Turkey's revelation in October that it was negotiating to buy air-defense systems from China shocked not only its NATO allies, but also Western missile manufacturers. Although not a done deal, Ankara says China's offer of CPMIEC FD-2000 anti-missile systems costs less and promises better technology transfer.
Unmanned-aircraft manufacturers are approaching a crossroads. The wars that fueled the market's dramatic growth are winding down. International demand is growing but bringing with it increased competition. And the civil market is slow to start, and initially focused on small systems that cannot match the military business in sales value.
As war winds down and the focus shifts from Afghanistan to China, missile manufacturers will see a move away from today's heavy use of precision air-to-surface weapons toward an emphasis on long-range anti-ship and strike systems.
Influenced by that trend, the world missile-systems market will see a steady increase in value over the next five years, but a drop in deliveries as production shifts to more expensive weapons. More than 194,000 missiles of all types are forecast for production between 2013 and 2017, valued at $61.9 billion.
The successes, evolution and technology of unmanned aircraft are helping to chip away at the barriers erected by critics who see unmanned aerial vehicles as a passing fad soon to be relegated to the trash heap of failed (or over-hyped) developments.
Prior to the 9/11 terrorist attacks and the U.S.-led invasions of Afghanistan and Iraq, UAVs were considered exotic toys and not essential tools for victory on the modern battlefield. This all changed as the U.S. demand for surveillance assets soared and its fleet of UAVs expanded by leaps and bounds.
Unmanned aerial vehicles, now also being called unmanned aircraft systems, have come a long way since their introduction during World War I. Inaccurate and unreliable, these early UAVs did not impress political or military leaders of the time, and few recognized their hidden potential.
Operation Desert Storm in 1991 saw the first widespread battle use of UAVs. NATO's involvement in the Balkans throughout the 1990s saw widened use of UAVs, but not until the 9/11 terrorist attacks did the news media propel these systems into the limelight.
Anyone doubting the importance of the tactical missile market on corporate bottom lines need only look at Forecast International's latest estimate of the market's production value over the next five years: $30 billion.
Dominating this arena will be American and European companies caught up in a tight race for market share. Indeed, over the next five years these companies will account for 54% of the worldwide market, or a total value of $16.2 billion. Russian missile production will add another $2.95 billion.
In just four years, worldwide spending on unmanned aerial vehicles has ballooned to levels unexpected prior to the 9/11 terrorist attacks. The market for UAVs to perform various missions such as reconnaissance and surveillance is expected to be worth $7.6 billion through 2010 ($13.6 billion through 2014), with the lion's share coming from the U.S.
So far, the fighting in Iraq has had no measurable effect on the overall tactical missile market, and years may pass before the impact of Operation Iraqi Freedom can be accurately determined. However, this segment of the defense market is likely to remain robust for the foreseeable future.
The total worldwide tactical missile market will generate nearly $32 billion in revenues from 2006-10, with Raytheon and Europe's MBDA accounting for the largest individual shares of revenues of $6.8 billion and $3.94 billion, respectively.
The U.S.-led invasion of Iraq and military operations in Afghanistan and elsewhere have helped to raise the profile of unmanned aerial vehicles to heights undreamed of just a few years ago. U.S. program managers report that for the first time they are receiving more money than requested. Worldwide, funding for UAVs is skyrocketing and more production contracts are being awarded than ever.
Although the U.S.-led invasion of Iraq was launched in 2003, the effects of this conflict on the worldwide missile market continue to reverberate but have yet to be fully realized. The most notable effect has been felt within the strike/stand-off segment.
The total worldwide tactical missile market is expected to be worth $69.3 billion from 2005-14, with suppliers in the U.S. and Western Europe accounting for nearly half of the total or about $34 billion. The top producers will be Raytheon ($10.3 billion) and MBDA ($7.2 billion).