Budget cuts place restraints on DoD helicopter market
NewsOctober 22, 2015
MOUNTAIN VIEW, California. Analysts at Frost & Sullivan say that a reduction new U.S. military helicopter procurement programs the need for logistical support, upgrades, and the remanufacture of current platforms and subsystems will sustain market growth. They say they expect military helicopter funding to decrease from about $9.99 billion in 2015 to $6.89 billion in 2020, at a negative compound annual growth rate (CAGR) of five percent.
“U.S. DoD budget cuts, looming sequestration and budget uncertainties explain the bleak military helicopter funding forecast,” says Frost & Sullivan Aerospace & Defense Senior Industry Analyst Michael Blades. “While the defense budget has been used as a political bargaining tool for several years, this has not had any effect on the industry so far.”
Opportunities will emerge from the Department of Defense's (DoD’s) demand for systems and solutions that will increase the service life of new and existing rotary-winged weapon systems. Technologies that enable commonality of parts and subsystems as well as ease maintenance to reduce overall life cycle costs will gain favor.
According to Frost & Sullivan in May this year, Army Chief of Staff, General Ray Odierno stated that budget uncertainty is “going to put us in a modernization hole for 10 years, and our ability to continue to meet our current missions will be challenged.” Helicopter manufacturers across the United States will then have to find new ways of boosting revenues.
“Leading helicopter manufacturers must foster partnerships to remain competitive,” Blades says. “They should focus on drawing synergies from these partnerships and establishing relationships leading to foreign military sales (FMS).”
Taiwan, Saudi Arabia,, Iraq, United Arab Emirates (UAE), and Sweden are among the countries already procuring U.S. military helicopters, according to Frost & Sullivan analysts. Countries with recent purchase agreements driving future FMS revenues include South Korea, Qatar, and Indonesia.
For more on Frost & Sullivan's "US DoD Helicopter Market" report, click here.
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