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Future of the Romanian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Future of the Romanian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Summary

Romania’s defense budget valued US$3.8 Billion in 2017, registering a compound annual growth rate (CAGR) of 22.70% during the historic period (2013-2017). The modernization of the armed forces to NATO standards, alongside participating in international peacekeeping missions, has driven Romania’s defense expenditure. With the trend expected to continue over the forecast period (2018-2022), defense expenditure will cumulatively value US$23.2 Billion during 2018-2022. Conversely, the defense budget as a percentage of GDP will rise from a historic-period average of 1.3% to 2.0% over the forecast period.

Aircraft accounted for the majority of Romania’s imports during the historic period, with Portugal being the largest supplier. The country acquired C-27J tactical transport aircraft and F-16 AM/BM Fighting Falcons. Sensors, armored vehicles, engines, and missiles were the other imports Italy, The US, Switzerland and France were the main suppliers. No significant increase in the country’s imports is anticipated over the forecast period.

Romania’s homeland security (HLS) stands at US$2.7 Billion in 2017 and is anticipated to reach US$3.4 Billion in 2022, registering a forecast-period CAGR of 4.12%. Expenditure will primarily be driven by the need to curb illegal immigration, human trafficking, cybercrime, and criminal activities. This is expected to lead to an increase in the demand for maritime security equipment and technology designed to counter security threats posed by international terrorist organizations, pirates, and cross border insurgents.

During the historic period, Romania held a defense equipment trade deficit due to its underdeveloped domestic defense industry. However, the country is anticipated to increase its defense exports over the forecast period, primarily in the area of naval vessels and related MRO.

The report “Future of the Romanian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022” offers insights into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain a market share in the Romanian defense industry.

In particular, it offers in-depth analysis of the following -
- Provides detailed analysis of the current industry size and growth expectations during 2018-2022, 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.
- Detailed analysis of imports and exports, together with their implications and impact on the Romanian defense industry.
- Provides five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.
- 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.
- Analysis of the defense industry’s competitive landscape, providing an overview of key defense companies, together with alliances, strategic initiatives, and financial analysis.
- Covers historical and forecast values for a range of indicators, evaluating business confidence, economic performance, infrastructure quality and availability, labor force, demographics, political and social risk.

Companies mentioned in this report: CN Romarm SA, S.C. Uzina Mecanica Cugir SA, Aerostar SA, IAR SA Brasov, Turbomecanica SA, Electromagnetica SA, Avioane Craiova SA, Elprof SA, IOR SA, Simultec SRL, Intelcan Technosystems, Inc and Airbus Helicopters Romania.

Scope

- Romania’s defense budget valued US$3.8 billion in 2017, registering a compound annual growth rate (CAGR) of 22.70% during the historic period (2013-2017). The modernization of the armed forces to NATO standards, alongside participating in international peacekeeping missions, has driven Romania’s defense expenditure. With the trend expected to continue over the forecast period (2018-2022), defense expenditure will cumulatively value US$23.2 billion during 2018-2022. Conversely, the defense budget as a percentage of GDP will rise from a historic-period average of 1.3% to 2.0% over the forecast period.
- Capital expenditure allocation, which stood at a historic-period CAGR of 27.4%, will rise to a forecast-period CAGR of 44.9% due to the procurement of multirole aircraft, multirole aircraft maintenance, repair and overhaul (MRO), and military-IT software. The government’s focus on modernization plans, which require the procurement of advanced military equipment, is expected to drive capital expenditure to post a forecast-period. Much of this will be allocated towards recruitment, training, and development programs for military personnel.
- The MoD is expected to invest in fighters and Multi-role aircraft, fighters & multi-role aircraft MRO and military-IT software.

Reasons to buy

- This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Romanian 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 Romanian defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts


1. Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. About Strategic Defence Intelligence
2. Executive Summary
3. Market Attractiveness and Emerging Opportunities
3.1. Current Market Conditions
3.1.1. Primary threat perception
3.1.2. Military doctrine and strategy
3.1.3. Military fleet size
3.1.4. Procurement programs
3.1.4.1. Ongoing procurement programs
3.1.4.2. Future procurement programs
3.1.5. Social, political and economic environment and support for defense projects
3.1.6. Political and strategic alliances
3.2. Defense Market Size Historical and Forecast
3.2.1. Romanian defense expenditure to register a forecast-period CAGR of 16.89%
3.2.2. Modernization to meet NATO standards and participation in peacekeeping missions
3.3. Analysis of Defense Budget Allocation
3.3.1. Defense expenditure as a percentage of GDP to increase over the forecast period
3.3.2. Capital expenditure allocation expected to increase over the forecast period
3.3.3. Capital expenditure expected to grow at a CAGR of 38.41% over the forecast period
3.3.4. Per capita defense expenditure forecast to rise over the forecast period
3.4. Homeland Security Market Size and Forecast
3.4.1. Homeland security budget projected to grow steadily over the forecast period
3.4.2. Border control measures and cybercrime to drive homeland security budget
3.4.3. The nation is at low risk of terrorism
3.4.4. Romania faces low-level threat from foreign terrorist organizations
3.4.5. Romania has a terrorism index score of zero
3.5. Benchmarking with Key Global Markets
3.5.1. Romania’s defense budget to post a forecast-period CAGR of 16.89%
3.5.2. Romanian defense expenditure to remain low compared to other leading spenders
3.5.3. Romania allocates a lower percentage of GDP to defense than other NATO members
3.6. Market Opportunities: Key Trends and Growth Stimulators
3.6.1. Fighters and multirole aircraft:
3.6.2. Multirole Aircraft MRO
3.6.3. Military IT software:
4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Defense imports registered a decline during 2012-2016
4.1.2. Romanian defense sourced the majority of its arms from the US
4.1.3. Aircraft and sensors accounted for the majority of arms imports during 2012-2016
4.2. Export Market Dynamics
4.2.1. Defense exports anticipated to grow over the forecast period
4.2.2. Romania supplies all of its defense equipment to the Netherlands
4.2.3. Naval Vessels are the most exported defense goods
5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of suppliers: low to medium
5.1.2. Bargaining power of buyers: high
5.1.3. Barriers to entry: medium
5.1.4. Intensity of rivalry: medium to high
5.1.5. Threat of substitutes: medium to high
6. Market Entry Strategy
6.1. Market Regulation
6.1.1. Offset policy mandates that suppliers must invest 80% of the contract’s value into Romania’s economy
6.1.2. Romania allows 100% FDI in defense industry
6.2. Market Entry Route
6.2.1. Budgeting process
6.2.2. Procurement policy and process
6.2.3. Foreign OEMs enter the market through the acquisition of domestic defense companies
6.2.4. EDA promotes defense procurements within the EU
6.3. Key Challenges
6.3.1. Corruption and inadequate legal infrastructure
7. Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.2. Key Domestic Companies
7.2.1. CN Romarm SA: overview
7.2.2. CN Romarm SA: products
7.2.3. CN Romarm SA: recent announcements and strategic initiatives
7.2.4. CN Romarm SA: alliances
7.2.5. CN Romarm SA.: recent contract wins
7.2.6. S.C. Uzina Mecanica Cugir SA: overview
7.2.7. S.C. UZINA MECANICA CUGIR SA: products
7.2.8. S.C. Uzina Mecanica Cugir SA: recent announcements and strategic initiatives
7.2.9. Aerostar SA: overview
7.2.10. Aerostar SA: products
7.2.11. Aerostar SA: recent announcements and strategic initiatives
7.2.12. Aerostar SA: alliances
7.2.13. Aerostar SA: recent contract wins
7.2.14. IAR SA Brasov: overview
7.2.15. IAR SA Brasov: products and services
7.2.16. IAR SA Brasov: recent announcements and strategic initiatives
7.2.17. IAR SA Brasov: recent contract wins
7.2.18. Turbomecanica SA: overview
7.2.19. Turbomecanica SA: products
7.2.20. Turbomecanica SA: recent announcements and strategic initiatives
7.2.21. Electromagnetica SA: overview
7.2.22. Electromagnetica SA: products
7.2.23. Electromagnetica SA: recent contracts and strategic initiatives
7.2.24. Avioane Craiova SA: overview
7.2.25. Avioane Craiova SA (SAIC): products
7.2.26. Avioane Craiova SA: recent contracts and strategic initiatives
7.2.27. Avioane Craiova SA: alliances
7.2.28. Avioane Craiova SA: recent contract wins
7.2.29. Elprof SA: overview
7.2.30. Elprof SA: products
7.2.31. Elprof SA: recent announcements and strategic initiatives
7.2.32. Elprof SA: recent contract wins
7.3. Domestic Private Companies
7.3.1. IOR SA: overview
7.3.2. IOR SA: products and services
7.3.3. IOR SA: recent announcements and strategic initiatives
7.3.4. Simultec SRL: overview
7.3.5. Simultec SRL: products
7.3.6. Simultec SRL: recent contracts and strategic initiatives
7.3.7. Simultec SRL: recent contract wins
7.3.8. Intelcan Technosystems, Inc.: overview
7.3.9. Intelcan Technosystems, Inc.: products
7.3.10. Intelcan Technosystems, Inc.: recent announcements and strategic initiatives
7.3.11. Intelcan Technosystems Inc.: recent contracts
7.3.12. Airbus Helicopters Romania: overview
7.3.13. Airbus Helicopters Romania: products and services
7.3.14. Airbus Helicopters Romania: recent announcements and strategic initiatives
7.3.15. Airbus Helicopters Romania: recent contract wins
8. Business Environment and Country Risk
8.1. Economic Performance
8.1.1. GDP per capita
8.1.2. GDP at current prices
8.1.3. Exports of goods and services
8.1.4. Imports of Goods and Services
8.1.5. Gross national disposable income
8.1.6. Local currency unit per US$
8.1.7. Market capitalization of listed companies
8.1.8. Market Capitalization of Listed Companies
8.1.9. Government Cash Surplus and Deficit
8.1.10. Goods exports
8.1.11. Goods imports
8.1.12. Service imports
8.1.13. Service exports
8.1.14. Net FDI
8.1.15. Net FDI
8.1.16. Mining, manufacturing, utilities output
9. Appendix
9.1. About SDI
9.2. Disclaimer
List of Tables
Table 1: Romanian Army Strength
Table 2: Romanian Navy Strength
Table 3: Romania Air Force Strength
Table 4: Romania - Ongoing Procurement Programs
Table 5: Romania - Future Procurement Programs
Table 6: Romania - Defense Expenditure (RON Billion and US$ Billion), 2013-2022
Table 7: Romania - GDP Growth vs Defense Expenditure as Percentage of GDP Growth (%), 2013-2022
Table 8: Romania − Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022
Table 9: Romania − Defense Capital Expenditure (RON Billion and US$ Billion), 2013-2022
Table 10: Romania − Per Capita Defense Expenditure (US$), 2013-2022
Table 11: Romania − Homeland Security Expenditure (RON Billion & US$ Billion), 2013-2022
Table 12: Terrorism Index, 2017
Table 13: Benchmarking against Key Markets - 2013-2017 vs 2018-2022
Table 14: Romania - Offset Regulations , 2017
Table 15: Romania − Budget Formation Timetable
Table 16: Market Entry Strategies by Key Foreign Companies
Table 17: CN Romarm SA - Product Focus
Table 18: CN Romarm SA - Alliances
Table 19: CN Romarm SA. - recent contract wins
Table 20: S.C. UZINA MECANICA CUGIR SA - Product Focus
Table 21: Aerostar SA - product focus
Table 22: Aerostar SA - Alliances
Table 23: Aerostar- recent contract wins
Table 24: IAR SA Brasov - product focus
Table 25: IAR SA Brasov- recent contract wins
Table 26: Turbomecanica SA - Product Focus
Table 27: Electromagnetica SA - Product Focus
Table 28: Avioane Craiova SA - Product Focus
Table 29: Avioane Craiova SA - Alliances
Table 30: Avioane Craiova SA - recent contract wins
Table 31: Elprof SA - product focus
Table 32: Avioane Craiova SA - recent contract wins
Table 33: IOR SA - Product Focus
Table 34: Simultec SRL - Product Focus
Table 35: Simultec SRL- recent contract wins
Table 36: Intelcan Technosystems, Inc. - Product Focus
Table 37: Intelcan Technosystems, Inc. - Alliances
Table 38: Airbus Helicopters Romania - Product Focus
Table 39: Airbus Helicopters Romania- Recent Contracts
List of Figures
Figure 1: Romania - Defense Expenditure (RON Billion), 2013-2022
Figure 2: Romania - Defense Expenditure (US$ Billion), 2013-2022
Figure 3: Romania - GDP Growth vs Defense Expenditure as Percentage of GDP (%), 2013-2022
Figure 4: Romania − Defense Budget by Capital and Revenue Expenditure (%), 2013-2022
Figure 5: Romania − Capital Budget Allocation (RON Billion), 2013-2022
Figure 6: Romania − Capital Budget Allocation (US$ Billion), 2013-2022
Figure 7: Romania − Per Capita Defense Expenditure (US$), 2013-2022
Figure 8: Romania − Homeland Security Expenditure (RON billion), 2013-2022
Figure 9: Romania − Homeland Security Expenditure (US$ billion), 2013-2022
Figure 10: Terrorism Heat Map, 2017
Figure 11: Terrorism Index, 2017
Figure 12: Benchmarking with World’s Largest and Top Regional Defense Spenders (US$ Billion), 2017 and 2022
Figure 13: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2017 and 2022
Figure 14: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2017
Figure 15: Romania - Fighter and Multirole Aircraft Market Size (US$ Million), 2017-2022
Figure 16: Romania - Multirole Aircraft MRO Market Size (US$ Million), 2017-2027
Figure 17: Romania - Military IT Software Market Size (US$ Million), 2017-2027
Figure 18: Romania − Defense Import Trend (US$ Million), 2012-2016
Figure 19: Romanian Defense Imports by Country (%), 2012-2016
Figure 20: Romanian Defense Imports by Category (%), 2012-2016
Figure 21: Romania − Defense Exports (US$ Million), 2012-2016
Figure 22: Industry Dynamics - Porter’s Five Forces Analysis
Figure 23: Romania − GDP Per Capita (US$), 2015-2025
Figure 24: Romania − GDP at Current Prices (US$ Billion), 2015-2025
Figure 25: Romania − Export of Goods and Services (LCU billion), 2005-2014
Figure 26: Romania − Import of Goods and Services (LCU billion), 2005-2014
Figure 27: Romania − Gross National Disposable Income (US$ billion), 2005-2014
Figure 28: Romania - LCU per US$, 2015-2024
Figure 29: Romania − Market Capitalization of Listed Companies (US$ Billion), 2005-2012
Figure 30: Romania − Market Capitalization of Listed Companies (Percentage of GDP), 2005-2012
Figure 31: Romania − Government Cash Surplus and Deficit (Percentage of GDP), 2005-2012
Figure 32: Romania − Goods Exports (Percentage of GDP), 2005-2014
Figure 33: Romania − Goods Imports (Percentage of GDP), 2005-2014
Figure 34: Romania − Service Imports (Percentage of GDP), 2005-2014
Figure 35: Romania − Service Exports as % of GDP, 2005-2014
Figure 36: Romania − Net Foreign Direct Investment (US$ Billion), 2005-2014
Figure 37: Romania − Net FDI (Percentage of GDP), 2005-2014
Figure 38: Romania − Mining, Manufacturing, Utilities Output (US$ Billion), 2005-2014

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