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Analysis 2 - The Naval Surface Combatants Market

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2 Nov 2003Note This analysis surveys leading programs in order to ascertain market patterns. Figures and monetary amounts represent only systems

Warships Forecast

    Analysis 2 - The Naval Surface Combatants Market

    Table of Contents Table of Contents ..................................................................................................................................................... 1 Executive Summary ................................................................................................................................................... 2 Introduction .......................................................................................................................... 错误;未定义书签。3 Trends ................................................................................................................................... 错误;未定义书签。5 Competitive Environment ...................................................................................................... 错误;未定义书签。16 Market Statistics ................................................................................................................. 错误;未定义书签。20

    Table 1 - The Naval Surface Combatants Market, Unit Production by Program ............. 错误;未定义书签。22

    Table 2 - The Naval Surface Combatants Market, Value of Production by Program ...... 错误;未定义书签。27

    Figure 1 - The Naval Surface Combatants Market, Unit Production by Program, Bar Graph错误;未定义书签。31

    Figure 2 - The Naval Surface Combatants Market, Value of Production by Program, Bar Graph错误;未定义书签。31

    Table 3 - The Naval Surface Combatants Market, Unit Production by Company ........... 错误;未定义书签。32

    Table 4 - The Naval Surface Combatants Market, Value of Production by Company..... 错误;未定义书签。33

    Table 5 - The Naval Surface Combatants Market, Unit Production, % Market Share ..... 错误;未定义书签。35

    Table 6 - The Naval Surface Combatants Market, Value of Production, % Market Share错误;未定义书签。36

    Figure 3 - The Naval Surface Combatants Market, Unit Production, % Market Share, Pie Chart错误;未定义书签。37

    Figure 4 - The Naval Surface Combatants Market, Value of Production, % Market Share, Pie Chart错误;未定义书签。37 Conclusion .......................................................................................................................... 错误;未定义书签。38

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     November 2003

Analysis 2, Page 2 Warships Forecast

    The Naval Surface Combatants Market

    Executive Summary

    The surface combatant sector’s cumulative total market other simple examples of the naval designer’s art. Such size over the years 2003-2012 is estimated at 252 programs tend to arise fairly quickly and proceed warships valued at US$112.7 billion. This represents a rapidly from initiation to completion. The other segment reduction of 1.2 percent in ship numbers over the consists of high unit value ship construction programs forecast for last year but an increase of no less than 16 where the design and production times are much longer. percent in the total value of the market. This startling These ships frigates, destroyers, and their equivalents increase in value is due to the entry to service of a new take much longer to complete. Back in the 1970s and generation of warships in the far term that are 1980s, there was an intermediate group of mid-cost, significantly larger and more capable than their present-mid-time ships (fast attack craft and general purpose day counterparts. An interesting example of this point is frigates) that filled the gap between these. This class of that the average unit value of the ships due for ships has now vanished, leaving just the two extremes. completion in 2003 is US$432.1 million, rising to The short-term forecast is dominated by the first group, US$617.6 million in 2012, an increase of no less than the long-term end by the second.

    42.9 percent. Although the current trend of surface combatants of Within the current forecasting window, the level of increasing size and capability replacing smaller and less annual expenditure varies from a 2003 value of capable ships is often depicted as the triumph of larger US$10.802 billion to a high of US$13.266 billion in ships over smaller, this is not really the case. The hull of 2008. The trend thereafter is a slow but steady decline a modern warship represents only a small percentage of throughout the remainder of the forecast period, with the total cost of the ship; the overwhelming proportion the total annual market dropping through the US$9 of the cost is due to weapons, sensors, and data billion mark to end just above the US$8 billion bracket processing systems. The procurement value of identical in 2012. As usual, the forecast period ends on this low systems being packaged into hulls of varying size note due to the impact of as-yet unformulated programs, should result in ships of more or less equivalent cost. In although the extended periods required by shipbuilding the past, it was naively assumed that producing a in comparison with other defense programs reduce the smaller hull would save money, a factor of significant significance of this factor. concern to the authorities responsible for economic

    matters. This was never true, but the myth (often In terms of numbers, the pattern over the forecast period exhibited as a reference to a ship’s “cost per ton”) is much more interesting. A total of 25 surface extended its pernicious influence for many years. combatants are scheduled for completion in 2003, and

    this number climbs quickly to average around 30 until Recently, however, a better understanding of surface 2010, then falls sharply to a total of 13 in 2012. This combatant design constraints has caused non-specialists apparently represents a fall of 48 percent over the to understand that building hulls appropriately sized to forecast period (as opposed to a corresponding fall of 66 the operational requirements may actually save money percent last year). However, the significant factor is the over a smaller alternative. The added costs of long period of virtually static completion rates shipbuilding steel are small and the air it contains comes combined with the steady increase in value of those free. A larger ship has greater margins for future completions. This is more indicative of the structure of development, usually requires less costly maintenance, the surface combatants market since warships are, and is better attuned to handling adverse sea conditions. perhaps, the longest term of military programs, Since the bulk of the cost of a modern warship is its frequently taking upwards of 20 years from original equipment outfit, it makes little sense to compromise design to delivery of the last of class. This makes the the performance of that equipment by packaging it in an warship market (in any sector) slow to respond to inappropriately small hull.

    changes. Thus, the shifts in the market as shown by this Thus the current dynamic of the surface combatants forecast period reflect the slow recovery from the long market is that the developing operational requirements building holiday of the 1990s. are forcing the adoption of increasingly complex and There is a more concrete reason behind the decline, expensive electronics fits. At the same time, the hinted at by the significant increase of the unit value of growing sophistication of those responsible for budget construction. The surface combatant market contains allocations has led them to understand that a ship two sub-segments. The first is a relatively low unit appropriately sized for her mission is more economic value but fast construction part consisting primarily of than one that has been compromised by a forced offshore patrol vessels and craft, fleet auxiliaries, and adoption of a less-than-adequate hull. The result is the

November 2003

Warships Forecast Analysis 2, Page 3

    escalation of price and size illustrated by this market of their enemies. These concepts were taken still further analysis. during Operation Iraqi Freedom, where a concentrated

    application of precision guided weapons was a key Within this paradigm, the basic concepts of surface factor in the rapid and effective elimination of organized combatant operations are changing. Amphibious Iraqi resistance. warfare is a case in point, one example being the recent

    British operation in Sierra Leone. Amphibious landing Operation Iraqi Freedom also showed that the end of craft and amphibious assault ships will now take center organized resistance does not necessarily mean the end stage. The Afghan campaign is a classic example of of fighting. A disturbing development in recent years is this shift. The key act there was the establishment of that the division between combatant and non-combatant Fire Base Rhino by the U.S. Marines, deep in forces established by the Peace of Westphalia in 1642 Afghanistan and over 400 miles from the amphibious and painfully developed since then has been deliberately ships that served as a jump-off point for the operation. discarded by some cultural groups. This makes for long, Fire Base Rhino was essential because it was an on-the-painful, and messy aftermaths that place substantial ground demonstration of American willingness to burdens on the flexibility, mobility, and sophistication commit troops to the operations. This demonstration of modern armed forces. Surface combatants have was key to the formation of an Afghan anti-Taliban capabilities that make them uniquely well suited to net-Southern Alliance that complemented the existing centric warfare. Surface combatants are being Northern Alliance and allowed the direct assault on the reinvented by the concepts of net-centric warfare and Taliban’s southern strongholds. the application of those concepts to the war on

    terrorism. The outcome of this process will define the The stunning success in Afghanistan was primarily due Surface Combatants Market for decades to come. to the first uses of a new technology application that is

    becoming known as net-centric warfare. This uses a Note: This analysis surveys leading programs in order combination of information acquisition and processing to ascertain market patterns. Figures and monetary with precision guided weapons and high-speed, high-amounts represent only systems currently in production capacity secure communications to define a new type of or planned and where these programs are believed to be battlefield. In this environment, relatively small and heading. From these trends, an overall picture of the dispersed forces can use the net-centric systems to bring total market is formulated.

    down appropriate amounts of firepower onto the heads

    * * *

    This Analysis prepared by:

    FORECAST INTERNATIONAL

    22 Commerce Road, Newtown, CT 06470 USA,

    Tel.:(203) 426-0800 • Web site: www.forecast1.com

     November 2003

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