Future of the Belgian Defense Industry Market Attractiveness, Competitive Landscape and Forecasts to 2018

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Austerity measures and focus on reducing public debt are expected to stabilize the Belgian defense budget at US$3 billion at the end of the forecast period (2014-18). The country’s defense budget, which values US$3.6 billion in 2013, declined at a CAGR of -2.43% during the review period (2009-13) and is expected to drop further over the forecast period to reach US$3.1 billion by 2018 at a CAGR of -2.82%. Joint operations with NATO allies and military modernization programs are expected to drive the country’s military expenditure over the forecast period. The defense budget as a percentage of GDP is expected to decline from an average of 0.8% during the review period to 0.5% in 2018.

Belgian defense imports saw a drastic decline in 2010 and again in 2012, although they appeared to recover in 2011. The country’s arms imports are expected to recover gradually over the forecast period due to the procurement plans of NH90 helicopters, Javelin and EuroSpike anti-tank missiles, and the procurement of A400M military transport aircraft. Historically, defense companies based in neighboring European countries such as the Netherlands, Portugal, Switzerland, and Italy have been the main arms suppliers to Belgium. Ships, armored vehicles, and missiles accounted for the majority of defense imports.

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The Belgian budget allocation for defense capital expenditure is expected to increase slightly from an average of 22.7% of the total defense budget during the review period to 23.3% over the forecast period. However, the cumulative capital expenditure over the forecast periodis expected to be US$3.8 billion compared to US$4.2 during the review period, owing to the budget cuts and economic pressures. The country is expected to spend more on the procurement of defense equipment to replace its outdated equipment and reduce spending on infrastructure and other capital expenditure. Belgium’s personnel expenditure is expected to reduce to US$1.9 billion by 2018, due to pruning of the country’s armed forces. Moreover, the country’s per capita defense expenditure is also expected to decrease from US$320.9 in 2013 to US$260.8 by 2018.

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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 Belgian 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 Belgium. 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.

The Belgian Defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017

Introduction and Landscape

Why was the report written?

The Belgian defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 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 Belgian defense industry.

What is the current market landscape and what is changing?

During the review period, the defense budget recorded a CAGR of -4.3%, driven by the implementation of defense plans to counter potential terrorist threats and Belgium’s participation in peacekeeping initiatives. The defense budget, which stood at 0.77% of GDP in 2012, is expected to decrease marginally to 0.76% of GDP by 2017, due to defense budget cuts announced by the government. During the review period, capital expenditure allocation stood at an average of 23.2% of the total defense budget, and throughout the forecast period, this is expected to increase to an average of 23.7%. In addition to this, the defense budget’s share of revenue expenditure is expected to reduce from an average of 76.8% in the review period, to an average of 76.3% 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.

What are the key drivers behind recent market changes?

Peacekeeping operations and the threat of terrorism drive defense spending. Belgium is surrounded by EU and NATO members and has no border disputes or significant threat to national security, except for the existence of terrorist groups. As NATO’s headquarters are in Belgium and the country is a founding member, it supports peacekeeping operations across the world. In spite of defense budget cuts, military spending is driven by factors such as peacekeeping operations, globalization of terrorism and countering radicalization and violent extremism.

What makes this report unique and essential to read?

The Belgian Defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 provides detailed analysis of the current industry size and growth expectations from 2013 to 2017, 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 a detailed analysis of the current industry size and growth expectations from 2013 to 2017, 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.

The report includes trend analysis of imports and exports, together with their implications and impact on the Belgian 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. 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

In 2010, the government announced defense budget cuts in order to control the country’s increasing fiscal deficit. In order to make the budget reductions, the government decided to reduce the size of its military, as the country deploys its troops for peacekeeping rather than defense purposes. In addition to this, Belgium plans to modernize its military workforce and equipment, and the money released through troop reductions is expected to offset the required modernization expenditure on equipment.

As Belgium is a member of the European Defense Agency (EDA), which was formed to improve European defense capabilities and to create a single defense equipment market, it gives preference to European nations in its defense contracts. As a result, Belgium is involved in several European defense programs, such as the Airbus A400M and the European Air Transport Fleet program. The EDA has simplified the defense trade within Europe through measures such as its electronic bulletin board (EBB), which requires all member countries to post defense contract opportunities, so that all opportunities are available for all member countries to easily access in one place.

Belgium has not had a stable government for more than four years. This has threatened the country’s economic condition and increased the rate of unemployment. This has resulted in a steep increase in the level of debt on the country. According to International Monetary Fund (IMF), the current debt level on the country is about 98.5% of its GDP, thus pushing the country into deep economic crisis.

Key Highlights

In 2012, defense expenditure was US$3.81 billion, and throughout the review period this declined at a CAGR of -4.3%. During the forecast period defense expenditure is expected to register a CAGR of 2.4%, and to reach a value of US$4.39 billion. Cumulative defense expenditure during the forecast period is expected to be US$20.74 billion, of which, US$15.82 billion will be spent on personnel and operations, and the remaining US$4.92 billion on equipment and infrastructure.

The Belgian homeland security budget, which is represented by the police budget, declined during the review period and registered a CAGR of -1.19%. During the forecast period, this is likely to rise, with a predicted CAGR of 2.99%. This is primarily due to the increase the crime rate and the unstable political conditions, making it imperative for the country to enhance its defense capabilities.

During the period 2007-2011, Belgian defense imports grew significantly, particularly in the years 2007 and 2008. However, from 2009, defense imports began to decline due to the global recession and European debt crisis, which meant the government, had to reduce its defense budget and therefore reduce expenditure on imports. During the forecast period, Belgian defense imports are likely to decrease due to further reductions in the MoD’s defense budget which have been implemented to curb rising public debt and improve the country’s trade balance.

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Report Details:

Published: Sep 2012

No. of pages: 159

Price: Single User License: US$ 1250     Corporate User License: US$ 3750