Stable growth for training and simulation market despite defence budgets cuts – report


The global military training and simulation market will maintain stable growth due to cost efficiency, according to a Frost & Sullivan report, which values the market at more than US$6.6 billion per year.

Ministries of Defence (MoDs) are trying to make military training and simulation (T&S) more efficient, and balance cost savings with the availability of simulators, Frost & Sullivan said in its Global Military Training & Simulation Market Assessment. This report finds that the market earned revenues of US$6 689.2 million in 2011 and estimates this to reach US$7 272.4 million by 2020. The research covers fifteen countries including the United States, the United Kingdom, France, Germany, India, South Korea, Australia, Brazil, Turkey, Saudi Arabia and the United Arab Emirates.

Despite defence budget reductions in many of the fifteen countries analysed, Frost & Sullivan still projects the military T&S market to expand during the forecast period. Stable market revenue will be mainly due to the need to maintain highly professional armies in these countries.
“Troops of these countries need permanent and customised training,” notes Frost & Sullivan Industry Analyst Dominik Kimla. “The significant growth of the market at the end of the forecast period will be driven primarily by the introduction of new, advanced defence platforms such as F-35 combat aircraft.”

The entry into service of sophisticated defence platforms such as F-35s or FREMM frigates will generate significant demand for training pilots and crews in the use of advanced, complex defence systems. In addition, it is expected that MoDs will increase demand for the provision of comprehensive T&S products and services for their professional armies.

The rapid development of unmanned systems, particularly unmanned aerial vehicles (UAVs), will also trigger an increase in demand for training of pilots of UAVs and operators of other unmanned systems, Frost & Sullivan said. In technologically advanced countries, such as the United States, the number of UAV pilots is set to outstrip the number of manned aircraft pilots at the end of the forecast period.
“The fast growing UAV segment has created a new market for the T&S industry,” remarks Kimla. “However, the control of UAVs is easier than manned aircrafts; consequently, the T&S revenue per pilot/operator of UAVs compared to pilots of manned platforms will keep decreasing.”

Budget cuts have forced MoDs to either cancel or postpone some T&S projects. In addition, budget cuts have resulted in reduced troop size. This will have a direct impact on military T&S revenue.

It is anticipated that defence contractors will provide a complex T&S package as a part of the main contract for the supply of modern weapons. Additionally, the industry will need to demonstrate the cost efficiency of military T&S solutions for end users.
“Defence suppliers must also demonstrate how their solutions can lead to reduced operational costs in the long term,” concludes Kimla. “Especially during the current post-recession period, MoDs are looking for a way to both reduce costs and improve the readiness of their forces.”