Global Defense Market - My views
Raven Dekker ??
Account and Business Development Manager - Business Unit Tactical Vehicles
Introduction
Having taken on the tasks of leading our Government & Defense Vertical for the EMEA Region as per January of this year, I have been following the global Defense market closely, both by speaking with personnel in the industry and by doing my own research and analysis.
Because I grew up with both parents having worked at the Dutch Ministry of Defense, this industry has always played an important part in my life and I have been able to indirectly witness the changes in the market but also what it is like to be in it, after being enrolled in an NCO Learning Plan with the Dutch Royal Navy for Weapons Engineering for 2 years. In this article, I will express my views on this market as per the below layout:
Please note that this article is based on my personal views and point of view, if you disagree with some points completely - perfect! Let me know or comment in the comment section and let's have a discussion with each other.
Let me wish you a good read and as always, feel free to contact me in regards to any questions you might have or ideas you would like to spar about, happy to schedule some time for a talk & coffee/lunch or a beer with you as well to exchange thoughts about this crucial and unique market, connecting and interacting can have a surprising outcome!
General Market overview
The Global Defense market is in a state of change and response to several shifts in the geopolitical landscape, the most prominent one being the change of Presidential Administration in The United States, leading to the withdrawal of US Military assets out of the major conflict zones, meaning that the countries within the EMEA region are now forced to become more self-dependent on establishing readiness of their Armed forces. Many countries are hesitant to engage in ‘boots on the ground’ to enforce/maintain security for their nation, which is why a global trend of heavy investments in unmanned crafts is having its impact within EMEA too. This, in combination with the required Military self-dependency of nations within this region creates a landscape with a strong focus on local -or regional manufacturing efforts and an increase in delivery of unmanned crafts. With the UK exiting the EU, they are ensuring involvement and relevancy in the global theatre by engaging in International collaborations with friendly nations.
The Geopolitical developments mentioned earlier, are also having an impact on the way nations develop, maintain and train their Armed Forces. Due to the US pulling out of major conflict zones and international tensions, the threat theatre is transitioning from an asymmetric, terror-oriented readiness to more of a symmetric, nation-oriented readiness profile. This transition into a nation-oriented threat readiness model also means that the Research & Development strategies of major contractors, as well as the procurement strategies for Government agencies will change and adept to this new situation. C4ISR and Systems integrations with interoperable combat platforms are popular subjects within the industry, maximizing the effectiveness of smaller-scaled Militaries who, due to a reliance on US Military support, have neglected their recruitment and budgetary efforts over the past few decades resulting in a headcount gap and more importantly: a knowledge gap. This knowledge gap is filled by intensifying the relationships between Government organizations and the commercial sector across the region, regional agreements between friendly nations and fresh diplomatic ties. Especially the Middle East is showing some very interesting developments, going into multiple joint ventures with US -and UK based Military contractors to localize manufacturing, and the UAE restoring its diplomatic ties with Israel, opening new channels for trade and knowledge transfers.?
Aerospace Outlook
Looking at the Commercial Air Freight Market since the beginning of COVID has been exceptionally interesting, with Airlines battling for survival, but also showing their flexibility and creativity, the past year has been hectic. In terms of Defense, the Aerospace Industry has in some cases put a stronger emphasis on their Defense business to mitigate the impact of COVID on their commercial operations and diversify their business income and risk.
The above, combined with an increased demand for unmanned crafts seems to be leading to increased competitive and demand based pressure for both the new and existing Defense Contractors out there. Also, with more organizations entering the unmanned crafts space, the R&D focus on new projects in order to 'keep up' will be much more intense. A speculation I have myself, is that the self-reliance of NATO Member States will eventually lead to increased Government spend, thus give a major impulse to this market in the coming years.
As mentioned, the buyers in the market are showing a huge interest in unmanned crafts, having visited several Defense Tradeshows over the pas couple of months, I can confidently say that almost no stand was complete without at least one unmanned system on display. Integration played a key role here, for example by having several UAVs deployed, acting as eyes and ears, sensors in the field able to communicate with attack aircraft and personnel on the ground or in a control set up.
Also, the Space domain will become increasingly important - launch costs are going down and Military powers want to build their Military presence in Space, for example the US Space Force - which will, from my point of view, lead to more funding released in this market, giving an impulse to the R&D and rapidly propelling its developments forward on a global scale.
The above brings me to the below important trends for the Aerospace domain:
Ground Systems outlook
For Ground Systems, like Aerospace, there will be a strong focus on autonomous and unmanned systems, both with offensive capabilities as well as supporting capabilities. Imagine a Military Unit having to cross rough terrain, bringing their heavy gear and equipment with them, decreasing mobility and slowing them down. Organizations like Rheinmetall have recognized this challenge and are bringing products into the market which are capable of carrying loads or carrying out offensive intitiatives remotely.With systems of this type, the integration with other systems and personnel on the ground seems to be a key focus area. Feeding back information and data to personnel on the ground or in a mission control set up and enabling personnel on the ground to make informed decisions and mitigate their risks by intelligent use of unmanned ground systems is in my opinion (one of) the way(s) of the future.
For your image:
Needless to say where also this market's R&D will be targeted in the coming years. Going fully autonomous anytime soon is probably not happening, however automating parts of the process and operations can potentially change the face of Military missions and offer clear advantages from a personnel safety point of view.
Electric Vehicles (EV's) are already a big trend and growing in popularity on commercial markets, slowly but surely the Military sector is starting to show an interest in this way of transportation as well to hit sustainability goals and/or to become less energy dependent. What I am especially interested in to see, is how the manufacturers of these Military EVs intend to counter the increasing threat of EMP attacks and the limited active range of the currently available battery technology for EVs.
The above brings me to the below trends for this market:
Marine Systems outlook
The global Military sector for Marine systems has been rapidly expanding, both from a shipbuilding perspective as well as from a technology perspective. I remember a couple of years ago, being on one of the first trials with the Holland Class OPV with the Dutch Royal Navy, which was revolutionary due to having only 50 people on board and being equipped with the first ever fully integrated sensor mast in the world, fascinating.
Looking at this market, Western Governments make up the majority of its spend and focus, although it is to be expected that the markets in the APAC Region will be upcoming players here as well. A focus on unmanned crafts is also taking place here, although in a bit earlier stage than in the ground and aerospace systems markets.
领英推荐
The technologies involved are growing in complexity and sofistification and the need for stealthy, long range engagement capable vessels is there. Looking at the developments in Hypersonic weapons technologies which in my opinion would be a military vessel's worst nightmare, there will be an increased demand and focus on Missile Defense systems. Missile Defense systems will have to adapt quickly in order to be able to effectively counter hypersonic anti-ship missile systems.
The need for stealth in the context of the Military Maritime sector obviously brings up the term Submarine. As Sonar and submersed weapons systems become more advanced and with hostile nations demonstrating their power in this domain, there is a big and ongoing need for constant heavy investments in R&D and product development, which I do not expect to change in the coming years.
The influence of Geopolitics
Geopolitics have clear and constant influence on the Global Defense markets and landscape. They determine what types of Foreign Military Sales are made, where the new conflicts will be, thus determining indirectly the need for new product development and R&D and they can steer in which nations form fronts and which nations oppose each other.
One of the easiest ways to determine how good relationships between nations are, is to observe the quality and how modern the Military equipment they sell to each other is. The more modern the equipment, the better the relationship. So, if nation A sells a lot of rusty old soviet-era equipment to nation B, but a state of the art Missile System to nation C, you know that the diplomatic ties between Nations A and C are way better than between nation A and B.
Geopolitics also determine to shape of the threat landscape. When nations are 'integrated' and have strong diplomatic ties, the borders between them (if they are neighbors) will become virtual lines, whereas when they have no or poor diplomatic ties, these borders will most likely be heavily controlled and monitored and in some cases even a frontline.
By determining these frontlines and virtual lines in terms of borders and diplomatic ties, automatically threat areas are created where tensions can be volatile, thus the allies of each nation involved will focus on being threat ready for the specific volatile area, leading to specific R&D and systems manufacturing, but also training of personnel in order to be able to efficiently operate within the specific threat area. In this way, there is a clear influence on the R&D and product/training development by geopolitical factors.
The logistics challenges and how we can help
Crane is a globally recognized partner for the Defense Industry with excellent references. We take this sector very seriously and have dedicated one of our Verticals to it, servicing the industry 24/7 through our global mechanism of support.
With the ever-changing?Geopolitical?landscape and its impact on R&D and Procurement strategies across the world, the last thing you want to deal with as a Defense?contractor is Logistics challenges. The competition, modern-day demands of your end users and of course your focus on contributing to Global?Security?should be your priority.
For us at?Crane, our priorities are with the tasks that keep you off your core business. Our contribution to global?Security?and the industry around it is to take care of?Compliance,?Logistics and?Engineering?creative and cost effective?Solutions?for moving your Defense articles to and from the areas where they are most needed.
We have a deep understanding of your global market, specific challenges and have a mechanism of support in place which is built on experience, compliance and proactiveness. We are much more than a forwarder, we are a centralized, experienced and reliable Logistics Force Multiplier.
Government Logistics Services
At Crane Worldwide Logistics, we offer various Government & Defense focused logistics solutions to support the US Government & Defense Contractors globally. Our goal is to ensure all our clients receive the highest level of support from the moment that you engage with our Government Control Tower located in Houston, TX.
Crane’s Active US Government Contracts
Global Heavyweight Services, Multi-Modal III, Global Husbanding Contract.
Logistics Service Offerings
Our logistics team understands how complex and time-sensitive Government Freight and shipping can be. We've designed proven solutions to meet large-scale projects and?hard-to-reach zones. When it comes to pulling resources, moving people, or complicated contracts, we are your best partner.
Approved Commodities
Certifications and Licenses
As a freight forwarder in a global industry, we strive to provide expertise in trade compliance to our customers. We intrinsically understand the unique requirements around the handling of US Department of State licenses.?To effectively operate in the government sector, Crane Worldwide Logistics has achieved numerous certifications.
Certifications: IATA, C-TPAT, Indirect Air Carrier (IAC), Freight Forwarders License (FF), Business Alliance for Secure Commerce (BASC), National and Local Customs Broker permits, TAPA- Class A as well as AEO certification at several sites.
Written policy and training are used to assure our teams are compliant on all levels. Global Policies & Procedures include Global Trade, GCPA/UK Bribery, Anti-Trust & Global Trade Export Compliance, Anti-Boycott Policy & Reporting Procedure, Code of Business Conduct, Anti-Trust & Competition Policy. Auditing includes the GTC-RCA program, soft distance audits, and weekly spot checks.