Future of the Mexican Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

  • ID: 4447375
  • Report
  • Region: Mexico
  • 85 pages
  • Strategic Defence Intelligence
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Future of the Mexican Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Summary:

Mexican defense budget values at just over US$5 Billion in 2017, and registered a CAGR of -5.89% during the historic period. Being one of the largest oil and gas exporters in the North and Latin American region, Mexico was hit hard by the fall in energy prices, which prompted the government to cut back on overall government spending. As a result, the Mexican defense budget contracted during 2015, 2016 and 2017 by around -8%, -13% and -4%, respectively.

Mexican homeland security (HLS) expenditure stands at around US$3 Billion in 2018 and is expected to grow at a CAGR of more than 8.5% over the forecast period, and is expected to cross US$4.5 Billion in 2022. In early 2013, under the anti-crime strategy, President Enrique Peña Nieto dissolved the Secretariat of Public Security (SSP), the official body that handled internal security. Consequently, the responsibility of internal security has been passed to the Interior Ministry. The need to protect the country from the growing threats of human, weapon, and drug traffickers are expected to drive HLS expenditure over the forecast period.

Moreover, the country’s policy on foreign direct investments (FDI) is favorable to foreign companies as it allows 100% FDI in the defense sector. Mexico is also inviting foreign OEMs to invest in the aerospace and defense sector, encouraging foreign OEM’s to establish manufacturing and assembly lines within the country. In 1997, Cobham, Plc., a major manufacturer of defense equipment, established a manufacturing facility in Mexico.

The report 'Future of the Mexican Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022' offers detailed analysis of the Mexican defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.

In particular, this report provides the following:
  • The Mexican defense industry market size and drivers: Detailed analysis of the Mexican defense industry during 2018-2022, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country’s expenditure and modernization patterns.
  • Budget allocation and key challenges: Insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country.
  • Porter’s Five Force analysis of the Mexican defense industry: Analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry.
  • Import and Export Dynamics: Analysis of prevalent trends in the country’s imports and exports over the last five years.
  • Market opportunities: Details of the top five defense investment opportunities over the next 10 years.
  • Competitive landscape and strategic insights: Analysis of the competitive landscape of the Mexican defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.
Companies mentioned in this report: Productos Mendoza and AVIABALTIKA Aviation Company

Scope:
  • Mexico’s defense budget stands at US$5.1 billion in 2017, and the country is expected to cumulatively spend US$33.8 billion on its military over the forecast period.The main factors driving this growth are the rapid modernization of the country’s armed forces in recent years.
  • During 2013-2017, an average of 11.0% of the country’s total defense budget was allocated to capital expenditure; while an average of 89.0% was reserved for revenue expenditure.
  • This is primarily due to Mexico’s future modernization programs. For instance, In April 2016, Mexico placed an US$54.9 million order for the acquisition of highly customized variants of the UH-60M Black Hawk utility helicopters. Similarly, in September 2016, the Mexican Navy took delivery of the first of ten units of Airbus AS565 MBe Panther helicopters, which were ordered in 2014.
  • The MoD is expected to invest in corvettes, multi mission helicopter, transport aircraft and corvettes MRO.
Reasons to buy:
  • This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Mexican 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 Mexican 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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1. Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. About the Publisher

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
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. Defense expenditure is expected to grow at a CAGR of 6.14% during 2018-2022
3.2.2. Government initiatives to combat drug trafficking to drive defense expenditure over the forecast period
3.2.3. Defense expenditure as a percentage of GDP estimated to increase over the forecast period
3.3. Analysis of Defense Budget Allocation
3.3.1. Share of capital expenditure to average 13.7% during the forecast period
3.3.2. In Mexico, capital expenditure on defense is expected to grow at a CAGR of 6.24% during the forecast period
3.3.3. Per capita defense expenditure expected to increase over the forecast period
3.4. Homeland Security Market Size and Forecast
3.4.1. Homeland security expenditure is anticipated to increase at a CAGR of 8.52% during the forecast period
3.4.2. Money laundering and organized crime to drive the Homeland Security market
3.4.3. Mexico is considered to be at ‘high risk’ of terrorist attacks
3.4.4. Mexico has a moderate threat from foreign terrorist organizations
3.4.5. Mexico considered at ‘Moderate Risk’ of terrorist attack
3.5. Benchmarking with Key Global Markets
3.5.1. Mexico’s defense budget is expected to increase over the forecast period
3.5.2. Mexico’s military expenditure is limited compared to the leading countries worldwide
3.5.3. Mexico allocates a low percentage of GDP to defense
3.6. Market Opportunities: Key Trends and Growth Stimulators
3.6.1. Multi-mission Helicopters
3.6.2. Corvettes MRO
3.6.3. Corvettes
3.6.4. Transport Aircraft

4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Limited domestic defense capability to drive the country’s defense imports
4.1.2. Defense imports are expected to increase over the forecast period
4.1.3. The US was a major arms supplier to Mexico during 2012-2016
4.1.4. Aircraft to dominate Mexican defense imports
4.2. Export Market Dynamics
4.2.1. Mexico does not export arms due to an underdeveloped domestic arms industry

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

6. Market Entry Strategy
6.1. Budgeting Process
6.1.1. Procurement Policy and Process
6.1.2. Mexico has not disclosed any offset obligations
6.1.3. Mexico allows 100% FDI in the defense industry
6.2. Market Entry Route
6.2.1. Foreign OEMs prefer direct selling to enter the market
6.2.2. Military collaborations provide good market entry opportunities
6.3. Key Challenges
6.3.1. Corruption and lack of transparency impedes the growth of Mexico’s defense industry
6.3.2. Lack of domestic defense technological know-how acts as a deterrent to market entry

7. Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.2. Key Domestic Companies
7.2.1. Productos Mendoza: overview
7.2.2. Productos Mendoza: products
7.2.3. Aviabaltika de Mexico Company: overview
7.2.4. Aviabaltika de Mexico Company: products and services

8. Business Environment and Country Risk
8.1. Economic Performance
8.1.1. GDP Per Capita
8.1.2. GDP, Current Prices
8.1.3. Exports of Goods and Services (LCU Billion)
8.1.4. Imports of Goods and Services (LCU Billion)
8.1.5. Gross National Disposable Income (US$ Billion)
8.1.6. Local Currency Unit per US$
8.1.7. Market Capitalization of Listed Companies
8.1.8. Market Capitalization of Listed Companies (% of GDP)
8.1.9. Goods exports as % of GDP
8.1.10. Goods imports as % of GDP
8.1.11. Service Imports as % of GDP
8.1.12. Service Exports as % of GDP
8.1.13. Foreign Direct Investment
8.1.14. Net foreign direct investment as % of GDP
8.1.15. Mining, Manufacturing and Utilities Output LCU Billion

9. Appendix
9.1. About the Publisher
9.2. Disclaimer

List of Tables:
Table 1: Mexican Ground Forces Strength
Table 2: Mexican Air Forces Strength
Table 3: Mexico Navy Strength
Table 4: Mexico - Ongoing Development and Procurement Programs
Table 5: Mexico - Future Procurement Programs
Table 6: Mexican Defense Expenditure (MXN Billion & US$ Billion), 2013-2022
Table 7: Mexican GDP Growth vs. Defense Expenditure as Percentage of GDP Growth, 2013-2022
Table 8: Mexican Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022
Table 9: Mexican Defense Capital Expenditure (MXN Billion & US$ Million), 2013-2022
Table 10: Mexican Per Capita Defense Expenditure (US$), 2013-2022
Table 11: Mexican Homeland Security Expenditure (MXN Billion & US$ Billion), 2013-2022
Table 12: Terrorism Index, 2017
Table 13:Benchmarking with Key Markets - 2013-2017 vs. 2018-2022
Table 14: Mexican Budget Formation Timetable
Table 15: Competitive Landscape of the Mexican Defense Industry
Table 16: Productos Mendoza - Product Focus
Table 17: Aviabaltika de Mexico Company - Products and Services

List of Figures:
Figure 1: Mexican Defense Expenditure (MXN Billion), 2013-2022
Figure 2: Mexican Defense Expenditure (US$ Billion), 2013-2022
Figure 3: Mexican GDP Growth vs. Defense Expenditure as a Percentage of GDP, 2013-2022
Figure 4: Mexican Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022
Figure 5: Mexican Capital Budget Allocation (MXN Billion), 2013-2022
Figure 6: Mexican Capital Budget Allocation (US$ Million), 2013-2022
Figure 7: Mexican Per Capita Defense Expenditure (US$), 2013-2022
Figure 8: Mexican Homeland Security Budget (MXN billion), 2013-2022
Figure 9: Mexican Homeland Security Budget (US$ billion), 2013-2022
Figure 10: Terrorism Heat Map, 2017
Figure 11: Terrorism Index, 2017
Figure 12: Benchmarking with Key Markets: 2013-2017 vs. 2018-2022
Figure 13: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2017 and 2022
Figure 14: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2017
Figure 15: Multi Mission Helicopter Market Size (US$ Million), 2017-2027
Figure 16: Corvettes MRO Market Size (US$ Million), 2017-2027
Figure 17: Corvettes Market Size (US$ Million), 2017-2027
Figure 18: Transport Aircraft Market Size (US$ Million), 2017-2019
Figure 19: Mexican Defense Imports (TIV Values) 2012-2016
Figure 20: Mexican Defense Imports by Country (%), 2012-2016
Figure 21: Mexican Defense Imports by Category (%), 2012-2016
Figure 22: Industry Dynamics Porter’s Five Forces Analysis
Figure 23: Mexican GDP Per Capita, 2015-2025
Figure 24: Mexican GDP, Current Prices (US$ Billion), 2015-2025
Figure 25: Mexican Exports of Goods and Services (LCU Billion), 2005-2014
Figure 26: Mexican Imports of Goods and Services (LCU Billion), 2005-2014
Figure 27: Mexican Gross National Disposable Income (US$ Billion), 2005-2012
Figure 28: Local Currency per US$, 2015-2024
Figure 29: Mexican Market Capitalization of Listed Companies (US$ Billion), 2005-2012
Figure 30: Mexican Market Capitalization of Listed Companies (% of GDP), 2005-2012
Figure 31: Mexican Goods Exports as % of GDP, 2005-2014
Figure 32: Mexican Goods Imports as % of GDP, 2005-2014
Figure 33: Mexican Service Imports as % of GDP, 2005-2014
Figure 34: Mexican Service Exports as % of GDP, 2005-2014
Figure 35: Mexican Foreign Direct Investment (US$ Billion), 2005-2014
Figure 36: Mexican Net foreign direct investment as % of GDP, 2005-2014
Figure 37: Mexican Mining, Manufacturing and Utilities Output (LCU Billion), 2005-2014
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  • Productos Mendoza
  • AVIABALTIKA Aviation Company
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