The Global Military Ammunition Market 2013-2023
This report is the result of extensive market and company research covering the global military ammunition industry. It provides detailed analysis of both historic and forecast global industry values, factors influencing demand, the challenges faced by industry participants, analysis of the leading companies in the industry, and key news.
Introduction and Landscape
Why was the report written?
“The Global Military Ammunition Market 2013-2023” offers the reader detailed analysis of the global military ammunition market over the next ten years, alongside potential market opportunities to enter the industry, using detailed market size forecasts.
What are the key drivers behind recent market changes?
Numerous countries in the world are currently involved in conflicts with their neighboring nations owing to reasons such as territorial disputes and terrorism. This situation is most commonly evident in the Asia Pacific region due to the rapid economic and military development among countries such as China, India, Japan, South Korea and North Korea among others. All the above mentioned countries are making rapid efforts in order to strengthen their military forces in order to be battle ready and thus involved in an arms race. And, battle readiness demands possessing adequate ammunition of various kinds including small caliber, artillery, mortar, large caliber and medium caliber. For example, India and Pakistan share tense relations owing to the territorial disputes between each other, as well as cross-border terrorism. The countries’ militaries are involved in frequent cross-border firing despite their ceasefire agreement signed a decade ago. China and South Korea too share hostile relations owing to the Chinese government’s intentions to reunite both the countries which are strongly opposed by the latter nation. Thus, South Korea is also making significant efforts in order to defend the Chinese military power when needed, though with the support of its allies such as the US.
What makes this report unique and essential to read?
“The Global Military Ammunition Market 2013-2023” provides detailed analysis of the current industry size and growth expectations from 2013 to 2023, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides detailed understanding of emerging opportunities in specific areas.
Key Features and Benefits
The report provides detailed analysis of the market for military ammunition during 2013-2023, including the factors that influence why countries are investing or cutting expenditure on military ammunition. It provides detailed expectations of growth rates and projected total expenditure.
The global ammunition industry is expected to witness a steady rise in the number of joint ventures and strategic alliances during the forecast period, due to the insufficient indigenous manufacturing capabilities of numerous countries such as the US, India, and Brazil. These countries are dependent on foreign ammunition manufacturers in order to meet demand and develop indigenous ammunition manufacturing capabilities. Some recent notable joint ventures are mentioned below:
- By the end of 2013, Russia and India are expected to establish a joint venture to manufacture ammunition for the Smerch multiple launch rocket system in India. The Russian firms Rosoboronexport and OAO NPO Splav are expected to form a joint venture with the artillery production department of the Indian defense ministry in order to produce, as well as provide after sales support to, the specified ammunition in India.
- In April 2012, General Dynamics Ordnance and Tactical Systems and Rheinmetall Defense announced the formation ofa joint venture called Defense Munitions International, LLC in order to develop and market the new and existing kinetic energy and multi-purpose cartridges, which are elements of tank ammunition. The JV intends to market these products in the US as well as international markets.
- In January 2012, BAE Systems and Olin Winchester announced that they have formed a joint venture called US Munitions, LLC in the US. The joint venture was formed with an aim to undertake the contract awarded by the US DoD to manage, operate and maintain its Lake City Army Ammunition Plant till 2022. The contract is worth US$8.4 billion.
Key Market Issues
Reducing the weight of ammunition without compromising combat performance is a key challenge for the military ammunition industry. The modernization of soldier systems to protect and empower the soldier has resulted in an exponential increase in the total weight being carried. The combined weight of equipment prevents them from being agile, mobile, and effective war fighters, and the lives of soldiers are being put at risk as heavy life saving equipment is often being left behind. Defense agencies worldwide are focusing on sourcing and integrating the most affordable, lightweight soldier equipment and technology to reduce the burden to personnel. For example, the US Department of Defense Ordnance Technology Consortium awarded a US$2.05 million contract to AAI’s Lightweight Small Arms Technologies (LSAT) team, part of Textron Systems to innovate both its caseless and cased telescoped lightweight ammunition and weapon technologies. The contract includes refining the 5.56mm Cased Telescoped ammunition and Light Machine Gun in support of an Army live fire experiment; development, testing and characterization of prototype 5.56mm Caseless ammunition; and extending Cased Telescoped ammunition technologies to a 7.62mm cartridge. The US Army Armament Research, Development and Engineering Center (ARDEC) and the Department of the Navy’s Office of Naval Research are jointly participating in this program. The contract is for a one year period and the team of AAI consists of Alliant Techsystems (ATK), Veritay Technology, and St. Marks Powder, a General Dynamics company. The UK MoD also plans to reduce the load on soldiers from 70 kg to no more than 25 kg under the Reducing the Burden on the Dismounted Soldier (RBDS) program. Furthermore, defense ministries are funding research and development projects that focus on reducing the weight of equipment, power, and communication systems that soldiers carry. All capability areas such as lethality - soldier’s weapons and ammunition; survivability and mobility - body armor, clothing, helmet, and equipment; C4ISR - radios, wearable computers, and optics, have to be integrated to reduce the weight.
Recent years have witnessed an increase in shortage of skilled laborers globally, mainly due to growing orders from the defense ministries for ammunition. There is a scarcity of technically skilled workers in firearms industry and the companies catering to ammunition needs of the militaries are ready to recruit more workers if they get in order to reduce their order backlogs. Skilled laborers were already scarce in the past in the arms and ammunition industry and the big ammunition programs announced by some countries recently have further caused the supply shortage to grow. The procurement of small caliber ammunition worth US$8.5 billion by the US DoD and US$3.2 billion Munition Acquisition Supply Solutions (Mass) program of the UK MoD are examples of such huge ammunition programs being carried out. Manufacturers that are supplying ammunition to the defense ministry started working with educational institutions to create programs to provide technicians for the industry as many of the positions are vacant in these companies due to lack of right workers. Implementation of measures to fill the existing shortage of skilled work force to clear order backlogs and get workers for positions that are newly created due to programs recently announced are expected to take much time and as such during the forecast period, lack of skilled laborers is expected to remain as a key challenge for the military ammunition industry.
The US government announced the withdrawal of majority of its troops from Afghanistan in 2011 and it started gradual withdrawal in the same year. By February 2014, 34,000 troops are expected to reain in Afghanistan with the withdrawal of 34,000 troops. The decision is expected to affect the military ammunition market especially the small caliber ammunition market as these are the types of ammunition mostly used for the combat mission in Afghanistan. The US has plans to leave between 6,000-20,000 troops until 2024 for support mission. The UK government also has plans to reduce its troop size in Afghanistan to 5,200 by the end of 2013 and to withdraw remaining soldiers by the end of 2014. Another major contributor for the Afghanistan combat mission, Germany has pulled out all of its troops in 2013. This, as support mission that includes counterterrorism mission and logistical and training support for Afghan forces will not require much of ammunition; the draw down plan is anticipated to negatively impact the market growth. Along with this, army personnel cuts announced by countries such as the US and the UK are also expected to cause a moderate growth of the military ammunition market. The US plans to cut its army personnel numbers from 535,000 to 380,000 by 2019 and the UK MoD plans reducing the number of army personnel from 102,000 to 82,000 by 2017.
The US DoD is making significant efforts to reduce the weight carried by the soldiers in the battlefield. One such initiative is the Lightweight Small Arms Technologies (LSAT) development program, through which the US DoD aims to provide lightweight weapons and ammunition to its forces. The infantry soldiers carry a range of equipment including arms and ammunition in the battlefield, which are very heavy to carry for long durations and thus affect the soldiers’ fighting capabilities. Therefore, this program intends to equip the soldiers with light-weight machine guns which fire specially designed ammunition, which is also significantly lighter in weight that the conventional small caliber ammunition. The new advanced light machine gun is designed to utilize 5.56mm ammo designed by the AAI Corporation, which is a part of Textron Systems in cooperation with the US DoD. This new ammunition is called telescoped ammunition and does not consist of the conventional brass cartridge, due to which the weight of the ammunition is significantly decreased by approximately 40% compared to the traditional 5.56 ammunition. The new ammunition uses solid propellant that does not need casing and is directly fed into the weapon. These bullets are also shorter and use lesser volumes, which enable the soldiers to carry more ammunition and less weight. Recently, the US DoD also awarded a contract to improve the lightweight 5.56 ammunition and apply the same technology in the 7.62mm ammunition as well. It is expected that these technological advancements will reduce approximately 25 pounds (lbs) from a typical M249 Squad Automatic Weapon gunner. Therefore, these lightweight ammunitions are expected to be adopted by various militaries during the forecast period.
Warfare techniques have undergone significant changes during the past decade owing to the rise in guerilla warfare, counter-insurgency and counter-terrorism operations in various countries. Therefore, with an increase in the instances of asymmetric warfare by terrorists, insurgents and rebel forces, the military forces are finding newer ways to neutralize the enemy with newer ammunition. Precision munitions are one such weapon of choice for the militaries fighting in environments such as Iraq and Afghanistan, which need greater accuracy in attacks. The various types of precision munitions include Excalibur, XM395 precision mortar and Guided Multiple Launched Rocket System (GMLRS) ammunition among others. The factors that are expected to bolster the spending on precision munitions are significantly decreasing costs, wide range of options to choose from and the rising familiarity with these weapons among the militaries of numerous countries. The ammunition manufacturers such as Alliant Techsystems (ATK) have developed course correcting fuses, which can convert conventional rounds into guided bombs. These are relatively cheaper than the advanced precision munitions such as Raytheon’s Excalibur Block 1b. Furthermore, the unit costs of these munitions have also decreased significantly during the last three to four years. For example, Raytheon’s Excalibur 1a projectile unit had cost around US$87,000 in 2010, whereas the cost of the Excalibur 1b projectile in 2012 was US$45,000. This steep reduction in prices can be attributed to the economies of scale due to the rapidly increasing orders for these weapons.
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