The Belgian Defense Industry-Market Opportunities and ... · The Belgian Defense Industry-Market...
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www.strategicdefenceintelligence.com [email protected] John Carpenter House, 7 Carmelite Street, LondonEC4Y 0BS, United Kingdom, Tel: +44 (0)20 7936 6830 The Belgian Defense Industry-Market Opportunities and Entry Strategies Analyses and Forecasts to 2017
Transcript of The Belgian Defense Industry-Market Opportunities and ... · The Belgian Defense Industry-Market...
www.strategicdefenceintelligence.com [email protected]
John Carpenter House, 7 Carmelite Street, LondonEC4Y 0BS, United Kingdom, Tel: +44 (0)20 7936 6830
The Belgian Defense Industry-Market
Opportunities and Entry Strategies
Analyses and Forecasts to 2017
The Belgian Defense Industry-Market Opportunities and Entry Strategies Analyses and Forecasts to 2017
www.strategicdefenceintelligence.com [email protected]
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TABLE OF CONTENTS
1 Introduction ......................................................................................................................... 10
1.1 What is this Report About? ..........................................................................................................10
1.2 Definitions .....................................................................................................................................10
1.3 Summary Methodology .................................................................................................................12
1.4 SDI Terrorism Index ......................................................................................................................13
1.5 About Strategic Defence Intelligence (www.strategicdefenceintelligence.com) ......................13
2 Executive Summary ............................................................................................................ 14
3 Market Attractiveness and Emerging Opportunities ........................................................ 16
3.1 Defense Market Size Historical and Forecast..............................................................................17
3.1.1 Defense expenditure expected to register a CAGR of XX% over the forecast period ............................. 17
3.1.2 Peacekeeping operations and the threat of terrorism drives defense spending ...................................... 19
3.2 Analysis of Defense Budget Allocation .......................................................................................20
3.2.1 Majority of defense budget allocated for revenue expenditure................................................................. 20
3.2.2 In the forecast period defense expenditure as a percentage of GDP will be XX% .................................. 22
3.2.3 Per capita defense spend to increase during the forecast period ............................................................ 24
3.2.4 Share of equipment expenditure in capital expenditure budget to increase during the forecast period .. 26
3.2.5 Increase in equipment expenditure likely during the forecast period ....................................................... 28
3.2.6 Budget allocation for other capital expenditure to register a CAGR of XX% during the forecast period . 30
3.2.7 Share of personnel expenditure in revenue budget to rise during the forecast period ............................ 32
3.2.8 Personnel expenditure to decline and register a CAGR of XX% during the forecast period ................... 34
3.2.9 Operations and other expenditure to register a CAGR of XX% during the forecast period ..................... 36
3.3 Homeland Security Market Size and Forecast ............................................................................38
3.3.1 Homeland security budget to rise during the forecast period ................................................................... 38
3.3.2 Linguistic conflicts, drug trafficking, cyber security and money laundering are main homeland security
concerns ................................................................................................................................................................ 41
3.3.3 Belgium experienced low terror activity during the review period ............................................................ 42
3.4 Benchmarking with Key Global Markets .....................................................................................46
3.4.1 Belgium’s defense budget to marginally improve during the forecast period ........................................... 46
3.4.2 Belgian military expenditure is limited compared to other countries ........................................................ 48
3.4.3 Belgium allocates a lower percentage of GDP towards defense compared to other NATO members .... 50
3.4.4 Belgium ranked eighteenth among leading arms exporting countries in 2011......................................... 51
3.5 Market Opportunities: Key Trends and Growth Stimulators ......................................................52
3.5.1 Increasing demand for Seastar and Gatekeeper sensors ........................................................................ 52
3.5.2 Enhancing Earth Observation (EO) capabilities will provide market opportunities .................................. 52
3.5.3 Demand for Networked Multi-Robot Systems expected ........................................................................... 52
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3.5.4 NH90 helicopter program will provide business opportunities.................................................................. 52
3.5.5 Demand for remote weapon stations, military vehicles and ships to increase ......................................... 53
4 Defense Procurement Market Dynamics ........................................................................... 54
4.1 Import Market Dynamics ...............................................................................................................55
4.1.1 Defense imports expected to decrease during 2012-2017 ....................................................................... 55
4.1.2 During 2007–2011, the majority of imports were from Netherlands ......................................................... 56
4.1.3 Ships and armored vehicles constitute the majority of Belgium’s arms imports ...................................... 57
4.2 Export Market Dynamics ..............................................................................................................58
4.2.1 Defense exports fluctuated widely during 2007-2011 .............................................................................. 58
4.2.2 Jordan, Bulgaria and Morocco are the largest importers of Belgium arms .............................................. 59
4.2.3 Aircraft, ships and armored vehicles account for the majority of exports ................................................. 60
5 Industry Dynamics .............................................................................................................. 61
5.1.1 Bargaining power of supplier: low to medium ........................................................................................... 62
5.1.2 Bargaining power of buyer: high ............................................................................................................... 62
5.1.3 Barrier to entry: medium ........................................................................................................................... 62
5.1.4 Intensity of rivalry: low to high .................................................................................................................. 62
5.1.5 Threat of substitution: low to medium ....................................................................................................... 63
6 Market Entry Strategy ......................................................................................................... 64
6.1 Market Regulation .........................................................................................................................64
6.1.1 Offset policy aids development of domestic defense industry.................................................................. 64
6.1.2 Belgium permits XX% FDI in defense industry ......................................................................................... 65
6.2 Market Entry Route .......................................................................................................................66
6.2.1 Joint weapons development program, a viable market entry route .......................................................... 66
6.2.2 Subsidiaries provide market entry opportunities ...................................................................................... 66
6.2.3 Acquisition of domestic companies enables entrance to market.............................................................. 66
6.3 Key Challenges .............................................................................................................................67
6.3.1 Defense budget cuts will impact negatively on defense companies ........................................................ 67
6.3.2 Preference to EU companies poses a challenge for non-European companies ...................................... 67
6.3.3 Instability in the political scenario poses a challenge to the Belgian defense industry ............................ 67
7 Competitive Landscape and Strategic Insights ................................................................ 68
7.1 Competitive Landscape Overview ...............................................................................................68
7.2 Key Domestic Companies ............................................................................................................68
7.2.1 FN Herstal: overview ................................................................................................................................ 68
7.2.2 FN Herstal: products and services ........................................................................................................... 68
7.2.3 FN Herstal: recent announcements and strategic initiatives .................................................................... 69
7.2.4 FN Herstal: alliances ................................................................................................................................. 70
7.2.5 FN Herstal: recent contract wins .............................................................................................................. 71
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7.2.6 Sonaca SA: overview ................................................................................................................................ 72
7.2.7 Sonaca SA: products and services ........................................................................................................... 72
7.2.8 Sonaca SA: recent announcements and strategic initiatives ................................................................... 73
7.2.9 Sonaca SA: alliances ................................................................................................................................ 73
7.2.10 Sonaca SA: recent contract wins .............................................................................................................. 73
7.2.11 Sonaca SA: financial analysis .................................................................................................................. 74
7.2.12 Cockerill Maintenance & Ingénierie SA: overview .................................................................................... 76
7.2.13 Cockerill Maintenance & Ingénierie SA: products and services ............................................................... 76
7.2.14 Cockerill Maintenance & Ingénierie SA: recent announcements and strategic initiatives ........................ 77
7.2.15 Cockerill Maintenance & Ingénierie SA: alliances .................................................................................... 78
7.2.16 Cockerill Maintenance & Ingénierie SA: recent contract wins .................................................................. 78
7.2.17 Cockerill Maintenance & Ingénierie SA: financial analysis ....................................................................... 79
7.2.18 SABCA Group: overview .......................................................................................................................... 81
7.2.19 SABCA Group: products and services ..................................................................................................... 81
7.2.20 SABCA Group: recent announcements and strategic initiatives .............................................................. 81
7.2.21 SABCA Group: alliances........................................................................................................................... 82
7.2.22 SABCA Group: recent contract wins ........................................................................................................ 83
7.2.23 SABCA Group: financial analysis ............................................................................................................. 84
7.2.24 Barco: overview ........................................................................................................................................ 86
7.2.25 Barco: products and services ................................................................................................................... 86
7.2.26 Barco: recent announcements and strategic initiatives ............................................................................ 87
7.2.27 Barco: alliances ........................................................................................................................................ 88
7.2.28 Barco: recent contract wins ...................................................................................................................... 88
7.2.29 Barco: financial analysis ........................................................................................................................... 90
7.2.30 Asco Industries: overview ......................................................................................................................... 93
7.2.31 Asco Industries: products/services ........................................................................................................... 93
7.2.32 Asco Industries: alliances ......................................................................................................................... 94
7.2.33 Asco Industries: recent contract wins ....................................................................................................... 94
7.3 Key Foreign Companies ...............................................................................................................95
7.3.1 Mecar SA: overview .................................................................................................................................. 95
7.3.2 Mecar SA: products and services ............................................................................................................. 95
7.3.3 Mecar SA: recent announcements and strategic initiatives...................................................................... 96
7.3.4 Mecar SA: alliances .................................................................................................................................. 96
7.3.5 Mecar SA: recent contract wins ................................................................................................................ 96
7.3.6 Alcatel-Lucent Belgium: overview ............................................................................................................. 97
7.3.7 Alcatel-Lucent Belgium: products and services ........................................................................................ 97
7.3.8 Alcatel-Lucent Belgium: recent announcements and strategic initiatives ................................................ 98
7.3.9 Alcatel-Lucent Belgium: financial analysis................................................................................................ 99
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7.3.10 Thales Belgium: overview ....................................................................................................................... 101
7.3.11 Thales Belgium: products and services .................................................................................................. 101
7.3.12 Thales Belgium: recent announcements and strategic initiatives .......................................................... 101
7.3.13 Thales Belgium: alliances ....................................................................................................................... 102
7.3.14 Thales Belgium: recent contract wins ..................................................................................................... 102
7.3.15 Northrop Grumman Belgium: overview .................................................................................................. 104
7.3.16 Northrop Grumman Belgium: products and services ............................................................................. 104
7.3.17 Northrop Grumman Belgium: recent announcements and strategic initiatives ...................................... 112
7.3.18 Northrop Grumman Belgium: recent contract wins ................................................................................ 112
8 Business Environment and Country Risk ....................................................................... 113
8.1 Demographics & Social Statistics .............................................................................................. 113
8.1.1 Population – Female ............................................................................................................................... 113
8.1.2 Population - Male .................................................................................................................................... 114
8.2 Economic Performance .............................................................................................................. 115
8.2.1 Construction Output, Current Prices, Local Currency ............................................................................ 115
8.2.2 Construction Output, Current Prices, US Dollars ................................................................................... 116
8.2.3 Current Account Balance as Percentage of GDP .................................................................................. 117
8.2.4 Exports of Goods and Services, current prices ...................................................................................... 118
8.2.5 Exports of services, local currency ......................................................................................................... 119
8.2.6 Fiscal Balance as a percentage of GDP................................................................................................. 120
8.2.7 Foreign Direct Investment....................................................................................................................... 121
8.2.8 GDP at Purchasing Power Parity ........................................................................................................... 122
8.2.9 GDP, Constant Prices (Local Currency) ................................................................................................. 123
8.2.10 GDP, Constant Prices (US$ billion) ........................................................................................................ 124
8.2.11 GDP, Current Prices (Local Currency) ................................................................................................... 125
8.2.12 GDP, Current Prices (US$ billion) .......................................................................................................... 126
8.2.13 General Government Final Consumption Expenditure ........................................................................... 127
8.2.14 Gross Fixed Capital Formation, Current Prices ...................................................................................... 128
8.2.15 Imports of goods and services ................................................................................................................ 129
8.2.16 Import of Services ................................................................................................................................... 130
8.2.17 Inflation, average consumer prices ......................................................................................................... 131
8.2.18 Interest rate (Lending) ............................................................................................................................ 132
8.2.19 Manufacturing Output, Current Prices (Local Currency Bn) ................................................................... 133
8.2.20 Manufacturing Output, Current Prices (US$ Billions) ............................................................................. 134
8.2.21 Wholesale Price Index ............................................................................................................................ 135
8.3 Energy and Utilities ..................................................................................................................... 136
8.3.1 Crude Oil Distillation Capacity ................................................................................................................ 136
8.3.2 Electricity Exports ................................................................................................................................... 137
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8.3.3 Electricity Imports ................................................................................................................................... 138
8.3.4 Electricity Installed Capacity ................................................................................................................... 139
8.3.5 Hydroelectricity Installed Capacity .......................................................................................................... 140
8.3.6 Natural Gas Consumption ...................................................................................................................... 141
8.3.7 Natural Gas Imports ................................................................................................................................ 142
8.3.8 Net Conventional Thermal Electricity Generation .................................................................................. 143
8.3.9 Net Geothermal, Solar, Wind, and Wood Electric Power Generation .................................................... 144
8.3.10 Net Hydroelectric Power Generation ...................................................................................................... 145
8.3.11 Nuclear Electricity Net Generation ......................................................................................................... 146
8.3.12 Petroleum, Consumption ........................................................................................................................ 147
8.3.13 Petroleum, Production ............................................................................................................................ 148
8.4 Labour .......................................................................................................................................... 149
8.4.1 People Employed in R & D ..................................................................................................................... 149
8.5 Minerals ....................................................................................................................................... 150
8.5.1 Coal Consumption .................................................................................................................................. 150
8.6 Social & Political Risk ................................................................................................................. 151
8.6.1 Political Stability Index ............................................................................................................................ 151
8.6.2 Transparency Index ................................................................................................................................ 152
8.7 Technology .................................................................................................................................. 153
8.7.1 Fixed Broadband Internet Subscribers ................................................................................................... 153
8.7.2 Gross Domestic Expenditure on Research and Development as Percentage of GDP .......................... 154
8.7.3 Investment in Telecommunication .......................................................................................................... 155
8.7.4 Patents Granted ...................................................................................................................................... 156
8.7.5 Fixed Line Calling Cost Local ................................................................................................................. 157
8.7.6 Fixed Line Calling Cost National ............................................................................................................ 158
9 Appendix ............................................................................................................................ 159
9.1 Contact Us ................................................................................................................................... 159
9.2 About SDI ..................................................................................................................................... 159
9.3 Disclaimer .................................................................................................................................... 159
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LIST OF FIGURES
Figure 1: Belgian Defense Expenditure (US$ Billion), 2008–2012 ................................................................................................................... 17 Figure 2: Belgian Defense Expenditure (US$ Billion), 2013–2017 ................................................................................................................... 18 Figure 3: Belgian Defense Budget Split between Capital and Revenue Expenditure (%), 2008–2012 .............................................................. 20 Figure 4: Belgian Defense Budget Split between Capital and Revenue Expenditure (%), 2013–2017 .............................................................. 21 Figure 5: Belgian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2008–2012 ..................... 22 Figure 6: Belgian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2013–2017 ..................... 23 Figure 7: Belgian Per Capita Defense Spend (US$), 2008–2012 ..................................................................................................................... 24 Figure 8: Belgian Per Capita Defense Spend (US$), 2013–2017 ..................................................................................................................... 25 Figure 9: Belgian Capital Budget Allocations (%), 2008–2012 ......................................................................................................................... 26 Figure 10: Belgian Capital Budget Allocations (%), 2013–2017 ....................................................................................................................... 27 Figure 11: Belgian Equipment Expenditure (US$ Billion), 2008–2012 .............................................................................................................. 28 Figure 12: Belgian Equipment Expenditure (US$ Billion), 2013–2017 .............................................................................................................. 29 Figure 13: Belgian Other Capital Expenditure (US$ Billion), 2008–2012 .......................................................................................................... 30 Figure 14: Belgian Other Capital Expenditure (US$ Billion), 2013–2017 .......................................................................................................... 31 Figure 15: Belgian Revenue Budget Allocation (%), 2008–2012 ...................................................................................................................... 32 Figure 16: Belgian Revenue Budget Allocation (%), 2013–2017 ...................................................................................................................... 33 Figure 17: Belgian Personnel Expenditure (US$ Billions), 2008–2012 ............................................................................................................. 34 Figure 18: Belgian Personnel Expenditure (US$ Billions), 2013–2017 ............................................................................................................. 35 Figure 19: Belgian Operations and Other Expenditure (US$ Billions), 2008–2012 ........................................................................................... 36 Figure 20: Belgian Operations and Other Expenditure (US$ Billions), 2013–2017 ........................................................................................... 37 Figure 21: Belgian Homeland Security Expenditure (US$ Billion), 2008–2012 ................................................................................................. 38 Figure 22: Belgian Homeland Security Expenditure (US$ Billion), 2013–2017 ................................................................................................. 39 Figure 23: SDI Terrorism Index, 2011 .............................................................................................................................................................. 42 Figure 24: SDI Terrorism Heat Map, 2011 ....................................................................................................................................................... 45 Figure 25: Benchmarking with Key Markets – 2008–2012 vs. 2013–2017 ....................................................................................................... 47 Figure 26: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2012 and 2017 ......................................................... 49 Figure 27: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2012 .................................................................. 50 Figure 28: Belgian Defense Import Trend, 2007–2011 (TIV values) ................................................................................................................. 55 Figure 29: Belgian Defense Imports by Country (%), 2007–2011 ..................................................................................................................... 56 Figure 30: Belgian Defense Imports by Category (%), 2007–2011 ................................................................................................................... 57 Figure 31: Belgian Defense Export Trend, 2007–2011 (TIV values) ................................................................................................................. 58 Figure 32: Belgian Defense Exports by Country (%), 2007–2011 .................................................................................................................... 59 Figure 33: Belgian Defense Exports by Category (%), 2007–2011................................................................................................................... 60 Figure 34: Industry Dynamics – Porter’s Five Forces Analysis ......................................................................................................................... 61 Figure 35: Sonaca SA - Revenue Trend Analysis (Euro million), 2007–2011 .................................................................................................. 74 Figure 36: Sonaca SA – Operating Profit Trend Analysis (Euro million), 2007–2011 ....................................................................................... 75 Figure 37: Cockerill Maintenance & Ingénierie S.A. - Revenue Trend Analysis (EUR Million), 2007–2011 ....................................................... 79 Figure 38: Cockerill Maintenance & Ingénierie S.A. – Operating Profit Trend Analysis (EUR Million), 2007–2011 ........................................... 80 Figure 39: SABCA Group - Revenue Trend Analysis (EUR million), 2007–2011 .............................................................................................. 84 Figure 40: SABCA Group - Net Profit Trend Analysis (EUR million), 2007–2011 ............................................................................................. 85 Figure 41: SABCA Group – Operating Profit Trend Analysis (EUR million), 2007–2011................................................................................... 85 Figure 42: Barco - Revenue Trend Analysis (EUR billion), 2007–2011 ........................................................................................................... 90 Figure 43: Barco – Operating Profit Trend Analysis (EUR million), 2007–2011 ................................................................................................ 91 Figure 44: Barco - Net Profit Trend Analysis (EUR million), 2007–2011 ......................................................................................................... 92 Figure 45: Alcatel-Lucent - Revenue Trend Analysis (EUR billion), 2007–2011 ............................................................................................... 99 Figure 46: Alcatel-Lucent – Operating Profit Trend Analysis (EUR million), 2007–2011 ................................................................................. 100 Figure 47: Alcatel-Lucent – Net Profit Trend Analysis (EUR million), 2007–2011 ........................................................................................... 100 Figure 48: Belgian Population – Female (Millions), 2008–2017...................................................................................................................... 113 Figure 49: Belgian Population – Male (Millions), 2008–2017 .......................................................................................................................... 114 Figure 50: Belgian Construction Output, Current Prices, Local Currency (Billions), 2001–2010 ..................................................................... 115 Figure 51: Belgian Construction Output, Current Prices (US $ Billions), 2001–2010 ...................................................................................... 116 Figure 52: Belgian Current Account Balance as Percentage of GDP, 2008–2017 .......................................................................................... 117 Figure 53: Belgian Exports of Goods and Services, Current Prices (US$ Billion), 2001– 2010 ....................................................................... 118 Figure 54: Belgian Exports of Services, Local Currency (Billion), 2003– 2012 ............................................................................................... 119 Figure 55: Belgian Fiscal Balance as a percentage of GDP, 2001–2009 ....................................................................................................... 120 Figure 56: Belgian Foreign Direct Investment (US$ Billion), 2002–2010 ........................................................................................................ 121
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Figure 57: Belgian GDP at Purchasing Power Parity (US$ Billion), 2006–2015 ............................................................................................. 122 Figure 58: Belgian GDP at Constant Prices (Local Currency Billion), 2006–2015 .......................................................................................... 123 Figure 59: Belgian GDP at Constant Prices (US$ Billion), 2006–2015 ........................................................................................................... 124 Figure 60: Belgian GDP at Current Prices (Local Currency Billion), 2006–2015 ............................................................................................. 125 Figure 61: Belgian GDP at Current Prices (US$ Billion), 2006–2015 ............................................................................................................. 126 Figure 62: Belgian General Government Final Consumption Expenditure (US$ Billion), 2001–2010 .............................................................. 127 Figure 63: Belgian Gross Fixed Capital Formation, Current Prices (US$ Billion), 2001–2010 ........................................................................ 128 Figure 64: Belgian Imports of Goods and Services (Current US$ Billion), 2001–2010 ................................................................................... 129 Figure 65: Belgian Import of Services, Local Currency (Billion), 2001–2010 .................................................................................................. 130 Figure 66: Belgian Inflation, average consumer prices, 2008–2017 ............................................................................................................... 131 Figure 67: Belgian Interest Rate (Lending), 2001–2010 ................................................................................................................................. 132 Figure 68: Belgian Manufacturing Output, Current Prices (Local Currency Billion), 2001–2010 ..................................................................... 133 Figure 69: Belgian Manufacturing Output, Current Prices (US$ Billion), 2001–2010 ...................................................................................... 134 Figure 70: Belgian Wholesale Price Index, 2000–2009 .................................................................................................................................. 135 Figure 71: Belgian Crude Oil Distillation Capacity (Thousand Barrel Per Day), 2000–2009 ........................................................................... 136 Figure 72: Belgian Electricity Exports (Billion Kilowatt Hours), 2001–2010 ..................................................................................................... 137 Figure 73: Belgian Electricity Imports (Billion Kilowatt Hours), 2001–2010 ..................................................................................................... 138 Figure 74: Belgian Electricity Installed Capacity (Million Kilowatts), 2000–2009 ............................................................................................. 139 Figure 75: Belgian Hydroelectricity Installed Capacity (Million Kilowatts), 2000–2009 .................................................................................... 140 Figure 76: Belgian Natural Gas Consumption (Billion Cubic Feet), 2001–2010 .............................................................................................. 141 Figure 77: Belgian Natural Gas Imports (Billion Cubic Feet), 2001–2010 ....................................................................................................... 142 Figure 78: Belgian Net Conventional Thermal Electricity Generation (Billion Kilowatt hours), 2001–2010 ...................................................... 143 Figure 79: Belgian Net Geothermal, Solar, Wind, and Wood Electric Power Generation (Billion Kilowatt hours), 2001–2010 ......................... 144 Figure 80: Belgian Net Hydroelectric Power Generation (Billion Kilowatt hours), 2001–2010 ......................................................................... 145 Figure 81: Belgian Nuclear Electricity Net Generation (Billion Kilowatt hours), 2001–2010 ............................................................................ 146 Figure 82: Belgian Petroleum Consumption (Thousand Barrels Per Day), 2002–2011 .................................................................................. 147 Figure 83: Belgian Petroleum Production (Thousand Barrels Per Day), 2002–2011 ...................................................................................... 148 Figure 84: Belgian People Employed in R & D (Number of Researchers Per Million People), 2000–2009 ..................................................... 149 Figure 85: Belgian Coal Consumption (Thousand Short Tons), 2001–2010 ................................................................................................... 150 Figure 86: Belgian Political Stability Index, 2002–2010 .................................................................................................................................. 151 Figure 87: Belgian Transparency Index, 2002–2011 ...................................................................................................................................... 152 Figure 88: Belgian Fixed Broadband Internet Subscribers (Thousands), 2001–2010 ..................................................................................... 153 Figure 89: Gross Domestic Expenditure on Research and Development as % of GDP, 2000–2009 .............................................................. 154 Figure 90: Investment in Telecommunication, 2000–2009 ............................................................................................................................. 155 Figure 91: Patents Granted, 2002–2011 ........................................................................................................................................................ 156 Figure 92: Fixed Line Calling Cost Local, 2001–2010 .................................................................................................................................... 157 Figure 93: Fixed Line Calling Cost National, 2001–2010................................................................................................................................ 158
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LIST OF TABLES
Table 1: Belgian Defense Expenditure (US$ Billion), 2008–2012 ..................................................................................................................... 17 Table 2: Belgian Defense Expenditure (US$ Billion), 2013–2017 ..................................................................................................................... 18 Table 3: Belgian Defense Budget Split between Capital and Revenue Expenditure (%), 2008–2012 ............................................................... 20 Table 4: Belgian Defense Budget Split between Capital and Revenue Expenditure (%), 2013–2017 ............................................................... 21 Table 5: Belgian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2008–2012 ...................... 22 Table 6: Belgian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2013–2017 ...................... 23 Table 7: Belgian Per Capita Defense Spend (US$), 2008–2012 ...................................................................................................................... 24 Table 8: Belgian Per Capita Defense Spend (US$), 2013–2017 ...................................................................................................................... 25 Table 9: Belgian Capital Budget Allocations (%), 2008–2012 .......................................................................................................................... 26 Table 10: Belgian Capital Budget Allocations (%), 2013–2017 ......................................................................................................................... 27 Table 11: Belgian Equipment Expenditure (US$ Billion), 2008–2012 ............................................................................................................... 28 Table 12: Belgian Equipment Expenditure (US$ Billion), 2013–2017 ............................................................................................................... 29 Table 13: Belgian Other Capital Expenditure (US$ Billion), 2008–2012 ........................................................................................................... 30 Table 14: Belgian Other Capital Expenditure (US$ Billion), 2013–2017 ........................................................................................................... 31 Table 15: Belgian Revenue Budget Allocation (%), 2008–2012 ....................................................................................................................... 32 Table 16: Belgian Revenue Budget Allocation (%), 2013–2017 ....................................................................................................................... 33 Table 17: Belgian Personnel Expenditure (US$ Billions), 2008–2012 .............................................................................................................. 34 Table 18: Belgian Personnel Expenditure (US$ Billions), 2013–2017 .............................................................................................................. 35 Table 19: Belgian Operations and Other Expenditure (US$ Billions), 2008–2012 ............................................................................................ 36 Table 20: Belgian Operations and Other Expenditure (US$ Billions), 2013–2017 ............................................................................................ 37 Table 21: Belgian Homeland Security Expenditure (US$ Billion), 2008–2012 .................................................................................................. 38 Table 22: Belgian Homeland Security Expenditure (US$ Billion), 2013–2017 .................................................................................................. 39 Table 23: SDI Terrorism Index ......................................................................................................................................................................... 43 Table 24: Benchmarking with Key Markets – 2008–2012 vs. 2013–2017......................................................................................................... 46 Table 25: Benchmarking with World’s Largest Defense Spenders – 2012 and 2017 ........................................................................................ 48 Table 26: Top Country Ranking by Value of Arms Imports, 2011*.................................................................................................................... 51 Table 27: Offset Regulations in Belgium .......................................................................................................................................................... 65 Table 28: Belgian Participation in International Defense Development Programs ........................................................................................... 66 Table 29: FN Herstal – Product Focus ............................................................................................................................................................. 68 Table 30: FN Herstal – Alliances ..................................................................................................................................................................... 70 Table 31: FN Herstal - Recent Contract Wins .................................................................................................................................................. 71 Table 32: Sonaca SA – Product Focus ............................................................................................................................................................ 72 Table 33: Sonaca SA – Alliances .................................................................................................................................................................... 73 Table 34: Sonaca SA – Recent Contract Wins................................................................................................................................................ 73 Table 35: Cockerill Maintenance & Ingénierie SA – Product Focus .................................................................................................................. 76 Table 36: Cockerill Maintenance & Ingénierie S.A. - Alliances ......................................................................................................................... 78 Table 37: Cockerill Maintenance & Ingénierie SA – Recent Contract Wins ...................................................................................................... 78 Table 38: SABCA Group – Product Focus ....................................................................................................................................................... 81 Table 39: SABCA Group - Alliances ................................................................................................................................................................ 82 Table 40: SABCA Group – Recent Contract Wins ........................................................................................................................................... 83 Table 41: Barco – Product Focus .................................................................................................................................................................... 86 Table 42: Barco - Alliances .............................................................................................................................................................................. 88 Table 43: Barco – Recent Contract Wins ......................................................................................................................................................... 88 Table 44: Asco Industries – Product Focus ...................................................................................................................................................... 93 Table 45: Asco Industries - Alliances ............................................................................................................................................................... 94 Table 46: Asco Industries: Recent Contract Wins ............................................................................................................................................ 94 Table 47: Mecar SA – Product Focus .............................................................................................................................................................. 95 Table 48: Mecar SA - Alliances ........................................................................................................................................................................ 96 Table 49: Mecar SA – Recent Contract Wins ................................................................................................................................................... 96 Table 50: Alcatel-Lucent Belgium – Product Focus .......................................................................................................................................... 97 Table 51: Thales Belgium – Product Focus ................................................................................................................................................... 101 Table 52: Thales Belgium - Alliances ............................................................................................................................................................. 102 Table 53: Thales Belgium – Recent Contract Wins ........................................................................................................................................ 102 Table 54: Northrop Grumman Belgium – Product Focus ................................................................................................................................ 104 Table 55: Northrop Grumman Belgium – Recent Contract Wins .................................................................................................................... 112
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1 Executive Summary
Belgian defense expenditure expected to increase at a CAGR of XX% during the forecast period
During the review period, defense expenditure decreased at a CAGR of XX%, and was valued at US$XX
billion in 2012. Belgium is an active participant in both NATO (North Atlantic Treaty Organization) and
the UN (United Nations) peacekeeping missions and counter terrorist measures, and these have
stimulated defense expenditure during the review period. In the forecast period, peacekeeping activities
will continue to be a factor behind the rising defense expenditure, which is expected to increase at a
CAGR of XX% and reach US$XX billion by 2017. The defense budget, which stood at XX% of GDP in
2012, is expected to decline marginally to XX% of GDP by 2017 due to budget reductions.
The capital expenditure allocation of the defense budget, which stood at an average of XX% during the
review period, is estimated to increase to an average of XX% during the forecast period as a result of the
Ministry of Defense’s (MoD) modernization plans for their armed forces. Personnel expenditure, which
includes remuneration for the military, accounted for the highest budget allocation in the review period,
with XX% of the total defense budget. It is expected that this will continue to constitute a significant
portion of Belgium’s defense budget during the forecast period, at an average of XX% of the total
budget.
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2 Market Attractiveness and Emerging Opportunities
During the review period, the defense budget recorded a CAGR of XX%, driven by the implementation of
defense plans to counter potential terrorist threats and participation in peacekeeping initiatives. The
defense budget, which stood at XX% of the GDP in 2012, is expected to decrease marginally to XX% of
the GDP by 2017, due to defense budget cuts announced by the government. During the review period,
the capital expenditure allocation stood at an average of XX% of the total defense budget, and
throughout the forecast period this is expected to increase to an average of XX%. In addition to this, the
defense budget’s share of revenue expenditure is expected to reduce from an average of XX% in the
review period, to an average of XX% in the forecast period. This is due to significant revenue
expenditure cuts, which include a reduction of troop numbers and decreased spending on military
equipment.
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2.1 Defense Market Size Historical and Forecast
2.1.1 Defense expenditure expected to register a CAGR of XX% over the forecast period
In 2012, defense expenditure was US$XX billion, and throughout the review period this declined at a
CAGR of XX%. During the forecast period defense expenditure is expected to register a CAGR of XX%,
to reach a value of US$XX billion. Cumulative defense expenditure during the forecast period is
expected to be US$XX billion, of which US$XX billion will be spent on personnel and operations, and the
remaining US$XX billion on equipment and infrastructure.
Until 2008, there was rapid growth in the defense budget. However, as a result of the global financial
crisis, from 2009 the government decreased its defense budget in order to reduce the country’s overall
expenditure. During the forecast period it is expected that the defense budget will not reach spending
levels seen before the financial crisis.
The following table and figure show Belgian defense expenditure during the review period:
Table 1: Belgian Defense Expenditure (US$ Billion), 2008–2012
Year Defense Expenditure (US$ bn)
Defense Growth Percentage
2008 XX XX%
2009 XX XX%
2010 XX XX%
2011 XX XX%
2012 XX XX%
CAGR 2008–2012 XX%
Source: Ministry of Finance, Belgium and SDI analysis © SDI
Figure 1: Belgian Defense Expenditure (US$ Billion), 2008–2012
Source: Ministry of Finance, Belgium and SDI analysis © SDI
Defe
nse E
xp
en
dit
ure
Growth Rate (%)
XX
XX
XX
XX
XX
XX
XX
2008 2009 2010 2011
Revenue Expenditure Capital Expenditure
2012
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The following table and figure show the projected Belgian defense expenditure over the forecast period:
Table 2: Belgian Defense Expenditure (US$ Billion), 2013–2017
Year Defense Expenditure (US$ bn)
Defense Growth Percentage
2013 XX XX%
2014 XX XX%
2015 XX XX%
2016 XX XX%
2017 XX XX%
CAGR 2013–2017 XX%
Source: Ministry of Finance, Belgium and SDI analysis © SDI
Figure 2: Belgian Defense Expenditure (US$ Billion), 2013–2017
Source: Ministry of Finance, Belgium and SDI analysis © SDI
XX
XX
XX
XX
XX
XX
XX
2013 2014 2015 2016
Revenue Expenditure Capital Expenditure
2017
Growth Rate (%)
Defe
nse E
xp
en
dit
ure
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2.2 Analysis of Defense Budget Allocation
2.2.1 Majority of defense budget allocated for revenue expenditure
During the review period, the Ministry of Defense (MoD) allocated an average of XX% of its total defense
budget for revenue expenditure and the remaining XX% for capital expenditure; this is expected to
increase to an average of XX% during the forecast period as a result of increased investment in defense
equipment. In the forecast period, the share of revenue expenditure in the total defense budget is
expected to decline to XX% due to significant personnel expenditure cuts, which will reduce troop
numbers from XX in 2011 to XX in 2016.
The following table and chart display defense budget share of capital and revenue during the review
period:
Table 3: Belgian Defense Budget Split between Capital and Revenue Expenditure (%),
2008–2012
Year Capital Expenditure Share Revenue Expenditure Share
2008 XX% XX%
2009 XX% XX%
2010 XX% XX%
2011 XX% XX%
2012 XX% XX%
Source: Ministry of Finance, Belgium and SDI analysis © SDI
Figure 3: Belgian Defense Budget Split between Capital and Revenue Expenditure (%),
2008–2012
Source: Ministry of Finance, Belgium and SDI analysis © SDI
XX
XX
XX
XX
XX
XX
XX
2008 2009 2010 2011 2012
%o
f D
efen
seEx
pend
itur
e
Revenue Expenditure Capital Expenditure
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The following table and chart display expected defense budget share of capital and revenue expenditure
over the forecast period:
Table 4: Belgian Defense Budget Split between Capital and Revenue Expenditure (%),
2013–2017
Year Capital Expenditure Share Revenue Expenditure Share
2013 XX% XX%
2014 XX% XX%
2015 XX% XX%
2016 XX% XX%
2017 XX% XX%
Source: Ministry of Finance, Belgium and SDI analysis © SDI
Figure 4: Belgian Defense Budget Split between Capital and Revenue Expenditure (%),
2013–2017
Source: Ministry of Finance, Belgium and SDI analysis © SDI
XX
XX
XX
XX
XX
XX
XX
2013 2014 2015 2016 2017
% o
f D
efe
nse
Exp
en
dit
ure
Revenue Expenditure Capital Expenditure
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2.3 Homeland Security Market Size and Forecast
2.3.1 Homeland security budget to rise during the forecast period
The Belgian homeland security budget, which is represented by the police budget, declined during the
review period, to register a CAGR of XX%. During the forecast period, the budget is likely to rise, with a
predicted CAGR of XX%. This is primarily due to the increase in crime rates and the unstable political
conditions, making it imperative for the country to enhance its defense capabilities.
The following table and chart show the Belgian homeland security expenditure during the review period:
Table 5: Belgian Homeland Security Expenditure (US$ Billion), 2008–2012
Year Homeland Security Expenditure (US$ bn) Growth Rate (%)
2008 XX XX%
2009 XX XX%
2010 XX XX%
2011 XX XX%
2012 XX XX%
Source: Ministry of Finance, Belgium and SDI analysis © SDI
Figure 5: Belgian Homeland Security Expenditure (US$ Billion), 2008–2012
Source: Ministry of Finance, Belgium and SDI analysis © SDI
Ho
mela
nd
Secu
rity
Exp
en
dit
ure
XX
XX
XX
XX
XX
XX
XX
2008 2009 2010 2011 2012
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The following table and chart show the projected Belgian homeland security expenditure over the
forecast period:
Table 6: Belgian Homeland Security Expenditure (US$ Billion), 2013–2017
Year Homeland Security Expenditure (US$ bn) Growth Rate (%)
2013 XX XX%
2014 XX XX%
2015 XX XX%
2016 XX XX%
2017 XX XX%
Source: Ministry of Finance, Belgium and SDI analysis © SDI
Figure 6: Belgian Homeland Security Expenditure (US$ Billion), 2013–2017
Source: Ministry of Finance, Belgium and SDI analysis © SDI
XX
XX
XX
XX
XX
XX
XX
2013 2014 2015 2016 2017
Ho
mela
nd
Secu
rity
Exp
en
dit
ure
