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This report is the result of SDI's extensive market and company research covering the Argentine defense industry, and provides detailed analysis of both historic and forecast defense industry values including key growth stimulators, analysis of the leading companies in the industry, and key news.
Introduction and Landscape
Why was the report written?
The Future of the Argentine Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 offers the reader an insight into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain a market share in the Argentine defense industry.
What is the current market landscape and what is changing?
Argentine defense expenditure increased at a CAGR of 15.37% during the review period and values US$4.1 billion in 2013. The focus of the Argentine government will be on the modernization of its armed forces, participation in peacekeeping operations, and the Falkland Islands dispute with the UK.
What are the key drivers behind recent market changes?
Modernization of its armed forces, participation in peacekeeping operations, and the Falkland Islands dispute with the UK.
What makes this report unique and essential to read?
The Future of the Argentine Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 provides detailed analysis of the current industry size and growth expectations from 2014 to 2018, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.
Key Features and Benefits
- The report provides detailed analysis of the current industry size and growth expectations from 2014 to 2018, including highlights of key growth stimulators, and also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.
- The report includes trend analysis of imports and exports, together with their implications and impact on the Argentine defense industry.
- The report covers five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.
- The report allows readers to identify 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.
- The report helps the reader to understand the competitive landscape of the defense industry in Argentina. It provides an overview of key defense companies, both domestic and foreign, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.
Key Market Issues
- The Argentine defense market has experienced a lack of investment due to the country's budgetary constraints. Argentina's armed forces are using obsolete defense equipment which needs to be replaced by more advanced equipment. There are many naval vessels that are not operational and need repair and maintenance, but the armed forces' procurement plans are halted by a fluctuating defense budget. However, Argentina is receiving help from countries such as Russia and China, who are ready to replace the obsolete military equipment on credit terms. The country has also postponed many of its modernization plans such as the replacement of the Mirage III fighter in 2009, due to economic constraints. However, it is expected that the country will establish a strong defense force during the forecast period.
- In October 2012 a naval training ship "ARA Liberated" was seized by court order from Ghana for its nonpayment of the loan to its creditors during 2001-2002. Argentina had a debt of US$100 billion in 2001 which had been restructured and 30% of the amount was paid during 2005-2010. This default background may deter many companies from investing their capital in Argentina's defense market.
- Foreign defense companies can supply the Argentine defense market through FMS arrangements. For example, in September 2010, the Argentine government signed a contract with Russia to procure two Mi-17 helicopters for the Argentine air force. This was the first time the Argentine government purchased Russian equipment. The majority of defense purchases from the US, which is the largest supplier of arms to Argentina, are made through FMS. There are approximately US$ 25.79 million and $ 0.37 million of arms and equipment sold to Argentina through FMS in the year of 2010 and 2011 respectively.
- Foreign defense companies can enter the Argentine defense market through technology transfers, sub-contracting agreements and long-term supply contracts, favored by Argentina's offset policy. For example, in October 2010, Brazilian firm Embraer established a partnership with Argentina for the development of the KC-390 medium transport aircraft. Argentina is expected to join the program through the Fábrica Argentina de Aviones aerospace company and initially purchase six KC-390 aircraft. Additionally, Argentina signed an agreement with South Africa in 2010 to exchange their security technologies, participation in various joint training exercises, military health development initiatives and rescue operations in the Southern Atlantic Ocean. Moreover, the South African defense company, Paramount Group, and the Argentine company, Codesur signed an agreement in December 2012 to introduce Paramount Group's security and land systems, and electronic and aerospace systems to Latin America.
- With a limited domestic defense industry, Argentina imports advanced defense equipment from countries such as the US, Russia, Spain, China, Brazil, and Austria. During 2008-2012, the country imported the highest share of arms from the US, constituting 78.8% of the total arms imports. During the forecast period, the US is expected to continue to dominate the market, with China expected to enter the market through the sale of helicopters. Argentina is expected to acquire fighter aircraft, including the possibility of acquiring second-hand aircraft which would allow other European countries to enter the market.