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Revenue Opportunities and Stakeholder Mapping - Italy: Air Platforms Market
Frost & Sullivan, June 2011, Pages: 59
Budget Cuts Mean Opportunities Will Yield Rewards Only Over Long Term
The recent economic downturn forced Italy to launch an austerity package aimed at trimming public spending by nearly €24 billion. This represents a 10 per cent reduction in spending over 2011 across all ministries including the defence ministry. Nevertheless, the total market size of nearly $23 billion for air programmes over the period 2011-2020 should still present diverse opportunities across all platform segments for the industry, although more so in the long term. “Opportunities within the Italian defence market are driven by new platforms and C4ISTAR procurements, although only in the medium- to long-term,” notes the analyst of this research. “In an effort to save up to €5 billion, the Italian Ministry of Defence (MoD) is planning to cut some major programmes such as the Eurofighter, which has been reduced by 25 units.” This means that Italy will only buy the already-ordered 21 of the planned 46 Tranche 3A variants. It is highly unlikely that Italy would undertake any new major platform procurement before 2013 at the earliest.
Manned platform revenues are set to slightly decrease in 2013 as the acquisition of M-346, NH-90 and CH-47 is completed. It then flattens out as the procurement of F-35s commences in 2014. Revenues from the latter part of the decade are likely to derive from upgrades. “Although at present most MoDs execute major procurements by taking the through-life route, Italy still maintains the bulk of the platforms in-house,” remarks the analyst. “This practice is expected to change as the current economic situation is likely to push the Italian MoD to consider future procurement in the form of service-based contracts.”
Partnerships with Domestic Companies Represents Easiest Entry Strategy
The recent cuts in the defence budget present significant challenges for the industry. The impact of this budget is likely to be felt in all levels across the value chain. In the upcoming days, industry participants will have to be cost efficient and adapt themselves to the changing trends. The country’s economy is slowly getting back to track, but a complete recovery is not expected in the short term. The government still faces a cash crunch, forcing it to curtail the defence budget by 10 per cent with more cuts likely in the coming years. Cuts package could also threaten the ministry’s top-up funds commonly used to support procurement.
“To enter the Italian defence market, especially amidst the current economic turmoil, partnership with the domestic participants is the easiest entry strategy,” concludes the analyst. “This is particularly so, since there is still exists a fair degree of red tape.”
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Manned platforms
- Support-in-service
- Unmanned platforms
- C4ISTAR
- Training and simulation
This Frost & Sullivan research service titled Revenue Opportunities and Stakeholder Mapping- Italy: Air Platforms Market provides details about revenue opportunities that exist within the Italian armed force and the associated stakeholder maps. In this research, Frost & Sullivan's expert analysts thoroughly examine the following segments: manned platforms, support-in-service, unmanned platforms, C4ISTAR and training and simulation.
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