Future of the Netherlands’ Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022
Netherlands is the fifth-largest economy in the Eurozone and has been battling to overcome the effects of the debt crisis through defense budget cuts. During the historic period (2013-2017), expenditure decreased at a compound annual growth rate (CAGR) of -2.71%, from US$10.3 Billion in 2013 to US$9.3 Billion in 2017.
The industry is expected to return to growth at a forecast CAGR of 3.38%, rising from US$9.4 Billion in 2018 to US$10.7 Billion in 2022. Military expenditure will be driven by modernization programs and a NATO mandate to spend a minimum of 2% of GDP on defense. The Netherlands is likely to default on this target, allocating an average of 1.2% of GDP to defense over the forecast period.
Army accounted for the highest budget allocation during the historic period, with an average share of 14.3%. Over the forecast period, the army’s share will decrease to an average budget allocation of 14.2%. After falling to US$11.0 Million in 2014, defense imports recovered to US$118 Million in 2016 and are set to increase over the forecast period due to the procurement of F-35s, armored vehicles, and modernization programs for naval vessels. Historically, US defense companies have been the country’s main arms supplier; however Romania, Italy, Germany and Sweden are being used as import sources for aircraft, naval vessels, armored vehicles, missiles, sensors, and engines.
Government’s offset policy helped the country to build defense manufacturing capabilities in areas such as ship building and aircraft manufacturing. The country enforces its offset policy to gain access to technological innovations while allowing 100% foreign direct investment (FDI). The policy necessitates offsets of 100% of the contract value for all defense contracts above US$6.7 Million.
Foreign companies can enter the Dutch defense market by establishing joint ventures within the domestic defense industry. Foreign companies can also acquire domestic firms or establish subsidiaries as the government’s FDI policy allows 100% investment. There are also opportunities to establish joint R&D programs involving the Netherlands as a consortium member. Due to defense cuts, collaborations and partnerships are encouraged by the government to save costs.
The report “Future of the Netherlands Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022” offers insights into the market opportunities and entry strategies adopted by foreign OEMs (original equipment manufacturers) to gain a market share in the Netherlands defense industry.
In particular, it offers in-depth analysis of the following -
- Market opportunity and attractiveness: Detailed analysis of the current industry size and growth expectations during 2018-2022, including highlights of the key growth stimulators. It also benchmarks the industry against key global markets and provides detailed understanding of emerging opportunities in specific areas.
- Procurement dynamics: Trend analysis of imports and exports, together with their implications and impact on the Netherlands defense industry.
- Industry structure: Five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.
- Market entry strategy: Analysis of 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: Analysis of the competitive landscape of the defense industry in Netherlands, providing an overview of key defense companies (both domestic and foreign), together with insights such as key alliances, strategic initiatives, and a brief financial analysis.
Companies mentioned in this report: Fokker Technologies, DamenSchelde Naval Shipbuilding (DSNS), TNO Defense, Thales Nederland, Fokker Aerostructures, RH Marine Group, Lockheed Martin.
- The Netherlands is the fifth-largest economy in the Eurozone and has been battling to overcome the effects of the debt crisis through defense budget cuts. During the historic period (2013-2017), expenditure decreased at a compound annual growth rate (CAGR) of -2.71%, from US$10.3 billion in 2013 to US$9.3 billion in 2017. Although the economy is likely to improve, the country’s defense budget will be capped at an average of 1.2% of GDP over the forecast period (2018-2022).After falling to US$11.0 million in 2014, defense imports recovered to US$118 million in 2016 and are set to increase over the forecast period due to the procurement of F-35s, armored vehicles, and modernization programs for naval vessels. Historically, US defense companies have been the country’s main arms supplier, however Romania, Italy, Germany and Sweden are being used as import sources for aircraft, naval vessels, armored vehicles, missiles, sensors, and engines.
- During the historic period, revenue expenditure accounted for 82.7% of the Netherland’s total defense expenditure, while the remaining 17.3% was spent on procuring equipment and services. The implementation of budget cuts and reform measures, such as the reduction of troop size, by the MoD adversely affected capital expenditure. However, due to an increasing level of threat from Russia, NATO member states are expected to gradually enhance their defense spending. The share of capital expenditure will reach 17.5% over the forecast period, with the majority allotted to the F-35 procurement program, AIM-9X-2 Sidewinder Block II all-up-round missiles, mortars, surveillance radar, MQ-9 Reaper UAVs, and the Walrus class submarine replacement project.
- The MoD is expected to invest in fighters and Multi-role aircraft, fighters & multi-role aircraft MRO and conventional submarines.
Reasons to buy
- This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Netherlands 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 Netherlands defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts
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