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Despite the Slow Growth in the Aerospace Industry, Mexico Reaches New Highs

Admin | 19.01.2012

Global growth in the aviation and defense industries is set to slow down this year, but the effect of the downturn on emergent arms industries in Brazil and Japan remains far from certain.

Data cited by industry analysts indicates the economic crisis rolling on since 2008 may finally be catching up with the aerospace and defense industries, with the military drawdown in Afghanistan and Iraq prompting drastic reviews of "war on terror" policies affecting demand.

The Iran crisis and vigorous defense marketing in the Persian Gulf are seen as factors likely to reverse some of the current trends, analysts said. France is trying to sell its Rafale fighter jet to Arab countries, having failed so far to secure Brazil as a customer for the plane.

Brazil is investing several billion dollars a year to revive its defense industry, in decline since the end of the military dictatorships in the 1980s, and has unveiled plans to enter the global defense markets for land, air and naval forces.

Brazil has already captured a major share of small and medium-sized executive jets and is developing larger passenger aircraft and military transport planes to rival the U.S. C-130 Hercules. Brazil has also begun building submarines, initially for its own use and eventually for export.

Japan announced last year it is reviving its defense industry, neglected or given low priority since World War II.

In addition to Japan, India, Israel and Russia are competing in a market likely to shrink further as demand slows.

The aerospace and defense market includes manufacturers from civil and military aerospace and defense sectors that provide not only the hardware and electronics but also parts and maintenance.

Overall, the global aerospace and defense markets earned more than $1.1 trillion in 2010, representing a compound annual growth rate of 6.6 percent between 2006 and 2010, Ireland's Dublin publisher Research and Markets said in a report.

The defense segment was the market's most lucrative in 2010, with total revenue of $791.3 billion, equivalent to 74.2 percent of the market's overall value including the aerospace sector.

However, market performance is forecast to decelerate, with an anticipated CAGR of 2.5 percent for the five-year period 2010-2015, Research and Markets said.

That growth rate is expected to bring the market to a value of $1.2 trillion by the end of 2015, Research and Markets said.

Latin American defense performance in the coming years is yet to be quantified, and developments in Brazil likely will produce better results in the coming years than in 2010, when many of the industries were retooling, building up research divisions and realigning their production and sales strategies, Brazilian industry analysts said in published comments.

The Mexican aerospace and defense market alone had revenues of $2.4 billion in 2010, a CAGR of 8 percent between 2006 and 2010.

The defense segment in Mexico's markets was the most lucrative in 2010, with total revenue of $1.5 billion, equivalent to 65 percent of the market's overall value. Mexico is expecting its market performance to improve in the 2010-2015 period and reach a total value of $4 billion by 2015.

Source: UPI.com