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This report is the result of SDI's extensive market and company research covering the Danish 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 Danish 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 market share in the Danish defense industry.
What is the current market landscape and what is changing?
The Danish defense budget, valued at US$4.1 billion in 2013, is estimated to register a CAGR of -9.16% during the forecast period and decline to US$2.8 billion by 2018. This decrease in spending is expected to be primarily due to the country's public debt, which will force Denmark to cut its defense budget over the forecast period. Primarily driven by capability building and participation in NATO and UN operations, the country's defense expenditure is expected to focus more on the procurement of equipment for its maritime security, cyber security, missile defense, and counterterrorism capabilities over the period 2014-2018. The country's defense imports and exports are expected to increase marginally over the forecast period.
What are the key drivers behind recent market changes?
Denmark's defense priorities focus on enhancing the capabilities of its armed forces to deploy force contributions at short notice for safeguarding Danish interests at home and abroad, and for participation in NATO's operations and UN peacekeeping operations. These factors are expected to drive the country's military expenditure over the forecast period.
What makes this report unique and essential to read?
The Future of the Danish 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 Danish 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 Denmark. 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
- Denmark has a small defense budget when compared to other European countries such as the UK, Germany, and France, and is likely to register negative growth over the forecast period. As the Danish government allocates a small proportion of its budget to defense, the country spends less on the purchase of equipment and high-technology arms and ammunition. Moreover, the country spends less on advanced technology and research and development, resulting in lower export capacities. Consequently, the country's low defense budget has become a barrier to entry for foreign companies. As Denmark's defense industry comprises small companies with little specialization in a particular weapon category, and due to a lack of advanced defense technology, foreign weapon suppliers wishing to conduct business face challenges in infrastructure. Although these foreign suppliers can bring in advanced technology, this will result in technology imports without any offset incentives. Foreign suppliers face challenges on these fronts while pursuing a defense business opportunity.
- Denmark is a member of the Nordic Council, which was formed in 1952 with the purpose of enhancing economic co-operation among Nordic countries. Moreover, with the formation of the Nordic Defense Co-operation (NORDEFCO) in 2009, defense procurement from - and joint equipment development programs with -Nordic member countries are likely to increase during the forecast period. Additionally, as Denmark has signed a defense co-operation treaty with the US, the country is giving preference to US companies while purchasing defense materials. As a consequence, it has become challenging for companies from countries other than the US and those in the Nordic region to enter the Danish defense market.
- Safeguarding Danish interests: The primary purpose of Danish armed forces is to enforce the sovereignty of the kingdom and safeguarding Danish interests in Greenland, Faroe Islands and abroad. In addition, the country's armed forces are also expected to carry out national tasks such as surveillance and rescue operations. Climate changes leading to increased geographic accessibility in Arctic region have been resulting in heightened commercial activity in the area. The Danish armed forces are expected to safeguard the country's right to extract natural resources in Greenland and the Arctic region. During the review period, the Ministry of Defense undertook a number of major reorganizations of its armed forces to equip relevant and contemporary capacities. In addition, the Danish government believes that the continuous proliferation of weapons of mass destruction and long-range missiles along with cyber-attacks pose major security threats to Danish interests. International developments coupled with these factors will lead to altered requirements for the capacity development of Danish armed forces, which is expected to deploy its forces quickly and flexibly, with a focus on short as well as sustained operations. As part of the capacity development, the Danish government is planning to equip its armed forces with modern military arms and equipment such as joint strike fighter aircraft, marine helicopters, armored vehicles, patrol vessels, small ships, radars and communication systems, new artillery systems, and ballistic missile defense systems among others. International Peacekeeping missions: Denmark is the main contributor to NATO (KFOR) operations in Kosovo with a commitment of about 150 military personnel. In November 2010 Denmark reaffirmed its commitment to assist NATO forces in Afghanistan and also committed to help train Afghan security forces ahead of an eventual withdrawal of NATO troops scheduled at the end of 2014, allowing the country to assume full sovereignty.
- Cyber-warfare has moved up the list of favorite mode of attack by terrorist groups over the last five years. The possibility of destroying the nation's strategic resources even without entering into the country is appealing to these terrorists groups and instances of such cyber-attacks have been increasing. Danish Defense Intelligence identified cyber war as the most serious threat to national security in its risk assessment announced in October 2012. The Danish government placed high priority on cyber security and established a Computer Emergency Response Team (CERT), which joined the Europe Government CERTs group (EGC group), a joint effort by European countries to counter cyber-attacks. Furthermore, Denmark's Defense Intelligence Service is planning to establish a cyber warfare unit 'Center for Cyber Security' to safeguard its military network from cyber-attacks with an estimated budget of US$6 million. The center's budget is expected to increase annually to reach US$26 million by 2017 and will be handling both defensive and offensive cyber security measures.
- Arms imports in Denmark declined sharply in 2010 and 2011 due to the country's budget cuts, which recovered in 2012. The country's defense imports are expected to recover gradually over the forecast period, as the country plans to modernize its military and procurement of F-35 joint strike fighters, MH-60R marine helicopters, and ballistic missile defense systems. Denmark sourced 31.8% of its defense import requirements from the UK during 2008-2012, followed by Sweden, the Netherlands and Germany, accounting for 29.7%, 18.0%, and 10.0% of defense imports respectively. Switzerland and the US were other major arms suppliers for the country. Over the period 2013-2017, the country is expected to increase its defense imports, especially from the US and its European neighbors.