October 15, 2015

Restraints on the U.S. DOD helicopter market limit industry’s prospects

With a small number of new procurement programs scheduled for the coming years, the need for logistical support, upgrades, and the remanufacture of current platforms and subsystems will sustain growth in the U.S. Department of Defense helicopter market.
Opportunities will emerge from the DOD’s demand for innovative systems and solutions to increase the service life of new and existing rotary-winged weapon systems.
Technologies allowing commonality of parts and subsystems as well as easing the maintenance to reduce overall life cycle costs will gain favor.
Analysis from Frost & Sullivan expects military helicopter funding to decrease from $9.99 billion in 2015 to $6.89 billion in 2020, at a negative compound annual growth rate of five percent.
“U.S. DOD budget cuts, looming sequestration and budget uncertainties explain the bleak military helicopter funding forecast,” said Frost & Sullivan Aerospace & Defense Senior Industry Analyst Michael Blades. “While the defense budget has been used as a political bargaining tool for several years, this has not had any effect on the industry so far.”
In May 2015, Army Chief of Staff, Gen. Ray Odierno stated budget uncertainty is “going to put us in a modernization hole for 10 years, and our ability to continue to meet our current missions will be challenged.” Helicopter manufacturers across the U.S. will have to find novel ways of boosting revenues.
“Leading helicopter manufacturers must foster partnerships to remain competitive,” noted Blades. “They should focus on drawing synergies from these partnerships and establishing relationships leading to foreign military sales.”
Saudi Arabia, Taiwan, Iraq, United Arab Emirates and Sweden are among the countries already purchasing U.S. military helicopters. Countries with recent purchase agreements driving future FMS revenues include South Korea, Qatar and Indonesia.

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