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

Product Synopsis

This report is the result of ICD Research / Strategic Defence Intelligence’s extensive market and company research covering the Turkish defense industry. It provides detailed analysis of both historic and forecast defense industry values including key growth stimulators, analysis of the leading companies in the industry, and key news..

Introduction and Landscape

Why was the report written?
The Turkish 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 Turkish defense industry.

What is the current market landscape and what is changing?
Turkey is one of Asia’s most attractive defense markets. The country’s defense expenditure registered a CAGR of -1.50% during the review period, and valued US$14.99 billion in 2008 and US$14.11 billion in 2012. Overall, the country spent a total of US$70.89 billion on defense during the review period. Over the forecast period, defense expenditure is expected to grow steadily to reach US$20.3 billion by 2017, primarily due to the threat posed by the political unrest in neighboring countries, terrorism, and peacekeeping missions. As a percentage of GDP, the country’s defense budget in 2012 was 1.72%. The Turkish homeland security market is driven by factors such as terror threats and maritime security needs. The country meets the majority of its defense requirements through imports.

What are the key drivers behind recent market changes?
A strained relationship with Greece, instability within the region, security threats, and peacekeeping missions will drive Turkish defense expenditure over the forecast period. Turkey shares borders with both Iran and Syria, and although the three countries share a peaceful relationship, the increasing defense capabilities of Iran and Syria in missile defense and weapons of mass destruction are perceived by Turkey as a potential security threat. The largest threat to the nation’s security is the Kurdish insurgency, which has been prevalent in the Southeastern part of the country since 1984.

What makes this report unique and essential to read?
The Turkish Defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017provides detailed analysis of the current industry size and growth expectations from 2013to 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

Market Opportunity and Attractiveness
The report 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.

Procurement Dynamics
The report includes trend analysis of imports and exports, together with their implications and impact on the Turkish defense industry.

Industry Structure
The report covers five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.

Market Entry Strategy
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.

Competitive Landscape and Strategic Insights
The report helps the reader to understand the competitive landscape of the defense industry in Turkey. 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

Corruption poses a challenge to the success of defense deals
Until 2004, the Turkish Ministry of Defense was highly trusted, and defense deals were not scrutinized for instances of corruption and bribery. However, during the review period, high ranking defense officials were convicted on charges of malpractice. Despite the fact that the country has ratified the OECD (Organization for Economic Co-operation and Development) anti-bribery convention, and implemented legislation which renders the bribery of foreign and domestic officials an illegal offense, several foreign firms operating in Turkey perceive the corruption present in the defense industry to be a continuing challenge.

Completion of military modernization plans, project delays, and cost escalation expected to limit new projects
Throughout the review period, Turkey has invested in substantial defense procurements, and its military modernization program is currently approaching completion. The country is in possession of a well-developed domestic defense industry which is primarily dependent on Turkish defense expenditure. However, the country has now achieved the majority of its military modernization plans and this, coupled with the impact of the global economic recession, has resulted in the postponement of a number of defense procurement programs.

Key Highlights

Turkish defense expenditure expected at US$20.3 billion by 2017
Turkish defense expenditure registered a CAGR of -1.50% during the review period, and valued US$14.99 billion in 2008 and US$14.11 billion in 2012. Overall, the country spent a total of US$70.89 billion on defense during the review period. Over the forecast period, defense expenditure is expected to record a CAGR of 7.67% and reach US$20.3 billion by 2017, largely due to the internal and external security threats faced by the country.

Turkey’s homeland security market estimated to be US$9.39 billion in 2012 In 2012, the Turkish homeland security market valued US$9.39 billion and is estimated to value US$16.36 billion by 2017. The country’s homeland security expenditure grew at a CAGR of 0.32% during 2008–2012. In order to prevent terrorist attacks, the government is expected to increase homeland security expenditure, resulting in a CAGR of 11.87% over the forecast period. Furthermore, the majority of Turkey’s borders are covered by coast and the country is therefore prone to maritime security threats.

The majority of Turkish defense requirements are met through imports Throughout the review period, Germany emerged as the largest supplier of arms to Turkey, with a market share of 30.54%. In 2011, the US accounted for the majority of the country’s arms imports, amounting to about 61.52% of total defense imports. During 2007–2011, Israel accounted for 19.37% of total imports. However, Turkish defense exports declined at a CAGR of -36.96% and were valued at merely US$6 million in 2011. During 2007–2011, Georgia, Pakistan, and Malaysia emerged as the largest consumers of Turkish military exports, of which land platforms such as armored vehicles, ships and artillery, accounted for the greater portion.