Friday 21 June 2013, Amsterdam
Although austerity measures introduced in the wake of the financial crisis continue to put pressure on the Austrian Defense industry, new research forecasts market expansion at a CAGR of 1.84% between 2013 and 2018 – although per-capita defense spending is expected to decline during that same period. Whilst spending will be driven by Austria’s peacekeeping activities, the lack of external security threats to Austria itself presents an obstacle to more expansive growth.
Spending to be Driven by Peacekeeping Missions
Austria’s defense expenditure is expected to be driven by peacekeeping and disaster relief operations, in addition to the acquisition of advanced defense equipment.
Austria’s peacekeeping heritage dates back to 1960, with approximately 60,000 Austrian troops and civilian helpers having participated in over 50 international peace support and humanitarian missions since then. It currently has over 1,200 soldiers deployed in 11 peacekeeping missions around the globe. Whilst the Austrian defense ministry is pulling 377 soldiers from the Golan Heights – which separate Syria and Israel – it is expected to increase its troop deployment in Afghanistan, Congo, and South East Europe over the next twelve months.
Moreover, in order to enhance the operational capabilities of its peacekeeping forces, Austria is expected to acquire multipurpose vehicles, helicopters, and fixed wing aircraft, in addition to simulator systems, unmanned weapon stations, and military transport systems.
Low Threat Levels
Despite the positive impact its global peacekeeping operations will have on Austria’s defense sector, the lack of external security threats to the nation itself is a significant barrier to market growth – it is ranked 75th in Terrorism Index. Indeed, over the past five years, 750 tanks and armored vehicles out of 1150 have been scrapped.
Whilst external security concerns are driving little expenditure in the country’s defense sector, Austria’s membership of the ATLAS Network – an organization of EU members consisting of special police units working on countering terrorism and criminal acts. It exchanges best practices and procedures, and conducts joint training exercises, such as real life simulations of terrorist acts like the 2013 simulation ‘Common Challenge’, which attacked nine different EU member states . Austria’s input into these initiatives are a key driver of homeland security expenditure in the country.
Furthermore, efforts to combat organized crime are also having a positive effect on Austria’s defense industry. Following its signing the Schengen agreement in 2005, Austria’s borders have become more vulnerable to illegal immigration, human trafficking, and the drugs trade – it is a destination for women trafficked from South America, and Strategic Defence Intelligence puts the quantity of heroin smuggled through Austria at approximately 55-60 tons per annum.
To combat these crimes, Austria will invest in surveillance and intelligence technologies, such as electronic identification documents, e-passports, automated border crossing systems, and closed circuit television systems.
Uniquely positioned to provide compelling, actionable market intelligence thanks to its rigorous research methodology – which encompasses internal resources, extensive desk research, market modeling, and the input of its panel of leading industry executives – Strategic Defence Intelligence is able to combine research on general industry drivers and trends with experts’ attitudes and behaviors, making Future of the Austrian Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2018 required reading for those serious about reacting to market trends and capitalizing on the opportunities in the Austrian defense sector.
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