Continued budget cuts are anticipated to keep US military demand for industry products low
New York, NY (PRWEB) December 02, 2014
The Armored Vehicle Manufacturing industry experienced significant declines over the five years to 2014. Industry operators research, develop, manufacture, modify and repair military armored vehicles, including infantry fighting vehicles, armored personnel carriers, mine-resistant ambush protected (MRAP) vehicles, self-propelled artillery and armored utility vehicles. Prior to the five-year period, US combat operations in the Middle East and a climbing defense budget created a boom in demand for armored vehicles, especially MRAPs. However, starting in 2010, this trend reversed. According to IBISWorld Industry Analyst Maksim Soshkin, “the United States began to wind down combat operations in the Middle East, the defense budget was cut and the sequestration eventually kicked in.” Consequently, the industry is expected to decline over the five years to 2014.
The most severe drops in industry revenue occurred when the MRAP program was complete. According to the Congressional Research Service, between fiscal 2006 and 2010, MRAP funding totaled $34.9 billion and consisted of over 20,000 vehicles. When the acquisition of MRAPs ended, demand for the industry's best-selling product plunged. “The reduction in demand for industry products eventually forced operators to curtail their operations and reduce their labor force,” says Soshkin. As a result, in the five years to 2014, the number of industry establishments and workers are expected to fall. Declining demand also reduced industry profitability and made industry operators more dependent on export orders.
In the five years to 2019, industry revenue is forecast to climb. Continued budget cuts and a reduction in combat operations in Afghanistan are anticipated to keep US military demand for industry products in decline for the next two years. However, the defense budget is anticipated to eventually stabilize, and development programs like the Armored Multi-Purpose Vehicle and the Joint Light Tactical Vehicle should eventually increase demand for industry products. Moreover, increasing geopolitical tensions are anticipated to help operators boost exports as more nations demand armored vehicles in order to stay ahead of rivals. Moreover, operators will also benefit from continued modification programs for the existing armored vehicle fleet, such as the replacement of the Stryker's flat-bottom configurations with double v-hulls.
For more information, visit IBISWorld’s Armored Vehicle Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
The Armored Vehicle Manufacturing industry includes establishments engaged in manufacturing, modifying, repairing and servicing military armored vehicles. These vehicles are utilized in combat to transport infantry, ammunitions or to provide combat support. Tanks are not included in this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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