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Frost & Sullivan: Military Helicopter Industry to Decline by Almost Half while Civil Market Flourishes — Press Release

While DoD budgets are slashed, civil helicopter purchases will grow to support a broader range of industries

MOUNTAIN VIEW, Calif., Dec. 17, 2013 /PRNewswire/ — As Department of Defense (DoD) budgets tighten, military services will be forced to spend less on helicopters. The declining budget is also driving trends of upgrading and remanufacturing existing platforms rather than funding new helicopter programs. Conversely, the civil helicopter market has rebounded after the 2008-2009 recession that resulted in a lack of financing to support civil helicopter purchases. The improving U.S. economy has allowed for recapitalization of old aircraft as well as new purchases to support growing demand from industries such as emergency medical services, oil and gas.

Frost & Sullivan finds the DoD spent $12.41 billion on military helicopters in 2012 and estimates this to decrease to $6.70 billion in 2018. The U.S. civil helicopter purchases, on the other hand, generated about $0.89 billion in 2012, and this is estimated to increase to $1.07 by 2020.

Click here to view the video on Frost & Sullivan’s Analysis of the US DoD and Civil Helicopter Markets analysis and gain access to the online community – http://bit.ly/1jc23x0.

For more information on this research, please email Jennifer Carson, Corporate Communications, at [email protected], with your full name, company name, job title, telephone number, company e-mail address, company website, city, state and country.

The need to replace equipment that is worn from years of constant deployment and harsh environments is the top driver in the military helicopter market, while recapitalizing a fleet with an average age of 24 years is what is driving the U.S. civil helicopter market.

“Due to constant use in combat, combat support operations, and humanitarian missions, many existing military airframes will reach their service lives between 2030 and 2040. Some Vietnam Era aircraft, like the CH-47 Chinook and the UH-1 Huey fleets, are nearly 50 years old,” said Frost & Sullivan Aerospace and Defense Senior Industry Analyst Michael Blades. “The civil fleet is not nearly as old as the military fleet, but a lack of used aircraft is driving the sales of new platforms.”

The most significant challenge the U.S. DoD helicopter market faces is future budget constraints and threat of a prolonged period of sequestration. Likewise, though the market is projected to grow, overall uncertainty in the U.S. economy is restraining the country’s civil helicopter market.

“Upgrades and remanufactured platforms will continue to dominate spending for the military helicopter market, and new programs will favor modifying commercial-off-the-shelf aircraft rather than developing aircraft from the ground up,” observed Blades. “In both the civil and military markets, end users will stress on total life cycle costs rather than acquisition costs.”

Therefore, helicopter manufacturers are focusing more on efficiency and ease of maintenance in order to reduce repair costs and logistical tails.

Analysis of the US DoD and Civil Helicopter Markets is part of the Aerospace & Defense Growth Partnership Services program, which provides global Mega Trends, information on emerging markets and the latest technology innovations, market, economic, customer, competitive, and best practices research. This CEO 360 degree perspective will enable your company to effectively plan your strategies for growth. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.

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Analysis of the U.S. DoD and Civil Helicopter Markets
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Defense Deals Have Dried Up–for Now

March 2, 2010 by · Comment
Filed under: BNET 

PriceWaterhouseCooper released a report showing that the total value of defense M&A fell precipitously in 2009. They feel that the recession…

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Britain Begins Construction Of New Aircraft Carriers

Despite the budget problems facing Great Britain due to the costs of operations in Afghanistan and the current recession the Labor Government of Gordon Brown continues to move out on some major programs. A few days ago it was to begin construction of the new centralized contractor provided training facility in Wales. Yesterday the first sub-contracts to begin construction of the two new aircraft carriers for the Royal Navy were announced.

These total over $600 million and went to a five different companies across the country. The building of the two ships will be the biggest defense program in England for several years and are critical to the economy of Scotland. Some of the contracts are just not for parts of the ships but also for the infrastructure to support construction including transport of the sections by river to the main assembly point in Rosyth. The two Queen Elizabeth class ships will form the core of the Royal Navy for a good deal of the Twenty-First Century and will operate the F-35 Joint Strike Fighters being developed by Lockheed Martin.

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Oracle Releases eBook on Selling Through A Slump

October 30, 2009 by · Comment
Filed under: Business Line, Events, IT, logistics, Promotions 

Oracle has released an eBook entitled “Selling Through A Slump – An Industry-by-Industry Playbook to Help You Prepare for the Recovery”. It may be purchased here.

The eBook helps with “Selling in a recession is tough. And simply doing more of the same is not the way to survive, much less thrive, in a recession. There are important dos and don’ts in times like these.”

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Next Year Looking Bleak For Government Spending

August 17, 2009 by · Comment
Filed under: BNET, Syndicated Industry News 

August 17, 2009 — The recession has hit all levels of government hard when it comes to tax revenue. The Federal and State have lost lots of income tax money while…

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Next Year Looking Bleak For Government Spending

August 17, 2009 by · Comment
Filed under: BNET, Syndicated Industry News 

August 17, 2009 — The recession has hit all levels of government hard when it comes to tax revenue. The Federal and State have lost lots of income tax money while…

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Internal British Report Recommends Privatizing Acquisition Workforce

August 13, 2009 by · Comment
Filed under: BNET, Syndicated Industry News 

August 6, 2009 — The British Government of Gordon Brown is facing serious issues when it comes to defense spending. The recession has greatly affected tax revenue…

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Lockheed Plans Further Job Cuts Due To VH-71 Ending

Lockheed Martin had already cut over one hundred jobs at their Upstate New York facility in Owego. This was mainly due to the decision by Obama and Secretary of Defense Gates to end the VH-71 New Presidential Transport helicopter program. Even though the aircraft was made in Italy Lockheed did all the modifications and integration in Owego.

Despite a great deal of argument and pressure to keep the program going in some form or another the contract was recently terminated. Lockheed is now saying that another seven hundred and fifty people may lose their jobs. Right now they are looking for people to voluntarily leave or retire with a promise of severance. The plan is to begin the layoffs in July based on how many people agree to leave voluntarily.

One of the arguments against ending this and other production programs is that they will just add to the joblessness during the current recession. Of course the defense budget is not really a jobs program and that is fairly poor reasoning to continue spending billions of dollars on a system that does not meet requirements. It is still possible that Congress will pass some form of spending that will keep pieces of the program alive in the 2010 defense budget but that will not be finished until the Fall.

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A400M Talks Continue

With the Paris Airshow coming up there is a great deal of pressure on EADS to be able to announce some good news at the premier showcase for their products. The company is looking at some severe issues on the military side with their major program the A400M facing push back from its customers.

This medium transport program is at a critical juncture as the nations looking to buy it have the right to end their deals and demand several million dollars worth of payments back from the company. England has been the most negative on the project as their budget problems overall are forcing an entire re-look at military procurement. Some of the other smaller countries such as Spain and Turkey have been more positive.

Now it is reported that talks between EADS and its customers have been extended once again to try and work something out. The hope is that more defense work will be able to balance off the decline in the civil aviation market driven by the world’s recession. Unfortunately like Boeing is facing EADS may have to deal with some major cuts to plans for U.S. defense spending. The FY 2011 budget may continue the large cuts to defense programs that Obama’s first one did.

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England Vacillating On Next Batch Of Eurofighters

Back in May we had written that England would go ahead with the full buy of the next order of Eurofighter Typhoon modern fighter aircraft. This was based on the fact that the costs associated with canceling the contract would be prohibitive. There was also some hope that part of the aircraft could be used to fulfill foriegn military sales rather then seeing service with the Royal Air Force.

Now it is reported that the deal may fall through after all. England like America is faced with economic problems that have led to massive borrowing and an attempt to spend their way out off the recession. This means that funds are limited and the cost of the new aircraft fairly prohibitive. Not only will there be the cost of breaking the contract but several thousand jobs related to building the aircraft may be lost. The government is trying to renegotiate the price or the fees in order to save some money but time is running out. Germany has restated their support for the program and an intent to go ahead and buy the latest batch.

When the original contract was signed England did not imagine that they would not have enough money. It was they who insisted on the strict and high fees if the contract was not followed through on in an attempt to keep the other countries involved from leaving. This had happened several times in the past when NATO and the U.S. joined on various development and procurement programs.

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Economic Downturn Affects Canadian Modernization Plan

November 4, 2008 by · Comment
Filed under: Canada, production program, Restructuring 

The Canadian Press has an article describing the fear among the Canadian military that the recent worldwide economic downturn, call it a recession, will affect funding for their modernization. The Canadian forces have deployed to Afghanistan for years and have been slowly upgrading their equipment based on needs. While small the military has for years been starved of funds and had to make do with older equipment – this has been especially true of the ground forces. Now when it seemed some progress would be made to get them newer, modern equipment funding might be cut due to declining tax revenue and other pressures on government funding.

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