Global UAV market growing by 4%
According to Strategic Defence Intelligence, the 4.08% compound annual growth rate for the UAV market will be driven by internal and external security threats, modernisation initiatives and territorial disputes. As a result, the UAV market will be worth US$91.7 billion between now and 2021.
North American and European countries will spend most on UAVs, while the global market will be dominated by American manufacturers, although Europe’s market share is predicted to increase. Strategic Defence Intelligence predicts that large growth will come from the Asia-Pacific region, primarily due to a tense security environment there. China, for one, is pushing ahead with the development of indigenous UAVs, as is India.
The United States is the biggest UAV market in the world and will account for 69% of procurement over the next decade, a Teal Group UAV report said when it was released in March. It added that the US will account for 77% of worldwide Research Development Test & Evaluation (RDT&E) spending on UAV technology.
"We expect that the sales of UAVs will follow recent patterns of high-tech arms procurement worldwide, with the Asia-Pacific representing the second largest market, followed very closely by Europe," said Teal Group senior analyst Steve Zaloga. "Africa and Latin America are expected to continue to be very modest markets for UAVs."
"The UAV market will continue to be strong despite cuts in defence spending," Philip Finnegan, Teal Group's director of corporate analysis, said in a statement. "UAVs have proved their value in Iraq and Afghanistan and will be a high priority for militaries in the United States and worldwide."
In terms of categories, medium-altitude long endurance (MALE) UAVs will likely account for the highest proportion of spending in the global UAV market due to their superior intelligence, surveillance and reconnaissance (ISR) capabilities. Strategic Defence Intelligence predicts MALE, high-altitude long endurance (HALE) and tactical UAVs (TUAVs) will be the most popular categories during the forecast period.
The Teal Group report noted that the number of UAV businesses is growing rapidly, mostly in the US, Europe and Israel. "Smaller companies can successfully compete against larger players, as AAI Corp, Insitu, General Atomics and AeroVironment," Finnegan said. "Now the prime contractors are buying the successful smaller companies." In the past year, L-3 Communications bought Airborne Technologies, a small UAV developer and manufacturer, and VT Group purchased Evergreen's UAV fee-for-service operations. This year Selex Galileo, a part of Italy-based Finmeccanica, acquired the Unmanned Technology Research Institute (UTRI), an Italian developer of MUAVs for defence and homeland security.
The global economic slowdown has reduced military expenditure worldwide, as a consequence of which a significant number of countries are establishing joint projects in order to share R&D costs. Partnerships between defence firms have also increased, as a significant number of countries are investing in the development of their domestic UAV industries by establishing strategic alliances and technology-transfer agreements with global UAV manufacturers, Strategic Defence Intelligence notes. The Dassault Neuron and EADS Talarion are a couple of examples of semi-international UAV projects.
Due to emerging technologies and changing environments, UAV manufacturers are investing in new UAV technologies, particularly stealth. Demand for solar powered UAVs has increased as they offer improved endurance and reduced maintenance costs.
Additionally, UAVs' roles are evolving from deployment on ISR missions to a wide range of capabilities such as electronic attack (EA), strike missions, suppression/destruction of enemy air defences (SEAD/DEAD), network nodes, communications relays, and combat search and rescue (CSAR).
This is reflected by the payloads they carry. The Teal Group report noted that UAV payloads are worth US$2.6 billion in the 2011 fiscal year, but will increase to US$5.6 billion in FY2020. The UAV electronics market will grow steadily, with especially fast growth and opportunities continuing in synthetic aperture radar (SAR) and signals intelligence/electronic warfare (SIGING/EW) technology, according to Dr David Rockwell at the Teal Group.
"The payload portion of the 2011 study includes many new systems and system types, with expanded coverage of SIGINT/EW and SAR markets," said Rockwell. "Few now question the US Air Force's claim that ISR (Intelligence, Surveillance and Reconnaissance) is the centrepiece of our global war on terrorism, with production beginning for major endurance UAV systems such as MP-RTIP and ASIP; new RDT&E programmes such as wide angle EO/IR systems, and a variety of ground and foliage-penetrating radars, and future development efforts to bring large-aircraft capabilities to small UAVs; tactical and mini/micro/nano-UAVs will continue to offer some of the best electronics opportunities over the next decade."
Although the worldwide UAV market is one of the prime areas of growth for defence and aerospace companies, the industry has been hampered by the global economic slowdown. This has reduced defence budgets around the world, including in the US, France, Germany and the UK. Cuts to military expenditure have led to the cancellation and indefinite delays of various UAV projects, and are having a detrimental impact on the growth of the UAV industry, Strategic Defence Intelligence said. For example, in 2010 the US Army indefinitely postponed the upgrade of its Shadow RQ-7B aircraft to the new RQ-7C model in order to reduce costs. The French government may also scrap the Talarion UAV development project to save development costs.
However, as it recovers from the global recession, the world aerospace and defence industry is expected to earn revenues of US$399 by 2015, according to a new report by Global Industry Analysts (GIA). The world Unmanned Aerial Vehicle (UAV) market will double over the next decade, totalling US$94 billion over the next ten years, according to the Teal Group. Their March study estimated that UAV spending will almost double from US$5.9 billion per year to US$11.3 billion, totalling just over US$94 billion in the next ten years.
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