................................................................................................... 30 Figure 12: Submarines MRO Market Size (US$ Billion), 2012–2022 ................................................................................................................... 31 Figure 13: Defense Capital Expenditure of Top Three European Defense Spenders (US$ Billion), 2011–2021 .................................................. 34 Figure 14: Defense Capital Expenditure of Top Three Asian Defense Spenders (US$ Billion), 2011–2021 ....................................................... 35 Figure 15: Defense Capital Expenditure of Top North American Defense Spenders (US$ Billion), 2011–2021 ................................................... 36 Figure 16: Defense Capital Expenditure of Top Three South American Defense Spenders (US$ Billion), 2011–2021 ........................................ 37 Figure 17: Defense Capital Expenditure of Top Three African Countries (US$ Billion), 2011–2021 ................................................................... 38 Figure 18: Defense Capital Expenditure of Top Three Middle Eastern Defense Spenders (US$ Billion), 2011–2021 .......................................... 39 Figure 19: Naval Vessels MRO Market in the US (US$ Billion), 2012–2022........................................................................................................ 55 Figure 20: Naval Vessels MRO Market Split By Category in the US (%), 2012–2022 ......................................................................................... 56 Figure 21: Destroyers MRO Market Size in the US (US$ Billion), 2012–2022 ..................................................................................................... 58 Figure 22: Submarines MRO Market Size in the US (US$ Billion), 2012–2022 ................................................................................................... 60 Figure 23: Frigates MRO Market Size in the US (US$ Billion), 2012–2022 ......................................................................................................... 61 Figure 24: Naval Vessels MRO Market in France (US$ Million), 2012–2022 ....................................................................................................... 63 Figure 25: Naval Vessels MRO Market Split by Sector in France (%), 2012–2022 .............................................................................................. 64 Figure 26: Aircraft Carriers MRO Market Size in France (US$ Million), 2012–2022 ............................................................................................. 65 Figure 27: Frigates MRO Market Size in France (US$ Million), 2012–2022 ........................................................................................................ 66 Figure 28: Naval Vessels MRO Market in Russia (US$ Million), 2012–2022 ....................................................................................................... 68 Figure 29: Russian Naval Vessels MRO Market Split by Sector (%), 2012–2022 ................................................................................................ 69 Figure 30: Destroyers MRO Market Size in Russia (US$ Million), 2012–2022 .................................................................................................... 70 Figure 31: Frigates MRO Market Size in Russia (US$ Million), 2012–2022 ......................................................................................................... 71 Figure 32: Naval Vessels MRO Market in the UK (US$ Million), 2012–2022 ....................................................................................................... 73 Figure 33: Naval Vessels MRO Market Split by Sector in UK (%), 2012–2022 .................................................................................................... 74 Figure 34: Submarines MRO Market Size in the UK (US$ Million), 2012–2022 ................................................................................................... 75 Figure 35: Destroyers MRO Market Size in the UK (US$ Million), 2012–2022 .................................................................................................... 76 Figure 36: Aircraft Carriers MRO Market Size in the UK (US$ Million), 2012–2022 ............................................................................................. 77 Figure 37: Naval Vessels MRO Market in the UAE (US$ Million), 2012–2022..................................................................................................... 79 Figure 38: Frigates MRO Market Size in the UAE (US$ Million), 2012–2022 ...................................................................................................... 80 Figure 39: Naval Vessels MRO Market in Australia (US$ Million), 2012–2022 .................................................................................................... 82 Figure 40: Naval Vessels MRO Market Split by Sector in Australia (%), 2012–2022 ........................................................................................... 83 Figure 41: Frigates MRO Market Size in Australia (US$ Million), 2012–2022 ...................................................................................................... 84 Figure 42: Naval Vessels MRO Market in China (US$ Million), 2012–2022 ........................................................................................................ 86 Figure 43: Naval Vessels MRO Market Split by Sector in China (%), 2012–2022 ............................................................................................... 87 Figure 44: Destroyers MRO Market Size in China (US$ Million), 2012–2022 ...................................................................................................... 88 Figure 45: Military Aircraft Carrier MRO Market Size in China (US$ Million), 2012–2022 .................................................................................... 89 Figure 46: Naval Vessels MRO Market in India (US$ Million), 2012–2022 .......................................................................................................... 91 Figure 47: Naval Vessels MRO Market Split by Sector in India (%), 2012–2022 ................................................................................................ 92 Figure 48: Aircraft Carriers MRO Market Size in India (US$ Million), 2012–2022 ................................................................................................ 93 Figure 49: Submarines MRO Market Size in India (US$ Million), 2012–2022 ...................................................................................................... 94 Figure 50: Naval Vessels MRO Market in Brazil (US$ Million), 2012–2022 ......................................................................................................... 96 Figure 51: Frigates MRO Market Size in Brazil (US$ Million), 2012–2022 ........................................................................................................... 97 Figure 52: Submarines MRO Market Size in Brazil (US$ Million), 2012–2022 ..................................................................................................... 98 Figure 53: Naval Vessels MRO Market in Peru (US$ Million), 2012–2022 .........................................................................................................100 Figure 54: Submarines MRO Market Size in Peru (US$ Million), 2012–2022 .....................................................................................................101
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Figure 55: Naval Vessels MRO Market in Algeria (US$ Million), 2012–2022 ......................................................................................................103 Figure 56: Frigates MRO Market Size in Algeria (US$ Million), 2012–2022 .......................................................................................................104 Figure 57: BAE Systems – Revenue Trend Analysis (GBP Billion), 2007–2011 .................................................................................................119 Figure 58: BAE Systems – Operating Profit (GBP Million), 2007–2011 .............................................................................................................120 Figure 59: BAE Systems – Net Profit Trend Analysis (GBP Million), 2007–2011 ...............................................................................................120 Figure 60: SAIC – Revenue Trend Analysis (US$ Billion), 2009– 2011 ..............................................................................................................122 Figure 61: SAIC – Operating Profit (US$ Million), 2009–2011 ...........................................................................................................................123 Figure 62: SAIC – Net Profit Trend Analysis (US$ Million), 2009–2011.............................................................................................................123 Figure 63: Northrop Grumman – Revenue Trend Analysis (US$ Billion), 2007–2011 .........................................................................................125 Figure 64: Northrop Grumman – Operating Profit (US$ Million), 2007–2011 ......................................................................................................126 Figure 65: Northrop Grumman – Net Profit Trend Analysis (US$ Million), 2007–2011 ......................................................................................126 Figure 66: General Dynamics – Revenue Trend Analysis (US$ Billion), 2007–2011 ..........................................................................................128 Figure 67: General Dynamics – Operating Profit (US$ Million), 2007–2011 .......................................................................................................129 Figure 68: General Dynamics – Net Profit Trend Analysis (US$ Million), 2007–2011 ........................................................................................129 Figure 69: Lockheed Martin – Revenue Trend Analysis (US$ Billion), 2007–2011 .............................................................................................134 Figure 70: Lockheed Martin – Operating Profit (US$ Million), 2007–2011 ..........................................................................................................135 Figure 71: Lockheed Martin – Net Profit Trend Analysis (US$ Million), 2007–2011 ...........................................................................................135 Figure 72: Saab – Revenue Trend Analysis (SEK Billion), 2007–2011 ..............................................................................................................137 Figure 73: Saab – Operating Profit (SEK Million), 2007–2011............................................................................................................................138 Figure 74: Saab – Net Profit Trend Analysis (SEK Million), 2007–2011 ............................................................................................................138 Figure 75: Elbit Systems – Revenue Trend Analysis (US$ Billion), 2006–2010 ..................................................................................................140 Figure 76: Elbit Systems – Operating Profit (US$ Million), 2006–2010 ..............................................................................................................141 Figure 77: Elbit Systems – Net Profit Trend Analysis (US$ Million), 2006–2010 ...............................................................................................141 Figure 78: Huntington Ingalls Industries (HII)– Revenue Trend Analysis (US$ Billion), 2008–2011 ....................................................................143 Figure 79: Huntington Ingalls Industries (HII)– Operating Profit (US$ Million), 2008–2011 .................................................................................144 Figure 80: Huntington Ingalls Industries (HII) – Net Profit Trend Analysis (US$ Million), 2008–2011 ..................................................................144 Figure 81: Direction des Constructions Navales Services (DCNS)– Revenue Trend Analysis (EUR Billion), 2009–2011 ...................................147 Figure 82: Direction des Constructions Navales Services (DCNS) – Operating Profit (US$ million), 2009–2011 ......................................148 Figure 83: Direction des Constructions Navales Services (DCNS) – Net Profit Trend Analysis (US$ million), 2009–2011 ........................148 Figure 84: Babcock International Group – Revenue Trend Analysis (GBP million), 2008–2011 .........................................................................150 Figure 85: Babcock International Group – Operating Profit Trend Analysis (GBP million), 2008–2011 ...................................................151 Figure 86: Babcock International Group – Net Profit Trend Analysis (GBP million), 2008 – 2011 .......................................................................151 Figure 87: URS Corporation – Revenue Trend Analysis (US$ million), 2007–2011............................................................................................153 Figure 88: URS Corporation – Operating Profit Trend Analysis (US$ million), 2007–2011 ................................................................................154 Figure 89: URS Corporation – Net Profit Trend Analysis (US$ million), 2007 – 2011 .........................................................................................154
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LIST OF TABLES
Table 1: Global Naval Vessels MRO Market Overview ....................................................................................................................................... 19 Table 2: Global Naval Vessels MRO Market Overview ....................................................................................................................................... 28 Table 3: SWOT Analysis of the Naval Vessels MRO Market ............................................................................................................................... 48 Table 4: US Naval Vessels MRO Market Overview............................................................................................................................................. 54 Table 5: Key Naval Vessels MRO Programs ...................................................................................................................................................... 55 Table 6: French Naval Vessels MRO Market Overview ...................................................................................................................................... 62 Table 7: Major French Naval Vessels MRO Programs ........................................................................................................................................ 63 Table 8: Russian Naval Vessels MRO Market Overview ..................................................................................................................................... 67 Table 9: Major Russian Naval Vessels MRO Programs ...................................................................................................................................... 68 Table 10: UK Naval Vessels MRO Market Overview ........................................................................................................................................... 72 Table 11: Major UK Naval Vessels MRO Programs ............................................................................................................................................ 73 Table 12: UAE’s Naval Vessels MRO Market Overview ...................................................................................................................................... 78 Table 13: Major Naval Vessels MRO Programs of the UAE ................................................................................................................................ 79 Table 14: Australian Naval Vessels MRO Market Overview ................................................................................................................................ 81 Table 15: Key Naval Vessels MRO Programs..................................................................................................................................................... 82 Table 16: Chinese Naval Vessels MRO Market Overview ................................................................................................................................... 85 Table 17: Main Chinese Naval Vessels MRO Programs ..................................................................................................................................... 86 Table 18: Indian Naval Vessels MRO Market Overview ...................................................................................................................................... 90 Table 19: Key Indian Naval Vessels MRO Programs .......................................................................................................................................... 91 Table 20: Brazilian Naval Vessels MRO Market Overview .................................................................................................................................. 95 Table 21: Key Brazilian Naval Vessels MRO Programs ...................................................................................................................................... 96 Table 22: Naval Vessels MRO Market Overview of Peru .................................................................................................................................... 99 Table 23: Algerian Naval Vessels MRO Market Overview ..................................................................................................................................102 Table 24: Program Details – E-71 Frigate Upgrade Program .............................................................................................................................105 Table 25: Program Details – SeaPort-e enhancement program .........................................................................................................................106 Table 26: Program Details – Group Maintenance Contract (GMC).....................................................................................................................107 Table 27: Program Details – Japanese Navy Aegis weapon system upgrade program ......................................................................................108 Table 28: Program Details – Admiral Nakhimov, nuclear cruiser modernization .................................................................................................109 Table 29: Program Details – Aegis Cruiser and Destroyer Modernization Program ............................................................................................110 Table 30: Program Details – Overhaul of Zubr-Class Air-Cushion Landing Ships ..............................................................................................111 Table 31: Program Details – Combat Management System program .................................................................................................................112 Table 32: Program Details – Command and Control System upgrade for Thai Aircraft Carrier ...........................................................................113 Table 33: Program Details – Revenge nuclear-armed submarine upgrade ........................................................................................................114 Table 34: Program Details – Submarine Technology Upgrade program ............................................................................................................115 Table 35: Program Details – Submarine Repair and Advanced Technology Development Program ..................................................................116 Table 36: BAE Systems – Recent Contract Wins ...............................................................................................................................................118 Table 37: SAIC – Alliances ...............................................................................................................................................................................121 Table 38: SAIC – Recent Contract Wins ............................................................................................................................................................121 Table 39: Northrop Grumman – Alliances .........................................................................................................................................................124 Table 40: Northrop Grumman – Recent Contract Wins ......................................................................................................................................124 Table 41: General Dynamics – Recent Contract Wins .......................................................................................................................................127 Table 42: Northrop Grumman – Alliances .........................................................................................................................................................130 Table 43: Abu Dhabi Ship Building – Recent Contract Wins ..............................................................................................................................131 Table 44: Kongsberg – Alliances ......................................................................................................................................................................132 Table 45: Kongsberg – Recent Contract Wins ...................................................................................................................................................132 Table 46: Lockheed Martin – Alliances ..............................................................................................................................................................133 Table 47: Lockheed Martin – Recent Contract Wins ..........................................................................................................................................133 Table 48: Saab – Alliances ................................................................................................................................................................................136 Table 49: Saab – Recent Contract Wins ............................................................................................................................................................137 Table 50: Elbit Systems – Recent Contract Wins ...............................................................................................................................................139 Table 51: Huntington Ingalls Industries (HII)– Alliances .....................................................................................................................................142 Table 52: Huntington Ingalls Industries (HII) – Recent Contract Wins ................................................................................................................143 Table 53: Teledyne Brown Engineering – Recent Contract Wins .......................................................................................................................145 Table 54: Direction des Constructions Navales Services (DCNS) – Recent Contract Wins ................................................................................146
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Table 55: Babcock International Group – Alliances ............................................................................................................................................149 Table 56: Babcock International Group – Recent Contract Wins ........................................................................................................................149 Table 57: URS Corporation – Recent Contract Wins .........................................................................................................................................152
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1 Executive Summary
The naval vessels MRO market is expected to increase at a CAGR of XX% during the forecast period
In 2012, the naval vessels MRO market valued US$XX billion and is expected to value US$XX billion by 2022,
representing a CAGR of XX% during the forecast period. The demand for naval vessel MRO services is
anticipated to be driven by ageing naval vessels globally, technological innovations in the industry, internal and
external security threats, territorial disputes and modernization initiatives undertaken by navies across the
world. Cumulatively, the global market for military MRO is expected to value US$XX billion during the forecast
period. The market is expected to be dominated by North America, followed by Asia Pacific and Europe.
Despite the economic crisis in Europe, Europe’s share of the global market is projected to increase during the
forecast period, albeit marginally due to the scheduled deployment of various modernization programs which
had been initiated in previous years.
In terms of categories, the destroyers MRO market is expected to account for the highest proportion of spending
in the naval vessels MRO market, followed by market for frigates MRO, submarines and aircraft carriers. The
market for destroyers MRO is anticipated to be bigger than other categories because of the increasing age of
the global destroyer fleet including cruisers and amphibious ships. This is the reason that countries around the
world are investing significantly to maintain and overhaul their naval vessels fleet. Further, in the face of global
budget cuts, defense departments are now looking to terminate various procurement programs and focus more
on maintaining, repairing and overhauling the existing fleet of naval vessels.
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2 Global Naval Vessels MRO Market Size and Drivers
2.1 Naval Vessels MRO Market Size and Forecast 2012–2022
2.1.1 Global naval vessels MRO market to show positive growth during the forecast period
The global naval vessels MRO market is estimated to value US$XX billion in 2012 and increase at a CAGR of
XX% during the forecast period to reach its peak of US$XX billion by 2022. The market consists of 4
categories of naval vessels MRO activities: frigates MRO, submarines MRO, destroyers MRO and aircraft
carriers MRO. The destroyers MRO market is expected to account for XX% of the global naval vessels MRO
market, followed by frigates MRO with a share of XX% and submarines MRO with XX% share. The aircraft
carriers MRO market accounts for the remaining XX% share of the overall naval vessels MRO market. During
the forecast period, cumulative global expenditure on naval vessels MRO is expected to reach US$XX billion.
The chart below shows the expected naval vessels MRO market value during 2012–2022:
Figure 1: Global Naval Vessels MRO Market (US$ Billion), 2012–2022
Source: SDI analysis © SDI
XX
XX
XX
XX
XX
XX
XX
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
US
$ B
illi
on
2022
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2.2 Global naval vessels MRO Market – Regional Analysis
2.2.1 North America dominates the global naval vessels MRO market
The North American region accounts for the highest spend in the global naval vessels MRO market and the
majority of the expenditure can be attributed to the US, with Canada accounting for a smaller share. The
worldwide recession has compelled several major defense spending nations to enforce cutbacks in defense
spending and as naval combatants are among the biggest investments that a defense ministry can make,
limiting spending on procurement of new vessels is a major area to be targeted when looking for savings.
Thus, the US Navy is increasingly choosing to refurbish naval combatants in order to extend their service
lives, or to refit them to meet new mission specifications as prescribed by the US Department of Defense
(DoD), which is committed to maintaining readiness and performance of its active fleet which in turn
necessitates focus on implementing upgrades to older vehicles that were deployed in the field or are still
serving.
Due to these factors the North American region is the leading spender in the global naval vessels MRO sector
and accounts for XX% of the global market. Some programs which are expected to contribute substantially to
North American expenditure on naval vessels MRO include the SeaPort-e enhancement project, upgrades of
Aegis cruisers and destroyers and the US Navy submarine technology upgrade program. Asia Pacific and
Europe are also expected to account for a significant portion of the total naval vessels MRO market during the
forecast period, with shares of XX% and XX% respectively. This will be largely driven by the efforts of
countries such as India, China, and Russia to modernize their armed forces. Latin America, the Middle East,
and Africa cumulatively account for XX% of global naval vessels MRO expenditure.
The table below gives a brief overview of the global naval vessels MRO market:
Table 1: Global Naval Vessels MRO Market Overview
Region Market in 2012 Market in 2022 Total Market (2012–2022)
Annualized growth/decline
(2012–2022)
North America US$XX billion US$XX billion US$XX billion XX%
Asia-Pacific US$XX million US$XX billion US$XX billion XX%
Europe US$XX million US$XX billion US$XX billion XX%
Latin America US$XX million US$XX million US$XX billion XX%
Middle East US$XX million US$XX million US$XX million XX%
Africa US$XX million US$XX million US$XX million XX%
Total Naval Vessels MRO Market US$XX billion US$XX billion US$XX billion XX%
Source: SDI analysis © SDI
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2.3 Naval Vessels MRO Sub–Sector Market Size Composition
2.3.1 Destroyers MRO segment expected to attract maximum expenditure during the forecast period
Destroyers MRO has emerged as the category which is expected to witness maximum global spending in the
naval vessels MRO market. Major defense spenders including the US, UK, China, South Korea and some
European countries are committed to maintaining readiness and performance of their active fleets by
implementing life cycle extension programs around a number of naval vessel platforms that are considered to
be of strategic importance. A number of these countries have placed renewed focus upon modernizing
destroyers by incorporating state of the art C4ISR and Ballistic Missile Defense (BMD) capabilities in their
older platforms. The US and UK are also implementing lifecycle extensions of their respective destroyer fleets
in order to comply with modern force effectiveness parameters.
For example, the US Navy plans to improve the combat capabilities of its Aegis ships and simultaneously
upgrade several of its Ticonderoga (CG-47) class cruisers and Arleigh Burke (DDG-51) class destroyers with
the Aegis BMD system. In addition to this, both the US and UK navies intend to extend the lives of their Flight
I/II DDG-51s to about 45 years, which is 10 years beyond their currently planned 35 year service lives.
Countries such as China, Russia and India are modernizing their destroyer fleets in order to achieve capability
increase which would in turn enable them to reduce their crew sizes and operating costs. As such, Destroyer
modernization in the Asia Pacific and European regions is mainly focused on incorporating electric-drive
propulsion equipment to the ships’ existing mechanism to fully interconnect the mechanical-drive components,
which in turn could reduce the ships’ fuel use and create other operational advantages.
The Destroyers MRO market is expected to register a strong CAGR growth of XX% during the forecast period
and is expected to account for XX% of the naval vessels MRO market, while Submarines MRO and Frigates
MRO are expected to constitute XX% and XX% respectively. The Aircraft Carriers MRO market is expected to
have a relatively low share of XX% of the naval vessels MRO market.
The table below gives a brief overview of the global naval vessels MRO market:
Table 2: Global Naval Vessels MRO Market Overview
Category Market in 2012 Market in 2022 Total Market (2012–2022)
Annualized growth/decline
(2012–2022)
Destroyers MRO US$XX billion US$XX billion US$XX billion XX%
Frigates MRO US$XX billion US$XX billion US$XX billion XX%
Submarines MRO US$XX billion US$XX billion US$XX billion XX%
Aircraft Carriers MRO US$XX million US$XX billion US$XX billion XX%
Total Naval Vessels MRO Market US$XX billion US$XX billion US$XX billion XX%
Source: SDI analysis © SDI
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