Future of the Mexican Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Future of the Mexican Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Summary

The Future of the Mexican Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022, published by Strategic Defence Intelligence, provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

Synopsis

This report offers detailed analysis of the Mexican defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.

In particular, it provides an in-depth analysis of the following:
- The Mexican defense industry market size and drivers: detailed analysis of the Mexican defense industry during 2018-2022, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country’s expenditure and modernization patterns
- Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country
- Porter’s Five Force analysis of the Mexican defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry
- Import and Export Dynamics: analysis of prevalent trends in the country’s imports and exports over the last five years
- Market opportunities: details of the top five defense investment opportunities over the next 10 years
- Competitive landscape and strategic insights: analysis of the competitive landscape of the Mexican defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

Scope

- Mexico’s defense budget stands at US$5.1 billion in 2017, and the country is expected to cumulatively spend US$33.8 billion on its military over the forecast period.The main factors driving this growth are the rapid modernization of the country’s armed forces in recent years.
- During 2013-2017, an average of 11.0% of the country’s total defense budget was allocated to capital expenditure; while an average of 89.0% was reserved for revenue expenditure.
- This is primarily due to Mexico’s future modernization programs. For instance, In April 2016, Mexico placed an US$54.9 million order for the acquisition of highly customized variants of the UH-60M Black Hawk utility helicopters. Similarly, in September 2016, the Mexican Navy took delivery of the first of ten units of Airbus AS565 MBe Panther helicopters, which were ordered in 2014.
- The MoD is expected to invest in corvettes, multi mission helicopter, transport aircraft and corvettes MRO.

Reasons to buy

- This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Mexican defense industry market trends for the coming five years
- The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
- Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector
- A deep qualitative analysis of the Mexican defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts

1. Introduction 7
1.1. What is this Report About? 7
1.2. Definitions 7
1.3. Summary Methodology 8
1.4. About Strategic Defence Intelligence 9
2. Executive Summary 11
3. Market Attractiveness and Emerging Opportunities 14
3.1. Current Market Scenario 15
3.1.1. Primary Threat Perception 15
3.1.2. Military Doctrine & Strategy 16
3.1.3. Military Fleet Size 18
3.1.4. Procurement Programs 23
3.1.5. Social, Political and Economic Environment & Support for Defense Projects 24
3.1.6. Political and Strategic Alliances 25
3.2. Defense Market Size, Historical and Forecast 26
3.2.1. Defense expenditure is expected to grow at a CAGR of 6.14% during 2018-2022 26
3.2.2. Government initiatives to combat drug trafficking to drive defense expenditure over the forecast period 28
3.2.3. Defense expenditure as a percentage of GDP estimated to increase over the forecast period 29
3.3. Analysis of Defense Budget Allocation 31
3.3.1. Share of capital expenditure to average 13.7% during the forecast period 31
3.3.2. In Mexico, capital expenditure on defense is expected to grow at a CAGR of 6.24% during the forecast period 33
3.3.3. Per capita defense expenditure expected to increase over the forecast period 36
3.4. Homeland Security Market Size and Forecast 38
3.4.1. Homeland security expenditure is anticipated to increase at a CAGR of 8.52% during the forecast period 38
3.4.2. Money laundering and organized crime to drive the Homeland Security market 40
3.4.3. Mexico is considered to be at ‘high risk’ of terrorist attacks 42
3.4.4. Mexico has a moderate threat from foreign terrorist organizations 43
3.4.5. Mexico considered at ‘Moderate Risk’ of terrorist attack 45
3.5. Benchmarking with Key Global Markets 46
3.5.1. Mexico’s defense budget is expected to increase over the forecast period 46
3.5.2. Mexico’s military expenditure is limited compared to the leading countries worldwide 48
3.5.3. Mexico allocates a low percentage of GDP to defense 49
3.6. Market Opportunities: Key Trends and Growth Stimulators 50
3.6.1. Multi-mission Helicopters 50
3.6.2. Corvettes MRO 51
3.6.3. Corvettes 52
3.6.4. Transport Aircraft 53
4. Defense Procurement Market Dynamics 54
4.1. Import Market Dynamics 55
4.1.1. Limited domestic defense capability to drive the country’s defense imports 55
4.1.2. Defense imports are expected to increase over the forecast period 56
4.1.3. The US was a major arms supplier to Mexico during 2012-2016 57
4.1.4. Aircraft to dominate Mexican defense imports 58
4.2. Export Market Dynamics 59
4.2.1. Mexico does not export arms due to an underdeveloped domestic arms industry 59
5. Industry Dynamics 60
5.1. Five Forces Analysis 60
5.1.1. Bargaining power of the supplier: low 61
5.1.2. Bargaining power of the buyer: medium 61
5.1.3. Barriers to entry: low 61
5.1.4. Intensity of rivalry: low 61
5.1.5. Threat of substitution: medium to high 61
6. Market Entry Strategy 62
6.1. Budgeting Process 62
6.1.1. Procurement Policy and Process 62
6.1.2. Mexico has not disclosed any offset obligations 63
6.1.3. Mexico allows 100% FDI in the defense industry 63
6.2. Market Entry Route 64
6.2.1. Foreign OEMs prefer direct selling to enter the market 64
6.2.2. Military collaborations provide good market entry opportunities 64
6.3. Key Challenges 65
6.3.1. Corruption and lack of transparency impedes the growth of Mexico’s defense industry 65
6.3.2. Lack of domestic defense technological know-how acts as a deterrent to market entry 66
7. Competitive Landscape and Strategic Insights 67
7.1. Competitive Landscape Overview 67
7.2. Key Domestic Companies 68
7.2.1. Productos Mendoza: overview 68
7.2.2. Productos Mendoza: products 68
7.2.3. Aviabaltika de Mexico Company: overview 69
7.2.4. Aviabaltika de Mexico Company: products and services 69
8. Business Environment and Country Risk 70
8.1. Economic Performance 70
8.1.1. GDP Per Capita 70
8.1.2. GDP, Current Prices 71
8.1.3. Exports of Goods and Services (LCU Billion) 72
8.1.4. Imports of Goods and Services (LCU Billion) 73
8.1.5. Gross National Disposable Income (US$ Billion) 74
8.1.6. Local Currency Unit per US$ 75
8.1.7. Market Capitalization of Listed Companies 76
8.1.8. Market Capitalization of Listed Companies (% of GDP) 77
8.1.9. Goods exports as % of GDP 78
8.1.10. Goods imports as % of GDP 79
8.1.11. Service Imports as % of GDP 80
8.1.12. Service Exports as % of GDP 81
8.1.13. Foreign Direct Investment 82
8.1.14. Net foreign direct investment as % of GDP 83
8.1.15. Mining, Manufacturing and Utilities Output LCU Billion 84
9. Appendix 85
9.1. About SDI 85
9.2. Disclaimer 85

List Of Tables

Table 1: Mexican Ground Forces Strength 18
Table 2: Mexican Air Forces Strength 19
Table 3: Mexico Navy Strength 21
Table 4: Mexico - Ongoing Development and Procurement Programs 23
Table 5: Mexico - Future Procurement Programs 23
Table 6: Mexican Defense Expenditure (MXN Billion & US$ Billion), 2013-2022 26
Table 7: Mexican GDP Growth vs. Defense Expenditure as Percentage of GDP Growth, 2013-2022 29
Table 8: Mexican Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 31
Table 9: Mexican Defense Capital Expenditure (MXN Billion & US$ Million), 2013-2022 34
Table 10: Mexican Per Capita Defense Expenditure (US$), 2013-2022 36
Table 11: Mexican Homeland Security Expenditure (MXN Billion & US$ Billion), 2013-2022 38
Table 12: Terrorism Index, 2017 43
Table 13:Benchmarking with Key Markets - 2013-2017 vs. 2018-2022 46
Table 14: Mexican Budget Formation Timetable 62
Table 15: Competitive Landscape of the Mexican Defense Industry 67
Table 16: Productos Mendoza - Product Focus 68
Table 17: Aviabaltika de Mexico Company - Products and Services 69

List Of Figures

List of Figures
Figure 1: Mexican Defense Expenditure (MXN Billion), 2013-2022 27
Figure 2: Mexican Defense Expenditure (US$ Billion), 2013-2022 27
Figure 3: Mexican GDP Growth vs. Defense Expenditure as a Percentage of GDP, 2013-2022 30
Figure 4: Mexican Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 32
Figure 5: Mexican Capital Budget Allocation (MXN Billion), 2013-2022 35
Figure 6: Mexican Capital Budget Allocation (US$ Million), 2013-2022 35
Figure 7: Mexican Per Capita Defense Expenditure (US$), 2013-2022 37
Figure 8: Mexican Homeland Security Budget (MXN billion), 2013-2022 39
Figure 9: Mexican Homeland Security Budget (US$ billion), 2013-2022 39
Figure 10: Terrorism Heat Map, 2017 42
Figure 11: Terrorism Index, 2017 45
Figure 12: Benchmarking with Key Markets: 2013-2017 vs. 2018-2022 47
Figure 13: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2017 and 2022 48
Figure 14: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2017 49
Figure 15: Multi Mission Helicopter Market Size (US$ Million), 2017-2027 50
Figure 16: Corvettes MRO Market Size (US$ Million), 2017-2027 51
Figure 17: Corvettes Market Size (US$ Million), 2017-2027 52
Figure 18: Transport Aircraft Market Size (US$ Million), 2017-2019 53
Figure 19: Mexican Defense Imports (TIV Values) 2012-2016 56
Figure 20: Mexican Defense Imports by Country (%), 2012-2016 57
Figure 21: Mexican Defense Imports by Category (%), 2012-2016 58
Figure 22: Industry Dynamics Porter’s Five Forces Analysis 60
Figure 23: Mexican GDP Per Capita, 2015-2025 70
Figure 24: Mexican GDP, Current Prices (US$ Billion), 2015-2025 71
Figure 25: Mexican Exports of Goods and Services (LCU Billion), 2005-2014 72
Figure 26: Mexican Imports of Goods and Services (LCU Billion), 2005-2014 73
Figure 27: Mexican Gross National Disposable Income (US$ Billion), 2005-2012 74
Figure 28: Local Currency per US$, 2015-2024 75
Figure 29: Mexican Market Capitalization of Listed Companies (US$ Billion), 2005-2012 76
Figure 30: Mexican Market Capitalization of Listed Companies (% of GDP), 2005-2012 77
Figure 31: Mexican Goods Exports as % of GDP, 2005-2014 78
Figure 32: Mexican Goods Imports as % of GDP, 2005-2014 79
Figure 33: Mexican Service Imports as % of GDP, 2005-2014 80
Figure 34: Mexican Service Exports as % of GDP, 2005-2014 81
Figure 35: Mexican Foreign Direct Investment (US$ Billion), 2005-2014 82
Figure 36: Mexican Net foreign direct investment as % of GDP, 2005-2014 83
Figure 37: Mexican Mining, Manufacturing and Utilities Output (LCU Billion), 2005-2014 84

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