The global submarine market is estimated to be worth $14.4 billion this year and will grow to $21.7 billion by 2023, according to a new report, showing compound annual growth of 4.2% over the next decade.
The report, entitled Global Submarine Market 2013-2023 – Analysis for the $14.4 Billion Industry, covers the market for SSNs (nuclear powered attack submarines), SSBNs (nuclear powered, ballistic missile-carrying submarines) and SSKs (conventionally powered submarines). The global expenditure on SSNs is expected to account for a major share of approximately 41% during the forecast period, the report said. The remaining expenditure is accounted for by SSBN and SSK with shares of 33% and 26% respectively.
A significant number of countries such as the US, the UK, Germany, France, and India are currently in the process of replacing their existing fleet of submarines. Most of these submarines are being retired as they have reached the end of their operational cycle. Additionally, Soviet era submarines currently in use by countries such as Russia, India, and China need to be replaced. The demand for modern submarines creates a lucrative opportunity for suppliers across the world.
The market for submarines in the Western world drastically reduced after the end of the Cold War and those possessing substantial submarine building capabilities are virtually self-sufficient in this regard, the report noted. However BRIC (Brazil, Russia, India and China) countries and the developing economies of Southeast Asia are becoming financially able to fund a cost consuming submarine capability.
China, with its anti-access strategy and its claim to the South China Sea, and North Korea, with its belligerent attitude, has triggered the demand for submarines in the Far East. Regional rivalries among countries such as India and Pakistan, and Greece and Turkey, and the push for general modernization are seen as drivers for the submarine market worldwide.
The global submarine industry requires skilled labour to design submarines and provide maintenance and upgrades throughout its operational life. However, budget cuts have led to a shortage of skilled professionals such as reactor engineers and scientists, causing a resource crunch within the industry. The UK’s submarine industry is currently facing a 14% shortage of civilian safety experts and a 7% shortage of submarine reactor engineers, largely due to a lack of defence budget allocation.
The decreased demand for submarines in the West and the increasing number of technologically advanced sub-systems included in these vessels means that no single industry would be able to develop and sustain a submarine manufacturing base, the report said. This has gradually resulted in consolidation in the industry. There is also increasing collaboration on joint development and production activities amongst firms. For example American firms Huntington Ingalls Shipbuilding and General Dynamics Electric Boat jointly produce the Virginia-class submarines.