Future of the Italy defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

  • ID: 4380119
  • Report
  • Region: Italy
  • 114 Pages
  • Strategic Defence Intelligence
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FEATURED COMPANIES

  • Elettronica
  • Fincantieri
  • Leonardo
  • MBDA
  • MORE

Summary

Italy is one of the largest defense spenders in Europe and is projected to spend US$77.5 Billion cumulatively on its armed forces during the forecast period. In 2013, the Italian Government allocated US$19.9 Billion to the defense budget but this declined to US$15.5 Billion in 2017, recording a negative CAGR of 6.04% during 2013-2017.

Eurozone debt crisis has highlighted a number of structural economic weaknesses in Italy. Despite having an advantage in various fields, a lack of structural reforms has been the major reason for Italy’s declining productivity. The allocation to the defense sector hit an all-time low in 2016 as a result of falling GDP and although the spending on defense recovered marginally in 2017, it is expected to be temporary and the country’s defense related expenditure is likely to decrease over the next two years until 2019.

The country’s defense budget stands at US$15.5 Billion in 2017 and is expected to reach US$15.9 Billion in 2022. Cumulatively, the defense budget is expected to be US$77.5 Billion over the forecast period. It is anticipated that the defense budget will record a CAGR of 0.92% during the forecast period in contrast to the CAGR of -6.04% registered during the historic period.

Air Force expenditure stands at US$2.7 Billion in 2017, which is forecast to reach US$2.8 Billion in 2022.This expenditure is expected to be fuelled by the continuing procurement of F-35 fighter aircraft, transport helicopters, and unmanned aerial system (UAS) mission trainers over the forecast period. The Italian Navy expenditure is expected to increase slightly from US$2.1 Billion in 2017 to US$2.2 Billion in 2022.

During 2012 to 2016, Italy’s defense exports grew significantly as a result of expansion into Asian and Middle Eastern markets such as UAE, Saudi Arabia, Pakistan, Singapore, UAE, and Israel. The demand for defense equipment was strong in these countries. The key exports were advanced technology equipment such as aircraft, naval vessels, sensors, armored vehicles, naval weapons, missiles, air defense systems, and satellites among others. Major recipients of Italian exports were Turkey, UAE, and Algeria which accounted for 14.2%, 11.1% and 8.0% of overall Italian exports respectively, largely involving military aircraft and naval vessels.

The report “Future of the Italy defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022” offers insights into the market opportunities and entry strategies adopted by foreign OEMs (original equipment manufacturers) to gain a market share in the Italian defense industry.

In particular, it offers in-depth analysis of the following -

  • Market opportunity and attractiveness: Detailed analysis of the current industry size and growth expectations during 2018-2022, including highlights of the key growth stimulators. It also benchmarks the industry against key global markets and provides detailed understanding of emerging opportunities in specific areas.
  • Procurement Dynamics: Trend analysis of imports and exports, together with their implications and impact on the Italian defense industry.
  • Industry Structure: Five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.
  • Market Entry Strategy: Analysis of possible ways to enter the market, together with detailed descriptions of how existing companies have entered the market, including key contracts, alliances, and strategic initiatives.
  • Competitive Landscape and Strategic Insights: Analysis of the competitive landscape of the defense industry in Italy, providing an overview of key defense companies (both domestic and foreign), together with insights such as key alliances, strategic initiatives, and a brief financial analysis.
  • Business Environment and Country Risk: A range of drivers at country level, assessing business environment and country risk. It covers historical and forecast values for a range of indicators, evaluating business confidence, economic performance, infrastructure quality and availability, labor force, demographics, and political and social risk.

Companies mentioned in this report: Leonardo, Fincantieri MBDA, Elettronica

Scope

  • Italy is one of the largest defense spenders in Europe and is projected to spend US$77.5 billion cumulatively on its armed forces during the forecast period. In 2013, the Italian Government allocated US$19.9 billion to the defense budget but this declined to US$15.5 billion in 2017, recording a negative CAGR of 6.04% during 2013-2017. However, with growing security concerns and modernization plans, the forecast period is set to witness positive growth. Italian defense expenditure is expected to be primarily driven by increasing terror threats, participation in peacekeeping initiatives, the replacement of aging military equipment, and the modernization of defense forces with advanced technology equipment.
  • On a cumulative basis, the country is expected to invest US$77.5 billion for defense purposes, of which US$13.3 billion is earmarked for capital expenditure to fund defense procurements.
  • The government’s focus on revitialising its economy is anticipated to result in cutbacks in defense spending and although the Italian defense budget is likely to recover over the forecast period, it neverthe less is anticipated to grow marginally.
  • The MoD is expected to invest in fighters and multirole aircraft, frigates and transport and utility helicopters.

Reasons to Buy

  • This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Italian 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 Italian defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts
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Note: Product cover images may vary from those shown
2 of 4

FEATURED COMPANIES

  • Elettronica
  • Fincantieri
  • Leonardo
  • MBDA
  • MORE

1. Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. About

2. Executive Summary

3. Market Attractiveness and Emerging Opportunities
3.1. Current Market Scenario
3.1.1. Primary threat perception
3.1.2. Military Doctrine & Strategy
3.1.3. Military Fleet Size
3.1.4. Procurement Programs

  • Ongoing procurement programs
  • Future procurement programs

3.1.5. Social, Political and Economic Environment & Support for Defense Projects
3.1.6. Political and Strategic Alliances
3.2. Defense Market Size Historical and Forecast
3.2.1. Italian annual defense expenditure expected to reach US$15.9 billion in 2022
3.2.2. Modernization of defense systems, peacekeeping initiatives, maintaining NATO, EU, and UN stipulations, and increasing terrorism activities are expected to drive Italian defense expenditure
3.2.3. Defense expenditure as a percentage of GDP is expected to average 0.8% during the forecast period
3.3. Analysis of Defense Budget Allocation
3.3.1. The majority of Italy’s defense budget is allocated for revenue expenditure
3.3.2. Overall capital expenditure is expected to grow at a CAGR of 2.34% during the forecast period
3.3.3. Common services leads the defense budget allocation with 37.5% share during 2013 to 2017
3.3.4. Army expenditure expected to reach US$5.2 billion by 2022
3.3.5. Air force expenditure expected to grow at CAGR 0.94% during forecast period
3.3.6. Cumulative navy expenditure expected to be US$10.6 billion during the forecast period
3.3.7. Common services expenditure is expected to reach US$5.3 billion in 2022
3.4. Homeland Security Market Size and Forecast
3.4.1. Homeland security expenditure expected to reach US$6.8 billion in 2022
3.4.2. Homeland security expenditure in Italy is mainly driven by activities such as terrorism in the country, mafia wars, cyber security issues, and rising anarchist groups
3.4.3. Terrorism Index rates Italy as a “moderately affected” region
3.4.4. Italy faces threats from terrorist organizations
3.4.5. Italy has a score of 3.4 on the Terrorism Index
3.5. Benchmarking with Key Global Markets
3.5.1. Italian defense expenditure expected to increase significantly over the forecast period
3.5.2. Italy is one of the largest defense spenders in the world
3.5.3. Italy expected to spend an average of 0.9% of its GDP on defense over the forecast period
3.6. Market Opportunities: Key Trends and Drivers
3.6.1. Frigates
3.6.2. Fighters and Multi-Role Aircraft
3.6.3. Transport and Utility Helicopter

4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Arms imports expected to remain constant during the forecast period
4.1.2. European countries such as Germany, France, and the UK have entered the import market in competition with the US
4.1.3. Aircraft, ships, and sensors were the key defense imports during 2012-2016
4.2. Export Market Dynamics
4.2.1. Falling exports is a cause for concern for Italy’s domestic military industry
4.2.2. Asia and the Middle East to account for a major portion of Italian defense exports
4.2.3. Aircraft was the main exported defense product during 2012-2016

5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of the supplier: medium
5.1.2. Bargaining power of the buyer: high
5.1.3. Barrier to entry: low
5.1.4. Intensity of rivalry: low
5.1.5. Threat of substitution: low

6. Market Entry Strategy
6.1. Market Regulation
6.1.1. The Italian defense industry is largely driven by government regulation and policy
6.1.2. Restrictive defense policies will prevent increase in foreign investment
6.2. Market Entry Route
6.2.1. Budget Process
6.2.2. Procurement Policy and Process
6.2.3. Technology transfer provides good market entry opportunities
6.2.4. Research and development collaborations offer market access
6.2.5. Joint ventures, partnerships, and licensing agreements are key market entry strategies in Italy
6.3. Key Challenges
6.3.1. Defense budget cuts across Europe challenge domestic defense companies
6.3.2. Restrictive foreign policy poses a challenge for non-European companies to enter the Italian defense industry

7. Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.2. Key Domestic Companies
7.2.1. Leonardo (Formerly Finmeccanica): overview
7.2.2. Leonardo: products
7.2.3. Leonardo: recent announcements and strategic initiatives
7.2.4. Leonardo: alliances
7.2.5. Leonardo: recent contract wins
7.2.6. Leonardo: financial analysis
7.2.7. Fincantieri: overview
7.2.8. Fincantieri: defense products
7.2.9. Fincantieri: recent announcements and strategic initiatives
7.2.10. Fincantieri: alliances
7.2.11. Fincantieri: recent contract wins
7.2.12. MBDA: overview
7.2.13. MBDA: defense products
7.2.14. MBDA: recent announcements and strategic initiatives
7.2.15. MBDA: alliances
7.2.16. MBDA: recent contract wins
7.3. Key Private Companies
7.3.1. Elettronica: overview
7.3.2. Elettronica: products
7.3.3. Elettronica: recent announcements and strategic initiatives
7.3.4. Elettronica: alliances
7.3.5. Elettronica: recent contract wins

8. Business Environment and Country Risk
8.1. Economic Performance
8.1.1. Gross Domestic Product per Capita
8.1.2. Gross Domestic Product, current US$
8.1.3. Exports of Goods and Services
8.1.4. Imports of Goods and Services
8.1.5. Gross National Disposable Income
8.1.6. Local Currency Unit per USD
8.1.7. Market Capitalization of Listed Companies
8.1.8. Market Capitalization of Listed Companies (% of GDP)
8.1.9. Total Government Cash Surplus/Deficit as % of GDP (LCU)
8.1.10. Goods Exports as a % of GDP
8.1.11. Goods Imports as a % of GDP
8.1.12. Services Imports as a % of GDP
8.1.13. Services Exports as a % of GDP
8.1.14. Net Foreign Direct Investment (BoP, current US$ Bn)
8.1.15. Net FDI as a % of GDP
8.1.16. Mining, Manufacturing, Utilities Output (US$ billions)

9. Appendix
9.1. About
9.2. Disclaimer

List of Tables

Table 1: Italian Army Strength
Table 2: Italian Navy Strength
Table 3: Italian Air Force Strength
Table 4: Italian - Ongoing Development and Procurement Programs
Table 5: Italian - Future Procurement Programs
Table 6: Italy Defense Expenditure (EUR billion & US$ billion), 2013-2022
Table 7: Italy GDP Growth and Defense Expenditure as Percentage of GDP Growth, 2013-2022
Table 8: Italian Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022
Table 9: Italy Defense Capital Expenditure (EUR billion & US$ billion), 2013-2022
Table 10: Italian Defense Expenditure Split (%), 2013-2022
Table 11: Italian Defense Expenditure for Army (EUR billion & US$ billion), 2013-2022
Table 12: Italian Defense Expenditure for Air Force (EUR billion & US$ billion), 2013-2022
Table 13: Italian Defense Expenditure for Navy (EUR billion & US$ billion), 2013-2022
Table 14: Italian Defense Expenditure for Common Services (EUR billion & US$ billion), 2013-2022
Table 15: Italian Homeland Security Expenditure (EUR billion & US$ billion), 2013-2022
Table 16: Terrorism Index, 2017
Table 17: Benchmarking with Key Markets - 2013-2017 vs. 2018-2022
Table 18: Offset Regulations in Italy
Table 19: Italian Parliamentary Budget Approval Timetable
Table 20: Italian Joint Development Programs for Missile Defense Systems
Table 21: Competitive Landscape of the Italian Defense Industry
Table 22: Leonardo - Product Focus
Table 23: Leonardo - Alliances
Table 24: Leonardo- Recent Contract Wins
Table 25: Fincantieri - Product Focus
Table 26: Fincantieri - Alliances
Table 27: Fincantieri - Recent Contract Wins
Table 28: MBDA - Product Focus
Table 29: MBDA - Alliances
Table 30: MBDA - Recent Contract Wins
Table 31: Elettronica - Product Focus
Table 32: Elettronica - Alliances
Table 33: Elettronica - Recent Contract Wins

List of Figures

Figure 1: Italy Defense Expenditure (EUR billion), 2013-2022
Figure 2: Italy Defense Expenditure (US$ Billion), 2013-2022
Figure 3: Italian GDP Growth and Defense Expenditure as Percentage of GDP, 2013-2022
Figure 4:Italian Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022
Figure 5: Italy Defense Capital Expenditure (EUR billion), 2013-2022
Figure 6: Italy Defense Capital Expenditure (US$ Billion), 2013-2022
Figure 7: Italian Defense Expenditure Split (US$ billion), 2013-2022
Figure 8: Italian Army Expenditure (EUR Billion), 2013-2022
Figure 9: Italian Army Expenditure (US$ Billion), 2013-2022
Figure 10: Italian Air force Expenditure (EUR Billion), 2013-2022
Figure 11: Italian Air Force Expenditure (US$ Billion), 2013-2022
Figure 12: Italian Navy Expenditure (EUR Billion), 2013-2022
Figure 13: Italian Navy Expenditure (US$ Billion), 2013-2022
Figure 14: Italian Common Services Expenditure (EUR Billion), 2013-2022
Figure 15: Italian Common Services Expenditure (US$ Billion), 2013-2022
Figure 16: Italian Homeland Security Budget (EUR billion), 2013-2022
Figure 17: Italian Homeland Security Budget (US$ billion), 2013-2022
Figure 18: Terrorism Heat Map, 2017
Figure 19: Terrorism Index, 2017
Figure 20: Benchmarking with Key Markets - 2013-2017 vs. 2018-2022
Figure 21: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2017 and 2022
Figure 22: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2017
Figure 23: Frigates Market (US$ Million), 2017-2027
Figure 24: Fighters & Multi-Role Aircraft (US$ Million), 2017-2027
Figure 25: Transport and Utility Helicopters (US$ Million), 2017-2024
Figure 26: Italian Defense Import Trend, 2012-2016 (TIV values)
Figure 27: Italian Defense Imports by Country (%), 2012-2016
Figure 28: Italian Defense Imports by Category (%), 2012-2016
Figure 29: Italian Defense Export Trend, 2012-2016 (TIV values)
Figure 30: Italian Defense Exports by Country (%),2012-2016
Figure 31: Italian Defense Exports by Category (%),2012-2016
Figure 32: Industry Dynamics - Porter’s Five Forces Analysis
Figure 33: Leonardo- Revenue Trend Analysis (EUR Billion), 2012-2016
Figure 34: Leonardo- Net Profit Trend Analysis (EUR Million), 2012-2016
Figure 35: Leonardo- Operating Profit Trend Analysis (EUR Million), 2012-2016
Figure 36: Italy GDP per Capita, 2015-2025
Figure 37: Italy Gross Domestic Product (current US$ Bn), 2015-2025
Figure 38: Italy Exports of goods and services (LCU billion), 2005-2014
Figure 39: Italy Imports of goods and services (LCU Bn), 2005-2014
Figure 40: Italy Gross national disposable income (US$ Bn), 2005-2014
Figure 41: Italy LCU per US$, 2015-2024
Figure 42: Italy Market Capitalization of listed Companies (US$ Bn), 2005-2012
Figure 43: Italy Market Capitalization of Listed Companies as a % of GDP, 2005-2012
Figure 44: Italy Government cash surplus/deficit as a % of GDP (LCU), 2005-2012
Figure 45: Italy Goods Exports as a % of GDP, 2005-2014
Figure 46: Italy Goods Imports as a % of GDP, 2005-2014
Figure 47: Italy Services Imports as a % of GDP, 2005-2014
Figure 48: Italy Services Exports as a % of GDP, 2005-2014
Figure 49: Italy Net Foreign Direct Investment (current US$ Bn), 2005-2014
Figure 50: Italy Net FDI as a % of GDP, 2005-2014
Figure 51: Italy Mining, Manufacturing, Utilities Output(US$ Bn), 2005-2014

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  • Elettronica
  • Fincantieri
  • Leonardo
  • MBDA
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