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Future of the Romanian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Published By :

Strategic Defence Intelligence

Published Date : Apr 2017

Category :

Defense and Security

No. of Pages : 109 Pages

Future of the Romanian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Summary

The Future of the Romania Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022, published by Strategic Defence Intelligence, provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

Synopsis

This report offers detailed analysis of the Romanian defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.
In particular, it provides an in-depth analysis of the following -
- The Romanian defense industry market size and drivers: detailed analysis of the Romanian defense industry during 2018-2022, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the countrys expenditure and modernization patterns
- Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget. It also details the key challenges faced by defense market participants within the country
- Porters Five Force analysis of the Romanian defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry
- Import and Export Dynamics: analysis of prevalent trends in the countrys imports and exports over the last five years
- Market opportunities: details of the top five defense investment opportunities over the next 10 years
- Competitive landscape and strategic insights: analysis of the competitive landscape of the Romanian defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

Scope

- Romanias defense budget valued US$3.8 billion in 2017, registering a compound annual growth rate (CAGR) of 22.70% during the historic period (2013-2017). The modernization of the armed forces to NATO standards, alongside participating in international peacekeeping missions, has driven Romanias defense expenditure. With the trend expected to continue over the forecast period (2018-2022), defense expenditure will cumulatively value US$23.2 billion during 2018-2022. Conversely, the defense budget as a percentage of GDP will rise from a historic-period average of 1.3% to 2.0% over the forecast period.
- Capital expenditure allocation, which stood at a historic-period CAGR of 27.4%, will rise to a forecast-period CAGR of 44.9% due to the procurement of multirole aircraft, multirole aircraft maintenance, repair and overhaul (MRO), and military-IT software. The governments focus on modernization plans, which require the procurement of advanced military equipment, is expected to drive capital expenditure to post a forecast-period. Much of this will be allocated towards recruitment, training, and development programs for military personnel.
- The MoD is expected to invest in fighters and Multi-role aircraft, fighters & multi-role aircraft MRO and military-IT software.

Reasons to buy

- This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Romanian defense industry market trends for the coming five years
- The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
- Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector
- A deep qualitative analysis of the Romanian defense industry covering sections including demand drivers, Porters Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts
Table of Contents
1. Introduction 9
1.1. What is this Report About? 9
1.2. Definitions 9
1.3. Summary Methodology 12
1.4. About Strategic Defence Intelligence 13
2. Executive Summary 14
3. Market Attractiveness and Emerging Opportunities 15
3.1. Current Market Conditions 16
3.1.1. Primary threat perception 16
3.1.2. Military doctrine and strategy 18
3.1.3. Military fleet size 21
3.1.4. Procurement programs 24
3.1.4.1. Ongoing procurement programs 24
3.1.4.2. Future procurement programs 25
3.1.5. Social, political and economic environment and support for defense projects 26
3.1.6. Political and strategic alliances 27
3.2. Defense Market Size Historical and Forecast 28
3.2.1. Romanian defense expenditure to register a forecast-period CAGR of 16.89% 28
3.2.2. Modernization to meet NATO standards and participation in peacekeeping missions 30
3.3. Analysis of Defense Budget Allocation 31
3.3.1. Defense expenditure as a percentage of GDP to increase over the forecast period 31
3.3.2. Capital expenditure allocation expected to increase over the forecast period 33
3.3.3. Capital expenditure expected to grow at a CAGR of 38.41% over the forecast period 35
3.3.4. Per capita defense expenditure forecast to rise over the forecast period 37
3.4. Homeland Security Market Size and Forecast 38
3.4.1. Homeland security budget projected to grow steadily over the forecast period 38
3.4.2. Border control measures and cybercrime to drive homeland security budget 40
3.4.3. The nation is at low risk of terrorism 41
3.4.4. Romania faces low-level threat from foreign terrorist organizations 42
3.4.5. Romania has a terrorism index score of zero 44
3.5. Benchmarking with Key Global Markets 45
3.5.1. Romanias defense budget to post a forecast-period CAGR of 16.89% 45
3.5.2. Romanian defense expenditure to remain low compared to other leading spenders 47
3.5.3. Romania allocates a lower percentage of GDP to defense than other NATO members 48
3.6. Market Opportunities: Key Trends and Growth Stimulators 49
3.6.1. Fighters and multirole aircraft: 49
3.6.2. Multirole Aircraft MRO 50
3.6.3. Military IT software: 51
4. Defense Procurement Market Dynamics 53
4.1. Import Market Dynamics 54
4.1.1. Defense imports registered a decline during 2012-2016 54
4.1.2. Romanian defense sourced the majority of its arms from the US 55
4.1.3. Aircraft and sensors accounted for the majority of arms imports during 2012-2016 56
4.2. Export Market Dynamics 57
4.2.1. Defense exports anticipated to grow over the forecast period 57
4.2.2. Romania supplies all of its defense equipment to the Netherlands 58
4.2.3. Naval Vessels are the most exported defense goods 58
5. Industry Dynamics 59
5.1. Five Forces Analysis 59
5.1.1. Bargaining power of suppliers: low to medium 60
5.1.2. Bargaining power of buyers: high 60
5.1.3. Barriers to entry: medium 60
5.1.4. Intensity of rivalry: medium to high 60
5.1.5. Threat of substitutes: medium to high 60
6. Market Entry Strategy 61
6.1. Market Regulation 61
6.1.1. Offset policy mandates that suppliers must invest 80% of the contracts value into Romanias economy 61
6.1.2. Romania allows 100% FDI in defense industry 62
6.2. Market Entry Route 63
6.2.1. Budgeting process 63
6.2.2. Procurement policy and process 65
6.2.3. Foreign OEMs enter the market through the acquisition of domestic defense companies 66
6.2.4. EDA promotes defense procurements within the EU 67
6.3. Key Challenges 68
6.3.1. Corruption and inadequate legal infrastructure 68
7. Competitive Landscape and Strategic Insights 69
7.1. Competitive Landscape Overview 69
7.2. Key Domestic Companies 69
7.2.1. CN Romarm SA: overview 69
7.2.2. CN Romarm SA: products 69
7.2.3. CN Romarm SA: recent announcements and strategic initiatives 71
7.2.4. CN Romarm SA: alliances 71
7.2.5. CN Romarm SA.: recent contract wins 71
7.2.6. S.C. Uzina Mecanica Cugir SA: overview 72
7.2.7. S.C. UZINA MECANICA CUGIR SA: products 72
7.2.8. S.C. Uzina Mecanica Cugir SA: recent announcements and strategic initiatives 73
7.2.9. Aerostar SA: overview 74
7.2.10. Aerostar SA: products 74
7.2.11. Aerostar SA: recent announcements and strategic initiatives 75
7.2.12. Aerostar SA: alliances 75
7.2.13. Aerostar SA: recent contract wins 75
7.2.14. IAR SA Brasov: overview 76
7.2.15. IAR SA Brasov: products and services 76
7.2.16. IAR SA Brasov: recent announcements and strategic initiatives 76
7.2.17. IAR SA Brasov: recent contract wins 77
7.2.18. Turbomecanica SA: overview 78
7.2.19. Turbomecanica SA: products 78
7.2.20. Turbomecanica SA: recent announcements and strategic initiatives 79
7.2.21. Electromagnetica SA: overview 80
7.2.22. Electromagnetica SA: products 80
7.2.23. Electromagnetica SA: recent contracts and strategic initiatives 80
7.2.24. Avioane Craiova SA: overview 81
7.2.25. Avioane Craiova SA (SAIC): products 81
7.2.26. Avioane Craiova SA: recent contracts and strategic initiatives 81
7.2.27. Avioane Craiova SA: alliances 82
7.2.28. Avioane Craiova SA: recent contract wins 82
7.2.29. Elprof SA: overview 83
7.2.30. Elprof SA: products 83
7.2.31. Elprof SA: recent announcements and strategic initiatives 83
7.2.32. Elprof SA: recent contract wins 84
7.3. Domestic Private Companies 85
7.3.1. IOR SA: overview 85
7.3.2. IOR SA: products and services 85
7.3.3. IOR SA: recent announcements and strategic initiatives 86
7.3.4. Simultec SRL: overview 87
7.3.5. Simultec SRL: products 87
7.3.6. Simultec SRL: recent contracts and strategic initiatives 88
7.3.7. Simultec SRL: recent contract wins 88
7.3.8. Intelcan Technosystems, Inc.: overview 89
7.3.9. Intelcan Technosystems, Inc.: products 89
7.3.10. Intelcan Technosystems, Inc.: recent announcements and strategic initiatives 90
7.3.11. Intelcan Technosystems Inc.: recent contracts 90
7.3.12. Airbus Helicopters Romania: overview 91
7.3.13. Airbus Helicopters Romania: products and services 91
7.3.14. Airbus Helicopters Romania: recent announcements and strategic initiatives 92
7.3.15. Airbus Helicopters Romania: recent contract wins 92
8. Business Environment and Country Risk 93
8.1. Economic Performance 93
8.1.1. GDP per capita 93
8.1.2. GDP at current prices 94
8.1.3. Exports of goods and services 95
8.1.4. Imports of Goods and Services 96
8.1.5. Gross national disposable income 97
8.1.6. Local currency unit per US$ 98
8.1.7. Market capitalization of listed companies 99
8.1.8. Market Capitalization of Listed Companies 100
8.1.9. Government Cash Surplus and Deficit 101
8.1.10. Goods exports 102
8.1.11. Goods imports 103
8.1.12. Service imports 104
8.1.13. Service exports 105
8.1.14. Net FDI 106
8.1.15. Net FDI 107
8.1.16. Mining, manufacturing, utilities output 108
9. Appendix 109
9.1. About SDI 109
9.2. Disclaimer 109

List of Tables
Table 1: Romanian Army Strength 21
Table 2: Romanian Navy Strength 22
Table 3: Romania Air Force Strength 23
Table 4: Romania - Ongoing Procurement Programs 24
Table 5: Romania - Future Procurement Programs 25
Table 6: Romania - Defense Expenditure (RON Billion and US$ Billion), 2013-2022 28
Table 7: Romania - GDP Growth vs Defense Expenditure as Percentage of GDP Growth (%), 2013-2022 31
Table 8: Romania Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 33
Table 9: Romania Defense Capital Expenditure (RON Billion and US$ Billion), 2013-2022 35
Table 10: Romania Per Capita Defense Expenditure (US$), 2013-2022 37
Table 11: Romania Homeland Security Expenditure (RON Billion & US$ Billion), 2013-2022 38
Table 12: Terrorism Index, 2017 42
Table 13: Benchmarking against Key Markets - 2013-2017 vs 2018-2022 45
Table 14: Romania - Offset Regulations , 2017 62
Table 15: Romania Budget Formation Timetable 63
Table 16: Market Entry Strategies by Key Foreign Companies 66
Table 17: CN Romarm SA - Product Focus 69
Table 18: CN Romarm SA - Alliances 71
Table 19: CN Romarm SA. - recent contract wins 71
Table 20: S.C. UZINA MECANICA CUGIR SA - Product Focus 72
Table 21: Aerostar SA - product focus 74
Table 22: Aerostar SA - Alliances 75
Table 23: Aerostar- recent contract wins 75
Table 24: IAR SA Brasov - product focus 76
Table 25: IAR SA Brasov- recent contract wins 77
Table 26: Turbomecanica SA - Product Focus 78
Table 27: Electromagnetica SA - Product Focus 80
Table 28: Avioane Craiova SA - Product Focus 81
Table 29: Avioane Craiova SA - Alliances 82
Table 30: Avioane Craiova SA - recent contract wins 82
Table 31: Elprof SA - product focus 83
Table 32: Avioane Craiova SA - recent contract wins 84
Table 33: IOR SA - Product Focus 85
Table 34: Simultec SRL - Product Focus 87
Table 35: Simultec SRL- recent contract wins 88
Table 36: Intelcan Technosystems, Inc. - Product Focus 89
Table 37: Intelcan Technosystems, Inc. - Alliances 90
Table 38: Airbus Helicopters Romania - Product Focus 91
Table 39: Airbus Helicopters Romania- Recent Contracts 92

List of Figures
Figure 1: Romania - Defense Expenditure (RON Billion), 2013-2022 29
Figure 2: Romania - Defense Expenditure (US$ Billion), 2013-2022 29
Figure 3: Romania - GDP Growth vs Defense Expenditure as Percentage of GDP (%), 2013-2022 32
Figure 4: Romania Defense Budget by Capital and Revenue Expenditure (%), 2013-2022 34
Figure 5: Romania Capital Budget Allocation (RON Billion), 2013-2022 36
Figure 6: Romania Capital Budget Allocation (US$ Billion), 2013-2022 36
Figure 7: Romania Per Capita Defense Expenditure (US$), 2013-2022 37
Figure 8: Romania Homeland Security Expenditure (RON billion), 2013-2022 39
Figure 9: Romania Homeland Security Expenditure (US$ billion), 2013-2022 39
Figure 10: Terrorism Heat Map, 2017 41
Figure 11: Terrorism Index, 2017 44
Figure 12: Benchmarking with Worlds Largest and Top Regional Defense Spenders (US$ Billion), 2017 and 2022 46
Figure 13: Defense Expenditure of the Worlds Largest Military Spenders (US$ Billion), 2017 and 2022 47
Figure 14: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2017 48
Figure 15: Romania - Fighter and Multirole Aircraft Market Size (US$ Million), 2017-2022 49
Figure 16: Romania - Multirole Aircraft MRO Market Size (US$ Million), 2017-2027 50
Figure 17: Romania - Military IT Software Market Size (US$ Million), 2017-2027 52
Figure 18: Romania Defense Import Trend (US$ Million), 2012-2016 54
Figure 19: Romanian Defense Imports by Country (%), 2012-2016 55
Figure 20: Romanian Defense Imports by Category (%), 2012-2016 56
Figure 21: Romania Defense Exports (US$ Million), 2012-2016 57
Figure 22: Industry Dynamics - Porters Five Forces Analysis 59
Figure 23: Romania GDP Per Capita (US$), 2015-2025 93
Figure 24: Romania GDP at Current Prices (US$ Billion), 2015-2025 94
Figure 25: Romania Export of Goods and Services (LCU billion), 2005-2014 95
Figure 26: Romania Import of Goods and Services (LCU billion), 2005-2014 96
Figure 27: Romania Gross National Disposable Income (US$ billion), 2005-2014 97
Figure 28: Romania - LCU per US$, 2015-2024 98
Figure 29: Romania Market Capitalization of Listed Companies (US$ Billion), 2005-2012 99
Figure 30: Romania Market Capitalization of Listed Companies (Percentage of GDP), 2005-2012 100
Figure 31: Romania Government Cash Surplus and Deficit (Percentage of GDP), 2005-2012 101
Figure 32: Romania Goods Exports (Percentage of GDP), 2005-2014 102
Figure 33: Romania Goods Imports (Percentage of GDP), 2005-2014 103
Figure 34: Romania Service Imports (Percentage of GDP), 2005-2014 104
Figure 35: Romania Service Exports as % of GDP, 2005-2014 105
Figure 36: Romania Net Foreign Direct Investment (US$ Billion), 2005-2014 106
Figure 37: Romania Net FDI (Percentage of GDP), 2005-2014 107
Figure 38: Romania Mining, Manufacturing, Utilities Output (US$ Billion), 2005-2014 108

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