BMI View: The United Stated defence military complex is the biggest in the world. United States military expenditure is the highest in the world , driv en the by government commitment to various peace keeping missions and large number of armed force deployments, in addition to a sizeable domestic terrorism threat . We believe that the United States defence budget will increase and be re- oriented to take account of the threat posed by Islamic State of Iraq and Syria (ISIS) and to address a diverse range of international commitments.
United States faces a complex security scenario: ISIL is posing a major security risk in the Middle East to the United States and its allies. United States also sees necessary to maintain military presence in Afghanistan until at least December 2015. These two facts also increase the potential of domestic terrorism. The need to contain Russia's initiatives in Europe determines its participation in permanent military exercises and educational exchanges with Ukraine. Finally, focus remains on the Asia Pacific region and the "pivoted" stance the US is implementing, trying to balance China's influence, through engaging in countless military exercises and defence cooperation initiatives with regional players. The mentioned security trends will drive US Defence expenditure in years to come.
Although initially was expected that US Congress would contract the defence budget in their time of austerity, the aforementioned security threats establish that 2015 will see a considerable increase in defence spending. We expect a 10.9% increase in relation with 2014. At the moment cost- saving measures have taken place but we expect that this will provide only minor inconveniences in terms of investments and procurements.
United States remains the biggest, most significant and profitable market in the world of defence, military and security goods and services and we expect it to hold this position in the short and middle term period. In 2015 we expect to see a rising defence budget of USD725bn, a USD71bn increase from 2014. The great amount of resources available for military spending have determined the existence of a strong and very competitive and sophisticated local market where there is little space for foreign companies to penetrate. The aforementioned expenditure is driven by acquisitions in equipment for military combat, missile defence, cyber defence, and nuclear deterrence. United States is also investing to assure the use of space, especially in relation to the expansion of capabilities to protect and improve the resilience of US systems.
The need to resolve a diverse range of conflict situations will in our view stimulate procurement plans as the country will now be able to focus on obtaining arms and technologies that might have been previously decided against due to austerity measures. The main focus of these procurements will be the F- 35 Lightning II Joint Strike Fighter Program. After years of setbacks, in July 2015 the United States Marine Corps stated that a squadron of 10 F- 35B Lightning II aircraft is ready for international deployment. The Marine Fighter Attack Squadron 121 is the first squadron in history to become operational with an F-35 variant.
In July 2015 was announced that by 2018 the US Army is expected to downsize from 490,000 to 450,000 personnel, cut 17,000 civilian workforces and reduce the size of some brigade combat teams.
In March 2015 high rank Navy and Air Force officials stated at a House Armed Services Committee hearing that the president's budget request for fiscal year 2016 will support the modernization of combat aviation initiatives. The mentioned budget proposal centres on modernizing Air Force capabilities while investigating revolutionary future technologies.
In January 2015 the Department of Defence released new updated instructions for acquisitions system (Department of Defence Instruction 5000.02, Operation of the Defence Acquisition System).
Key BMI Forecasts
Over 2015 defence expenditure will reach 4% of United States GDP (an increase of 10.9% over 2014 levels), reaching USD725bn.
Defence imports will reach USD5572mn over 2015 of which USD3639mn will come from arms and ammunition.
Defence exports will reach USD 8572mn of which USD4573mn will come from arms and ammunition.
We expect in the long term future to see a sustained defence expenditure level of around 4% of GDP.
The United States Defence & Security Report features BMI Research's independent forecasts for national and international security, the defence industry, military expenditure, employment in arms production, and arms imports and exports, as well as examining industry trends and prospects, national and multinational arms producers and the regulatory environment.
BMI's United States Defence & Security Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the American defence and security industry.
- Benchmark BMI's independent defence and security industry forecasts on United States to test other views - a key input for successful budgetary and strategic business planning in the American defence and security market.
- Target business opportunities and risks in the Asia defence and security sector through reviews of latest industry trends, regulatory changes and major deals, projects and investments in Asia.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).
Global and Regional Political Outlooks
A strategic overview of the world’s major political risks, identifying countries facing leadership successions and nations at risk of upheaval, inter-state conflict, or separatism and insurgencies, plus a summary of the world’s ‘wild card’ low-probability high-impact risks.
Snapshot evaluation of the major issues affecting the defence and security sectors, economy and politics, with issues subdivided into strengths, weaknesses, opportunities and threats.
BMI Industry Forecast Scenario
Historic data series and forecasts to end-2019 for key industry indicators supported by explicit assumptions, plus analysis of key downside risks to the main forecast.
- Defence Expenditure: Defence expenditure (local currency and USDbn); defence expenditure (% of total budget); defence expenditure per capita (USD); defence budget (local currency and USDbn).
- Armed Forces (to 2012): Manpower available for military service, manpower fit for militaryservice, army personnel, navy personnel,air force personnel, total armed forces, (‘000) (% population).
- Arms Trade: Arms and ammunition exports and imports (USDmn); bombs, grenades and missiles exports and imports (USDmn); revolver and pistol exports and imports (USDmn); weapons excluding guns and swords exports and imports (USDmn).
Political Risk Assessment
Drawing on BMI’s heritage of more than 25 years of Country Risk analysis, this comprehensively evaluates the key risks to domestic politics and foreign relations, focusing on issues most likely to affect either domestic security or the defence sector.
Security Risk Analysis
BMI’s proprietary Security Risk Indices provide investors with a reliable and country-comparable guide to conflict, terrorism and criminal risk, backed up by our analyst’s latest assessment of each component. Furthermore, drawing on our Country Risk expertise, we assess the state’s vulnerability to a serious, or prolonged, terrorist campaign.
Armed Forces Spending/ Expenditure
The reports contain a detailed breakdown of areas of expenditure by the armed forces, these include spending on international deployments, WMDs and missile defence systems as well as individual breakdowns of the cost-per-soldier.
The domestic security overview lists the various potential internal security threats facing a country, ranging from internal security issues such as terrorism, cyber terrorism, crime and drugs, to external security issues including general defence procedures and potential threats from specific countries. The reports also provide a regional overview which details specific issues and flashpoints affecting the Americas, along with potential risks in the coming year.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Defence & Security Market reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.