Contracts with foreign governments will help offset losses, but overall revenue will shrink
Los Angeles, CA (PRWEB) March 14, 2012
IBISWorld expects revenue for the Tank and Armored Vehicle Manufacturing industry to fall to $8.2 billion in 2012. The industry depends highly on the funding allocated to defense spending from the US government and allied governments internationally. This funding is expected to fall away this year and over the next five years as worldwide conflicts decline. The ongoing withdrawal of troops from Iraq will negatively affect the industry; however, an increase in troops in Afghanistan will sustain demand for spare parts and repairs. IBISWorld industry analyst Brian Bueno says "the wars in Iraq and Afghanistan boosted revenue in previous years due to increased demand for US military armored vehicle and tank fleets." These conflicts also caused some countries, such as Egypt and the United Kingdom, to upgrade their military fleets. However, revenue began to fall strongly in 2010 (19.8%) as defense spending on tracked and armored vehicles declined and a number of upgrade programs were completed. Due to recent declines, total industry revenue is estimated to fall at an annualized rate of 4.8% over the five years to 2012.
The recession has also affected the industry in the longer term, with worldwide governments focusing their financial resources on restoring business and consumer confidence as GDP growth slows. The global economic recession cut many governments' revenue streams and increased major countries' deficits. To repay this debt, government spending will likely decline in the next five years. "In the United States, budget cuts in defense will occur in 2012, but funding for tank and armored vehicle procurement has fallen since 2010," says Bueno. The Tank and Armored Vehicle Manufacturing industry has a very high level of concentration. General Dynamics and BAE Systems are the primary recipients of government contracts for tank and armored vehicle production. The relatively stable of number of players has maintained concentration at an almost constant level over the past five years. Concentration levels vary in different segments of the market. When a major player receives a contract from the US Army, some components, such as weapons systems, vehicle armor, communications and electronics are typically contracted out to subcontractors that also form part of the industry.
Over the five years to 2017, revenue is forecast to decrease. As the US government continues to cut funding for tanks and armored vehicle procurement, industry firms will lose contracts with their largest customers. Still, demand for industry products from abroad will help limit the fall in revenue. Major industry players currently operate abroad, and they will leverage their international market power to increase contracts with foreign governments. Therefore, over the five years to 2017, exports are expected to increase. For more information, visit IBISWorld’s Tank & Armored Vehicle Manufacturing in the US industry page.
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IBISWorld industry Report Key Topics
This US industry comprises establishments that primarily manufacture complete military armored vehicles, combat tanks and specialized components for combat tanks.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.