aerospace & defense market opportunitiesin central and eastern europe
TRANSCRIPT
Aerospace & Defense Market Opportunitiesin Central and Eastern Europe
Poland a Gateway to the Market
Dominik Kimla, PhD - Industry Analyst
Aerospace, Defense & Security
16 September 2014
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Today’s Presenter
Dominik interprets forecast trends and drivers in the global ADS industry from a
market and technology perspective. He has 10 years of work experience in
project management, research and market analysis across public and private
sectors. His particular expertise include: macroeconomic research, competitive
landscape analysis and European defense Industry consolidation.
Dominik Kimla, PhD - Industry Analyst
Frost & Sullivan
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Analyst Briefing Agenda
� Executive Summary
� CEE Aerospace & Defense Market Drivers & Restraints
� Selected Programs / Contracts Opportunities
� Critical Success Factors
� Conclusion
� Strategic Recommendations
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Executive Summary
� Despite economic slowdown and defense budget cuts in Western Europe, the Central and
Eastern European (CEE) military markets will present positive dynamics fuelled by defense
procurement programs.
� Poland, with multi-defense procurement programs, is the most lucrative market among CEE
countries for defense suppliers.
� Price conscious CEE end-users demand from suppliers to establish lower life cycle costs for
their equipment.
� Defense OEMs interested in the CEE market should increase its industrial foot print in the
region and proactively engaged with local counterparts specifically in the military R&D and
technologies areas.
� Defense modernization programs are seen by decision makers as a tool to development of
indigenous defense sector capabilities in the region which lead to increased importance for
technology transfer.
Source: Frost & Sullivan
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CEE Aerospace & Defense Market
Source: Frost & Sullivan
CEE Aerospace & Defense Market: Analysed Countries
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Drivers 1–3 Years 4–7 Years 8–10 Year
The annexation of Crimea by the Russian
Federation and the crisis in Ukraine boost
defense spending in CEE.
H H M
The implementation of re-armament programs in
CEE countries create many business
opportunities for Western aerospace and
defense OEMs.
M H H
Defense modernization programs act as a
stimulus for industrial development and
increasing the capabilities of the indigenous
defense sector.
L M M
Impact ratings: H = High, M = Medium, L = Low Source: Frost & Sullivan
CEE Aerospace & Defense Market: Key Market Drivers, CEE, 2014-2023
CEE Market Drivers
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Impact ratings: H = High, M = Medium, L = Low Source: Frost & Sullivan
CEE Aerospace & Defense Market: Key Market Restraints, CEE, 2014-2023
CEE Market Restraints
Restraints 1–3 Years 4–7 Years 8–10 Year
The financial situation in the European Union
(EU) may negatively impact defense
procurements in CEE.
M M M
High-end defense technology prices to slow
down new modernization programs.L M H
European Union (EU) legislation diminishes
military offset obligations in the CEE region.L M M
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CEE Selected Programs / Contracts Opportunities
Source: Frost & Sullivan
CEE Aerospace & Defense Market: Selected Programs / Contracts Opportunities
New multi-role combat aircraft
155mm self-propelled howitzers
Image and satellite
reconnaissance
Combating threats at sea
Simulators
Patrol reconnaissance
Medium range air surveillance radars
New multi- role combat aircraft
Multi-role helicopters
Multi-role combat aircraft
Air and missile defense systemsMulti-role helicopters
C4ISR
Modernization of armour and mechanised forces
New jet training aircraft
Multi-role helicopters
Multi-role helicopters
Armoured personnel carriers
Air and missile defense systems
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CEE Critical Success Factors
Source: Frost & Sullivan
The technological quality and life cycle cost of military hardware are the most important award criteria in expected defense procurement tenders in the CEE region. However, the importance of
price factors could increase over time due to potential budget constraints.
Technology transfer and partnerships with local defense sector are substantial decision-making factors for end-users in the CEE region due to governmental policies to promote local industrial production and the development of indigenous defense capabilities. In this context, the spillover
effects of defense modernization projects to the local economy and the resulting creation of jobs, particularly for high-skilled jobs, are also important factors.
Aerospace & Defense Market: Critical Success Factors, CEE, 2014–2023
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Conclusion
� Poland as a regional leader in terms of defense expenditures presents the highest market opportunitiesfor defense OEMs.
� Companies interested in Polish market should increase its in country presence and proactively engagedwith Polish counterparts in the military R&D and technologies areas.
� The Czech Republic, Romania and Slovakia should be perceived as a second tier countries in terms ofpotential defense contract opportunities.
� The main CEE’s defense capability gap is in the air domain. Therefore, the air defense systems androtary wing platforms are the most attractive segments for international defense suppliers.
� From defense OEMs perspective, increasing industrial foot print by investments in the A&D clusters or bysetting up long term partnership with key local defense companies seem to be the most rational marketentry strategies.
� The military modernization programs are seen as a path to modernizing the CEE’s defense sector. Thus,partnering or engaging in development of the indigenous defense sector is well seen by the local decisionmakers.
Source: Frost & Sullivan analysis
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Strategic Recommendations
20142014 20162016 2020202020182018
Polish Air Defense Systems
Polish Multi-role Helicopters
Czech Multi-role HelicoptersPolish Attack Helicopters
Polish Multi-role Combat Aircrafts
Slovakia Multi-role Combat aircrafts
Slovakia Multi-role Helicopters
Czech and Slovak Jet Training Aircrafts
Routes to Markets Target Partners Challenges & Solutions
PolandGreenfield investments and / or partnering with local companies
Polish Armaments Group, companies located in the Aviation Valley
Partnering with local companies and / or provision defense capabilities in framework of lease agreements
Partnering with local companies and / or provision defense capabilities in framework of lease agreements or second hand platforms
AERO Vodochody, Česká letecká servisní,
LOM PRAHA, PBS Velká Bíteš
Letecké opravovne Trenčín, Virtual Reality Media
CzechRepublic
Slovakia
Access to / and sharing defense technologies and the Intellectual Property Rights
Capability Gaps Driving Market Attractiveness
Localizing the Global Business
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For Additional Information
Edyta Grabowska
Junior Corporate Communications Executive
(0048) 2248-16203
Dominik Kimla, PhD
Industry Analyst
Aerospace, Defense & Security
(0048) 2248-16210
Richard Hilton
Research Manager
Aerospace, Defense & Security
(0044) (0)2079-157-824
Piotr Mszyca
Account Executive
CEE, Russia & CIS
(0048) 2248-16270