Aerospace&Defence in BRIC Nations

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It is a report written about A&D Industry and BBIC countries.It gives the outlook how BRIC countries can gain form this industry and vice versa.

It is a report written about A&D Industry and BBIC countries.It gives the outlook how BRIC countries can gain form this industry and vice versa.

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  • 1. Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries   1                                                                                                                                                                                                             Development  &  Opportunities  of     Aerospace  &  Defense  (A&D)  Industry     in  BRIC  Countries     Submitted  By:  Ashish  Jude  Michael   Participant  PGPEx     (OUC  China  +  IIM  Shillong,  India)       *Image  show  Embraer,  Sukhoi,  Tejas  and  Comac  from  Brazil,  Russia,  India  &  China  respectively.  
  • 2. 2   Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries    Table  of  Contents    Executive  Summary  1  Introduction  to  Aerospace  &  Defense  Industry    1.1 Brief  History  about  development  of  A&D  Industry.  1.2 Present  Scenario.  1.2.1 Effect  of  Euro  Zone  crisis  on  A&D  Industry.    2 A  Brief  Introduction  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries    2.1  A&D  Industry  in  Brazil  2.1.1 Present  Scenario  2.1.2 PEST  Analysis    2.1.3 SWOT  Analysis    2.1.4 Market  Growth  2.1.5 Opportunities  2.1.6 Suggestions    2.2 A&D  Industry  in  Russia  2.2.1 Present  Scenario  2.2.2 PEST  Analysis    2.2.3 SWOT  Analysis    2.2.4 Market  Growth  2.2.5 Opportunities  2.2.6 Suggestions    2.3 A&D  Industry  in  India  2.3.1 Present  Scenario  2.3.2 PEST  Analysis    2.3.3 SWOT  Analysis    2.3.4 Market  Growth  2.3.5 Opportunities  2.3.6 Suggestions    2.4 A&D  Industry  in  China  2.4.1 Present  Scenario  2.4.2 PEST  Analysis    2.4.3 SWOT  Analysis    2.4.4 Market  Growth  2.4.5 Opportunities  2.4.6 Suggestions    2.6  How  to  grow  together  as  BRIC  using  A&D  industry  as  a  tool?    Exhibits:  1  -­‐9  Sources  &  References:      
  • 3. Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries   3    Executive  Summary:    This  paper  is  about  how  the  BRIC  nations  can  use  A&D  industry  as  tool  for  growth  for  combined  growth.  We  have  analyzed  each  country  through  PEST  &  SWOT  analysis  and  found  their  Core  Competencies  and  Competitive  Advantage.    Then  accordingly  the  strategies  have  to  be  set  so  that  the  maximum  can  be  made  out  of  each  country.  I  have  given  a  broader  preoperative  while  concluding  the  paper.  The  main  Idea  behind  this  paper  is  to  think  that  BRIC  countries  are  not  each  other’s  competitors  but  partners.  If  the  work  as  a  group  they  can  speed  up  their  economic  growth.            1  Introduction  to  Aerospace  &  Defense  Industry:    1.1  Brief  History  about  development  of  A&D  Industry.            Aerospace  &  Defense  Industry  now  days  generally  referred  as    A&D  industry.  If  we  want  to  find  the  history  of  this  industry  we  can  say  it  started  in  1908  when  Wright  Brothers  got  an  order  from  U.S.  Army  to  make  one  aircraft  and  also  when  they  licensed  their  patents  to  Astra  Company  to  manufacture  aircraft  in  France.  Europeans  took  an  earlier  advantage  in  A&D  business  right  from  the  start  of  First  World  War  in  1914  during  which  French  firms  built  about  200O,  Germans  about  1000  and  Britain  also  approximately  1000  aircrafts.  And  Americans  hardly  100  aircrafts.  After  the  First  World  War  most  of  the  aircraft  companies,  which  survived,  were  basically  because  of  entrepreneur  sprit.  Americans  invested  on  R&D  and  got  many  patents  and  this  give  them  an  upper  hand  over  Europe  and  became  a  major  player  in  A&D  Industry.  In  the  six-­‐year  period  1940  through  1945.In  1943,  the  aviation  industry  was  Americas  largest  producer  and  employer  with  1,345,600  people  bent  to  the  task  of  making  aircraft.  We  can  say  this  was  the  start  of  American  dominance  in  A&D  Industry.    Production  reached  maximum  during  World  War  II,  despite  a  minor  blip  for  the  wars  in  Korea  and  Vietnam.  Instead,  research  ruled  the  industry.  During  cold  war  the  demand  of  stealth  and  UAV  increased.  This  lead  to  new  technologies  prompted  a  massive  restructuring  of  the  industry.  Established  airframe  firms  shifted  from  manufacturing  to  research,  while  the  military  channeled  funds  to  technology-­‐specific  startup  firms.  And  after  the  Cold  war  season  started  Globalization  and  the  world  became  a  Global  Village.  Hence  the  civil  aviation  became  an  important  means  of  transport  and  this  boost  the  A&D  Industry.    And  at  present  Boeing  and  Airbus  are  major  players  in  Commercial  sectors.  Where  else  Boeing,  United  Technologies  were  leaders  in  A&D  Sectors  during  2011  as  per  Fortune  500  (Refer  Exhibit  2).        1.2  Present  Scenario.                  Aerospace  and  defense  industry  delivers  a  second  consecutive  Year  of  record  revenues  and  Profit  in  year  2011  as  per  data  from  Boeing  &  EADS  (Refer  Exhibit  3).    If  we  consider  commercial  aerospace  market  things  were  appearing  good  and  Industry  leaders  were  optimistic  as  Air  Traffic  was  strong  and  steady  which  was  driving  the  after  market  business  also  the  industry  had  delivered  a  record  number  of  large  aircraft  and  orders  are  available  for  next  8  years.      1.2.1  Effect  of  Euro  Zone  crisis  on  A&D  Industry:  
  • 4. 4   Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries     With  the  onset  of  Eurozone  crisis  it  is  difficult  that  the  forecasted  figures  of  3.5%  by  IATA  for   the  Air  traffic  in  year  2012  can  be  met.  This  is  because  Europe  is  the  largest  Air  Travel  market   in  the  world  and  the  condition  of  Eurozone  Crisis  is  deteriorating  day  by  day.   Still  the  implication  of  Eurozone  Crisis  on      Commercial  Aerospace  OEMs  and  after  market   suppliers  remains  unclear.  Though  certain  suppliers  will  be  negatively  affected  by  stringent   credit  standards  and  higher  oil  prices.  And  also  the  after  market  suppliers  will  be  at  greater   risk  than  the  Commercial  Aerospace  OEMs.       2  A  Brief  Introduction  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries    1800  1600  1400   16.831200   %  1000   World   800   World   600   BRICS   BRIC   400   100.00 200   %   0   2007   2008   2009   2010   2011           As  we  can  see  from  A&D  Insights  2011  by  pwc  (Refer  Exhibit  2)  that  A&D  industry  is  still  not   totally  globalized  it  ranks  at  8  out  of  total  15  stated  industries.  There  is  a  huge  potential  for   emerging  economies  such  as  BRIC  in  A&D  industry.  And  the  economic  slowdown  is  in  some   manner  helping  this  as  the  top  line  is  reducing  hence  OEMs  are  trying  to  maximize  profit  by   decreasing  the  bottom  line.  One  way  of  reducing  the  bottom  line  is  by  reducing  the  cost  in   manufacturing  and  R&D.  OEMs  are  doing  this  by  outsourcing  the  manufacturing  &  R&D  to   offset  locations.   And  if  observe  the  graphs  shown  above  we  can  see  that  even  the  defense  budget  for  BRIC  is   increasing  continuously  from  2007  onwards  and  if  we  compare  to  the  world  trend  the  increase   in  defense  expenditure  is  at  lower  rate  then  BRIC  ,  in  near  future  BRIC  will  be  the  leading   spenders.  Even  now  they  are  accounting  for  about  16%  of  world  total  defense  expenditure.   This  can  observed  from  the  recent  data  provided  in  A&D  Insights  2011  by  pwc  (Exhibit  6),   where  a  relation  is  shown  in  terms  percentage  of  Total  GDP  the  expenditure  for  each  country.   Where  China  spends  maximum  approximately  12  %  and  India  is  lowest  about  4%  with  Brazil  &   Russia  at  6%  &  10%  respectively.       Similarly  if  we  consider  the  commercial  air  traffic  market  we  can  observe  that  the  U.S.  &   European  market  are  nearly  saturated.  And  the  BRIC  countries  have  large  countries  they  have   neary  40%  of  world’s  total  population  scattered  over  25%  of  earths  land  which  they  cover  and   with  a  combined  GDP  growth  of  about  25%  of  world.  This  is  further  strengthen  by  the  recent   statics  given  in    A&D  Insights  2011  by  pwc  (Exhibit  5)  ,  which  speaks  that  the  air  traffic  in  Asia-­‐ pacific*  is  expected  rise  from  present  21%  in  2008  to  31%  in  2028  of  total  world’s.  This  is  further   confirmed  from  the  order  books  of  Boeing  &  Airbus  who  have  to  deliver  about  37%  of  their   remaining  orders  for  the  period  of  (2009-­‐2028)  to  Asia-­‐pacific*  region.  (*Asia-­‐pacific  region   includes  India  &  China,  which  are  key  constituents  of  BRIC).  
  • 5. Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries   5    And  the  rise  in  commercial  air  traffic  also  opens  gates  for  MRO  (Maintaince,  Repair&  Overhaul)  in  India  &  China.  At  present  the  MRO  center  for  Asia-­‐pacific  region  is  Singapore.  Just  to  give  an  idea  about  the  potential  of  MRO  market  I  would  like  to  tell  you  that  the  total  cost  spent  on  MRO  activities  for  an  Commercial  Aircraft  in  its  useful  service  life  is  equivalent  to  the  total  initial  cost  of  that  Aircraft.      Just  analyzing  the  recent  trends  we  can  see  that  in  2009,  the  number  of  investments  made  by  Top  50  Global  A&D  firms,  in  R&D  side  maximum  12  were  done  in  India  followed  by  6  in  Russia  and  4  in  China,  in  manufacturing  side  maximum  23  were  done  in  China  followed  by  20  in  India,  9  in  Russia  and  2  in  Brazil.  Hence  we  can  observe  a  trend  that  India  is  soon  becoming  a  R&D  hub  for  A&D    this  may  be  also  contributed  to  the  government  policies  and  political-­‐socio-­‐economic  factors  which  I  will  be  discussing  later  in  this  paper  for  each  country.  China  is  still  maintaining  its  brand  of  “World’s  Factory”  in  A&D  sector  too  with  one  and  only  Airbus  assembly  line  operating  in  Tenzin.  The  challenges  faced  by  BRIC  countries  to  retain  and  develop  the  A&D  sectors  are  investment  risk  to  IPR  and  the  Frauds.  The  gravity  of  these  issues  can  be  understood  from  Exhibits  8&9,  which  are  taken  from  A&D  Insights  2011  by  pwc.  It  can  be  suggested  that  the  governments  of  BRIC  nations  should  have  stringent  laws  dealing  with  IPR  &  Frauds  issues  and  also  speed  up  the  legal  activities  related  to  them.      2.1  A&D  Industry  in  Brazil  Aerospace  Industry  Export  &  Import    6,000.00      5,000.00      4,000.00      3,000.00     Brazil  Export    2,000.00     Brazil  Import    1,000.00      -­‐         2007   2008   2009   2010   2011    2.1.1  Present  Scenario  Brazil  is  one  of  the  countries  in  BRIC,  which  is  already  playing  a  major  role  in  A&D  industry.  Embraer,  which  is  a  major  player  in  business  jets,  is  from  Brazil.  Also  it  is  the  second  largest  exporter  in  Aerospace  Industry  after  China  among  BRIC.  It  exported  5469.01  million  USD(United  States  Dollar)  while  it  imported  935.77  million    USD  worth  of  Aerospace  goods.    It  is  facing  a  tough  competition  from  China  &  India  now.  Its  core  competency  can  be  said  to  lie  in  Business  Jets  and  some  offset  business  generated  by  Boeing  in  Brazil.  If  we  analysis  the  Defense  spending  it  was  relatively  consistent  in  terms  of  growth  in  2011  it  was  3.53  billion  USD  and  has  been  increased  by  18%  for  2012.                            
  • 6. 6   Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries    2.1.2  PEST  Analysis   PEST(ANALYSIS(FOR(A&D(INDUSTRY(IN(BRAZIL( POLITICAL(&(POLICY( ECONOMIC( 1.  Stable(government.( 1.  Seventh(largest(Economy(&(sixth(as(per(GDP.( 2.  No(na;onalis;c(manufacturing(ambi;ons.( 2.  Increased(the(defense(budget(by(18%(this(year( 3.  High(import(du;es(on(behalf(of(Embraer.( hence(a(big(emerging(market.( 4.  Defense(is(top(priority.( 3.  Low(external(&(public(debt.( ( 4.  Supports(manufacturing,(services(and(natural( resource(development(simultaneously.( SOCIAL(&(LEGAL( TECHNOLOGICAL( 1.IPR&regula-ons&below&average.& 1.  Embraer&DNA.& 2.Low&unemployment.& 2.  Experience&work&force&for&A&D&industry&as& 3.2014&FIFA&world&cup&&&2016&Olympic&will&create& Embraer,&one&of&the&largest&brand&in& the&market&for&more&commercial&air&traffic.& commercial&aircraNs&is&from&Brazil.& 4.&Large&popula-on&&&big&country&scope&for& 3.  Has&all&the&resources&required.& increasing&air&traffic.& 4.  Non&availability&of&exper-se&in&ITES.&    
  • 7. Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries   7    2.1.3  SWOT  Analysis SWOT(ANALYSIS(FOR(A&D(INDUSTRY(IN(BRAZIL( STRENGTH( WEAKNESS( 1.  Embraer(DNA.( 1.  IPR(regulaQons(below(average.( 2.  Increased(the(defense(budget(by(18%(this(year(hence(a(big( 2.  High(import(duQes(on(behalf(of(Embraer.(In(long(run(wil(be( emerging(market.( a(problem(as(local(firms(will(not(be(compeQQve(enough(for( 3.  Low(external(&(public(debt.( global(market.( 4.  Supports(manufacturing,(services(and(natural(resource( 3.  Brazil(is(not(lowPcost.(( development(simultaneously.(( 4.  Non(availability(of(experQse(in(ITES.( 5.  Increased(the(defense(budget(by(18%(this(year(hence(a(big( ( emerging(market.( ( 6.  Supports(manufacturing,(services(and(natural(resource( development(simultaneously.( 7.  HighPspeed(development(of(biofuels(for(aviaQon.(( OPPORTUNITIES( THREATS( 1.  Strategically-located-can-cover-South-American-Market-and- 1.Rise-in-compe<<on-in-A&D-from-India-&-China.- African.- 2.-Free-trade-scenario.- 2.  Has-a-domes<c-brand-Embraer-which-is-one-of-the-major- 3.-Increase-in-the-compe<<on-of-Business-jets-faced-by-Embraer.-- player-in-commercial-business-jets-and-so-can-enter-in- - commercial-aircraB-business-in-future.- 3.  Growing-A&D-market-in-BRICS-countries.- 4.  Can-be-a-preferred-choice-for-manufacturing-for-Europe-&- US’s-OEMs-shiBs-their-base-from-Europe-as-it-rela<vely- neutral--rather-than-China-&-Russia.-    2.2.4  Market  Growth  By  studying  the  PEST  and  SWOT  Analysis  we  can  see  that  there  is  still  a  relatively  protective  market  because  high  import  duties  are  levied  may  be  to  protect  Embraer.    On  political  front  government  is  stable  and  they  have  not  started  investing  in  Defense  Aircraft  development.  This  makes  it  still  available  defense  market  for  foreign  companies,  as  there  is  no  domestic  competition.  In  next  four  years  Brazil  is  going  to  hoist  FIFA  Football  World  cup  in  2014  &  Olympic  in  2016.  This  will  increase  the  air  traffic  with  lots  of  tourists  flying  throughout  the  country  hence  is  a  large  potential  market  in  short  term  for  Commercial  aircraft  companies.  The  increasing  GDP  is  raising  the  per  capita  income  and  this  will  increase  the  time  value  of  its  nationals,  which  will  further  encourage  them  to  use  airways  instead  of  roadways  or  railways.  Hence  in  long  term  too  the  domestic  air  traffic  is  expected  to  rise  with  increase  in  economic  growth.  And  the  economic  growth  will  also  provide  the  rise  in  defense  budget,  which  makes  it  an  attractive  defense  market.    2.2.5  Opportunities  We  can  say  unless  it  opens  its  market  for  free  trade  it  will  be  difficult  its  local  companies  to  compete  at  global  level.  It  is  not  a  low  cost  manufacturing  destination  hence  it  can’t  take  that  advantage  from  China.  It  has  a  labor,  which  is  skilled  in  commercial  aircraft  industry  but  over  all  R&D  is  not  up  to  the  mark  and  IPR  regulations  are  below  average.  Again  in  R&D  India  is  becoming  a  global  hub  for  A&D  industry.      2.2.6  Suggestions  
  • 8. 8   Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries    I  would  give  the  following  suggestions:   1. Allow  the  local  companies  to  compete  with  global  companies  in  domestic  market  so  that   they  may  become  strong  to  survive  in  International  Market.  This  can  be  done  by   removing  trade  barriers  and  also  promoting  JV(Joint  ventures)  and  FDI.   2. IPR  regulations  to  be  made  stringent  at  preset  they  are  the  lowest  among  BRIC   countries.(Exhibit   3. They  should  try  to  improve  in  ITES  sector  at  least  so  that  they  can  offer  the  complete   package  as  they  have  all  other  resources  available.   4. They  are  in  South  America  which  is  full  of  Emerging  economies  hence  can  make  their   presence  in  that  growing  market.   5. Can  target  BRIC  market  especially  India,  requires  a  lot  of  business  jets.    2.2  A&D  Industry  in  Russia  Aerospace  Industry  Export  &  Import    800.00      700.00      600.00      500.00      400.00     Russia  Export    300.00     Russia  Import    200.00      100.00      -­‐         2007   2008   2009   2010   2011      2.2.1  Present  Scenario  Russia  was  once  a  superpower  but  with  time  it  lost  its  glory  is  now  again  want  to  resurrects  for  the  ashes.  It  is  one  of  the  most  technological  advanced  nation  specially  in  defense  sector.  There  are  one  of  the  best  in  Arm  design  and  manufacture  AK-­‐47  is  one  of  the  example,  even  it  is  considered  better  than  similar  American  &  German  Assault  riffles.  And  in  defense  aircraft  sector  they  have  a  very  successful  Sukhoi  30,  Sukhoi-­‐35  the  latest.  But  if  we  see  the  exports  and  imports  in  Aerospace  product  its  742.16  and  192.38  million  USD  respectively.  The  core  competency  of  Russians  can  be  said  in  Defense  sector  from  arms  to  aircrafts.                                        
  • 9. Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries   9    2.2.2  PEST  Analysis     PEST(ANALYSIS(FOR(A&D(INDUSTRY(IN(RUSSIA( POLITICAL(&(POLICY( ECONOMIC( 1.  Poli0cal(instablity.( 1.  As(as(Per(GDP(9th(and(6th(largest(economy.( 2.  Corrup0on.( 2.  Basically(based(on(natural(resources.( 3.  Defense(top(most(priority.( 3.  A(con0nuously(rise(in(defence(budget(making( 4.  Moderniza0on(of(defense(forces.( it(a(poten0al(market.( 5.  Recently(changed(the(poli0cal(model(from( 4.  Has(second(largest(numbers(of(air((ports(in( communist(to(democra0c.( world(hence(a(big(poten0al(for(commercial(air( ( traffic.( 5.  Rise(in(Sovereign(debt.( ( 6.  S0ll(not(a(part(of(WTO.( SOCIAL&LEGAL TECHNOLOGICAL 1.  LessEnglishspeakingpopula9on. 1.  DNAofanearlierSuperpowerwithproficiency 2.  Highlydependentonlocallanguage. inhighendtechnology. 3.  Deepimpactofcommunistteachings. 2.  AleaderamongBRICSinA&Dsectorinterms 4.  Asperareathelargestcountryandasper oftechnologyadvancement. popula9onstandsat…hencelocaldomes9c 3.  HavelocalcompaniesinR&D,Manufacturing& airlinenetworkexistsbutisnotoperatedinan MROsectorofA&Dindustry.Ie.Sukhoi, effec9vemanner. Antonovetc 5.  Unemploymentisamajorissue. 6.  LowIPRprotec9onlaws.  2.2.3  SWOT  Analysis   SWOT(ANALYSIS(FOR(A&D(INDUSTRY(IN(RUSSIA( STRENGTH( WEAKNESS( 1.  1.(DNA(of(an(earlier(Super(power(with(proficiency(in(high( 1.  (Low(IPR(protecMon(laws.(( end(technology.( 2.  Rise(in(Sovereign(debt.( 2.  A(leader(among(BRICS(in(A&D(sector(in(terms(of(technology( 3.  SMll(not(a(part(of(WTO.( advancement.( 4.  Non(avaliablity(of(aVer(sales(service.( 3.  Have(local(companies(in(R&D,(Manufacturing(&(MRO(sector( 5.  Totally(dependent(on(Russian(language(specially(in( of(A&D(industry.(Ie.(Sukhoi,(Antonov(etc(Defense(top(most( technology(which(makes(it(difficult(for(entering(into(global( priority.( market(&(seWng(global(R&D,manufacturing(&(MRO( 4.  A(conMnuously(rise(in(defence(budget(making(it(a(potenMal( centers.( market.( 6.  Geographical(locaMon(leser(number(of(ports(and(country( 5.  Has(second(largest(numbers(of(air((ports(in(world(hence(a( lies(far(away(from(the(major(growing(market(ie.(Africa,( big(potenMal(for(commercial(air(traffic.( AsiaYsubconMnent(&(South(America.( 6.  Russian(products(are(generally(considered(robust.( 7.  Lack(of(engineers(&(managers(for(A&D(Industry.( 8.  AdaptaMon(of(western(Quality(Standards(and(neither(any( development(of(Quality(Standards.( 9.  No(FDI(in(A&D(sector(and(lack(of(competaMon(due(to(less( number(of(private(players.( OPPORTUNITIES* THREATS* 1.  Rise*in*the*A&D*market*in*BRICS*countries.* 1.  The*Overall*Growth*of*China*in*A&D*sector*is*posing*a* 2.  Already*a*major*player*in*fighter*aircraG*manufacturing*&* serious*compeKKon*to*Russia.* defense*sector.*** 2.  A&D*industry*accept*the*western*Quality*&*Industry* 3.  Has*a*good*relaKon*with*the*governments*of*BRICS*countries* standards*compulsory*to*adhere*to*sustain*in*Global*Market.* and*that*is*the*major*growing*porKon*in*A&D*sector.* 3.  The*rise*of*outsourcing*business*in*India*for*A&D*Industry.* 4.  HesitaKon*of*western*countries*in*sharing*technology*&* placing*R&D*faciliKes.*      2.2.4  Market  Growth  Russia  is  a  developing  market  specially  for  commercial  air  traffic.  It  is  the  largest  country  in  terms  of  land  and  for  population  to  travel  across  it  air  travel  is  the  only  option.    As  it  is  already  
  • 10. 10   Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries    a  big  producer  of  arms  and  fighter  aircraft  hence  it  is  not  much  dependent  on  outside  world  for  its  defense  needs.  Still  it  is  a  growing  market  as  its  defense  budget  was  64.12  billion  USD.      2.2.5  Opportunities  I  can  clearly  see  an  opportunity  for  Russia  in  World  Defense  market  especially  in  Arms  &  Fighter  Aircraft  area.  Their  products  are  robust  but  lack  service  support  and  spares.  They  have  a  large  market  among  BRIC  nations  such  as  India  ,China  &  Brazil.  They  can  eye  commercial  and  cargo  aircrafts  too.  At  present  one  of  the  largest  cargo  aircraft  Antonov  An  225  was  built  by  Russia  and  is  used  for  transportations  of  space  shuttles,  heavy  machinery  etc.          Suggestions  I  would  suggest  Russia  to  target  markets  of  BRIC  in  defense  market  with  improving  its  service  &  spares  support.  It  can  also  open  its  service  wings  as  a  JV  with  the  local  players  of  each  country  so  that  it  may  have  an  cost  advantage  too.  It  can  focus  the  manufacturing  cargo  aircrafts  and  outsource  offset  activities  to  India  or  China.  India  is  world’s  largest  buyer  of  arms  and  so  Russia  can  target  Indian  market  for  the  same.    2.3  A&D  Industry  in  India  Aerospace  Industry  Export  &  Import    4,000.00      3,000.00      2,000.00     India  Export   India  Import    1,000.00      -­‐         2007   2008   2009   2010   2011    2.3.1  Present  Scenario  The  above  graph  represents  the  trend  of  Indian  Exports  &  Imports  in  Aerospace  sector.  We  can  clearly  see  that  the  present  exports  are  1990.11  and  57.26  million  USD  in  year  2011.This  also  shows  an  aspect  that  we  are  basically  exporting  the  services  (IT  &  R&D)  and  smaller  level  offset  units  which  are  mostly  tier  3  suppliers.  Hence  a  lager  market  exists  of  tier  1&2  suppliers  also  Indian  Government  promoting  OEMs  to  set  up  an  assembly  line  and  the  R&D.  Though  the  OEMs  have  started  investing  in  R&D  which  can  be  confirmed  by  the  statistics  given  in  A&D  Insights  2011  by  pwc  (Exhibit  7)  in  a  period  between  2000-­‐2011  about  12  investments  have  been  made  by  top  50  ranking  companies  as  ranked  by  Flight  International  Top  100  and  about  20  in  manufacturing  sector  of  Aerospace.  India  has  got  an  advantage  where  global  players  are  investing  in  R&D  and  got  a  lead  and  slowly  it  is  gaining  some  momentum  in  manufacturing  though  it  will  take  some  time  to  give  competition  to  China.                    Where  else  it  has  definitely  become  a  hot  market  for  defense  deals  with  the  10.2  billion  USD  Rafael  deal  or  the  Hercules  &  P-­‐8I  aircrafts  deals  which  Boeing  has  won.  In  additional  to  this  India  is  also  developing  its  indigenized  4.5  generation,  single  engine,  single  seater    Light  Combat  Aircraft  (LCA)  or  commonly  known  as  Tejas.  It  is  now  in  its  final  phase  and  it  expected  to  join  the  nation  defense  by    2020.  Also  its  fairly  independent  on  manufacturing  of  Combat  Helicopters  such  as  (LCH)  and  others  as  Dhruv.  This  has  given  India  a  through  experience  of  working  in  R&D  and  manufacturing  of  Fighter  aircrafts.  With  the  organizations  such  as  
  • 11. Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries   11    DRDO(Defense  Research  and  Development  Organization),  ADA(Aeronautical  Development  Organization),  ADE(Aeronautical  Development  Establishment),  HAL(Hindustan  Aernautical  Limited)  and  BEL(Bharat  Electronics  limited).  Where  DRDO,ADA,NAL  &  ADE  caters  the  R&D  requirement,  BEL  is  manufacturing  the  electronics  related  to  FCS(Flight  Control  System)  and  WMS(Weapon  Management  System)  and  HAL  overall  assembly  and  manufacturing.  The  development  of  UAV(Unmanned  Air  Vehicles)  is  in  very  nascent  stage.  Hence  we  can  say  India  has  the  basic  building  blocks  for  A&D  industry,  which  are  all  following  international  standards  such  as  AS9100  Rev  C  &  EMS  140001.      2.3.2  PEST  Analysis   PEST(ANALYSIS(FOR(A&D(INDUSTRY(IN(INDIA( POLITICAL(&(POLICY( ECONOMIC( 1.  Government(support.( 1.  Major(economic(reforms(done(in(last(20(years.( 2.  Induc;on(of(GAAR((General(An;(Avoidance(Rule).( 2.  One(of(the(fastest(growing(economy(of(world(ranked(at(11( 3.  Poli;cal(stability,(regulatory(effec;veness,(rule(of(law(and( as(per(GDP(and((4th(largest(economy.( sovereign(debt.( 3.  Increase(in(defense(budget(on(an(yearly(average(of(8%.( 4.  Corrup;on( 4.  Huge(poten;al(for(Air(traffic(business(as(2nd(largest( 5.  Regional(issues(overpowering(important(country(level( country(popula;on)(and(7th(largest((Land).( economic(decisions.( 5.  One(of(the(highest(saving(fund.( 6.  Defense(Produc;on(policy(&(Defense(Procurement( 6.  Defense(Offset(Policy.( Policy(DPP).( 7.  Recently(A&D(sector(opened(for(private(players(with( 7.  Many(eminent(economist(in(poli;cal(senario.( investment(upto(100%(and(FDI(upto(26%.( 8.  Defense(of(the(country(is(of(highest(priority.( 8.  Largest(importer(of(Arms.( 9.  Difficulty(in(star;ng(a(business(specially(in(A&D(sector.( 9.  Founding(member(of(WTO.( SOCIAL(&(LEGAL( TECHNOLOGICAL( 1.  Constant)treat)from)terrorists.) 1.  Availability)of))founda2ons)for)developing)a)robust)industrial) 2.  Many)interna2onal)disputes)with)neighbors.) base)in)the)aerospace)and)defense)(A&D))sector)for) 3.  Safeguarding)Long)cost)lines.) R&D,OEMs)&)MROs)(Maintaince)Repair)and)Opera2ons))ie.) 4.  Second)largest)army)of)the)world.) DRDO,)HAL)etc.) 5.  )Low)cost)labor.) 2.  Indigenized)development)of))Helicopters)by)(HAL))and) 6.  Pool)of)second)largest)English)speakers.) AircraX)(LCA/TEJAS))is)under)progress.) 7.  Large)pool)of)skilled)manpower)required)for)A&D)industry)is) 3.  Experience)of)producing)robust))A&D)equipment)at)low)cost.) available.) 4.  Availability)of))talent)suitable)for)A&D)Industry.) 8.  Labor)problems.) 5.  Knowledge)&)Implementa2on)of)Interna2onal)Quality) 9.  Improvement)in)IPR)environment)with)the)onset)of) Standards)required)for)A&D)Industry)is)available.) pharmaceu2cals)companies.) 6.  Availability)of))all)technical)exper2se)ie.)ITES,)Manufacturing,) 10.  BeQer)equipped)legal)system.))) Management)and)R&D.)Makes)it)a)complete)package.)) 11.  Highly)consolidated)SMEs)Base.) 7.  Has)a)well)recognized)and)economical)space)program) 12.  Highest)no.)of)scien2st)&)engineers.) operated)by)ISRO)which)is)a)recognized)name)at)Global)level.)                                
  • 12. 12   Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries    2.3.3  SWOT  Analysis   SWOT(ANALYSIS(FOR(A&D(INDUSTRY(IN(INDIA( STRENGTH( WEAKNESS( 1.  Government(support.( 1.  Induc>on(of(GAAR((General(An>(Avoidance( 2.  Availability(of((founda>ons(for(developing(a(robust(industrial(base(in(the(aerospace(and( Rule).( defense((A&D)(sector(for(R&D,OEMs(&(MROs((Maintaince(Repair(and(Opera>ons)(ie.(DRDO,( 2.  Corrup>on( HAL(etc.( 3.  Difficulty(in(star>ng(a(business(specially(in( 3.  Knowledge(&(Implementa>on(of(Interna>onal(Quality(Standards(required(for(A&D(Industry(is( A&D(sector.( available.( 4.  Pool(of(second(largest(English(speakers.( 4.  Recently(A&D(sector(opened(for(private(players(with(investment(upto(100%(and(FDI(upto(26%.( 5.  Low(innova>on.( 5.  Increase(in(defence(budget(on(an(yearly(average(of(8%.( 6.  Very(long(product(cycle(>me(as(many( 6.  Defense(Offset(Policy.( approvals(&(checks(to(be(done.( 7.  Many(eminent(economist(in(poli>cal(senario.(( 7.  Labor(problems.( 8.  Pool(of(second(largest(English(speakers.( 8.  Regional(issues(overpowering(important( 9.  Low(cost(labor.( country(level(economic(decions.( 10.  Improvement(in(IPR(environment(with(the(onset(of(pharmaceu>cals(companies.( 9.  Poli>cal(inbstability,(regulatory(inb 11.  Be]er(equipped(legal(system.(( effec>veness,(rule(of(law(and(sovereign( 12.  (Huge(poten>al(for(Air(traffic(business(as(2nd(largest(country(popula>on)(and(7th(largest((Land).( debt.( 13.  Strong(IT(service(sector(and(similarly(Automobile(manufacturing(sector.(( 10.  Strategic(Barriers.( 14.  Adaptability(to(changed(scenario.( 11.  Lack(of(Infrastructure(and(the(increase(in( Energy(deficient.(( OPPORTUNITIES( THREATS( 1.  It%is%one%of%the%fastest%developing%market%and%so%the%items%can%be%manufactured%as%all%required% 1.Stratergic%barriers%fot%criKcal%technologies%&% resources%are%available.% source%codes,%IP.%% 2.  Can%become%a%MRO%hub%for%A&D%industry%because%of%availability%of%low%cost%human%resource.% 2.%US%InternaKonal%Traffic%in%Arms%RegulaKons%ITAR% 3.  India%is%strategically%%located%and%developing%markets%of%Middle%East,%ASEAN%&%ASIA%can%be% restricKons.% targeted.% 3.Exchange%change%risk%ie.%DepreciaKon%in%dollar.% 4.  Largest%no.%of%scienKst%and%engineers.%% 4.Tough%compeKKon%from%Brazil,%China%&%Russia.% 5.  Increasing%domesKc%players%involvement%in%Indian%defense%industry%HALNBoeing,%BELNBoeing,% 5.ReducKon%in%overall%defense%budget.% UTCNBEL.% 6.DegradaKon%of%India’s%raKng%by%InternaKonal% 6.  Increase%in%overseas%suppliers%involvement%in%Indian%defense%industry.% Agencies%ie.%S&P%has%reduced%from%BBB+%to%BBBN.%%% 7.  Because%of%recession%&%Eurozone%crisis%profit%margins%of%A&D%firms%are%squeezed%hence%to% % increase%profit%they%will%try%to%reduce%their%cost%by%mostly%outsourcing.%% 8.  Can%be%a%preferred%choice%for%manufacturing%for%Europe%&%US’s%OEMs%shiXs%their%base%from% Europe%as%it%relaKvely%neutral%%rather%than%China%&%Russia.%    2.3.4  Market  Growth  India  has  continuously  raised  its  defense  budget  during  last  5  years,  and  for  the  year  of  2011  it  was  approximately  44.28  billion  USD,  which  is  about  4%  of  its  GDP.  It  is  the  largest  importer  of  Arms.  And  recent  modernization  of  its  Air  Force  has  opened  new  doors  of  opportunity  tor  global  players.  It  is  definitely  an  attractive  market  in  defense.  If  we  see  the  Aerospace  sector  India  has  a  huge  potential  for  Air  Traffic.  As  per  capita  income  is  increasing  hence  the  purchasing  power  of  middle  class    is  also  increasing  which  will  extend  the  air  traffic  market  to  Indian  middle  class.  This  makes  it  a  lucrative  market  for  Global  Commercial  Aircraft  Manufacturers.      2.3.5  Opportunities  Discussing  about  opportunities  we  can  say  that  India  hasn’t  got  much  experience  in  arms  designing  &  manufacturing  but  there  is  definitely  potential  in  Designing  and  manufacturing  of  fighter  and  military  aircrafts  and  offset  outsourcing  of  R&D  and  manufacturing  activities  in  commercial  aircraft  market.  It  has  got  organizations  like  DRDO,  HAL  &  BEL,  which  are  AS9100  Rev  C  certified  (HAL-­‐LCA  SBU  &  BEL-­‐EW&A  SBU)  and    HAL,  BEL  &  other  private  companies  acting  as  tier  2  &  1  suppliers  for  Boeing.  There  are  many  R&D  have  been  set  up.  Also  the  players  like  Rafael  Dassault  ,  Lockheed  Martin  &  Boeing  have  entered  into  JV(Joint  Venture)  with  Indian  companies.  During  the  Aero  India  2011  about  the  contracts  of  about  2  billions  USD  were  signed  between  Indian  &  Foreign  companies.  Indian  government  has  increased  the  competation  in  A&D  sector  by  allowing  few  of  Indian  private  Companies  such  as  Wipro,  Mahindra,  Infosys,  Tata,  L&T  &  Reliance  and  giving  them  a  title  “Raksha  Ratna”.Earlier  the  A&D  sector  was  dominated  by  PSU  
  • 13. Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries   13    (Public  Sector  Units)  and  Government.  Also  as  per  DPP(Defense  Procurement  Procedure)  2011  for  any  A&D  contract  at  least  30%  of  job  to  be  outsourced  to  Indian  Companies.FDI  upto  26%  is  allowed  in  A&D  sector,  special  benefits  are  given  to  foreign  companies  setting  up  their  R&D  centers  in  India.  In  India  R&D,  manufacturing  &  (IT)  services  all  three  are  available  hence  it  offers  a  very  good  package  for  global  players  to  outsource  their  activities  to    take  advantage  of  low  cost  skilled  talent.  Also  there  is  a  large  opportunity  in  MRO  (Maintaince  ,  Repair  &  Overhaul  sector)  at  present  Singapore  is  the  MRO  hub  for  all  commercial  aircrafts  for  Asia-­‐pacific  region.  The  problem  is  that  Indian  government  has  put  heavy  import  duties  about  19-­‐20%  on  the  equipment’s  required  for  MRO.  As  I  have  already  discussed  earlier  that  the  cumulative  cost  of  service  (MRO)  of    an  aircraft  during  its  useful  life  is  equivalent  to  its  initial  cost.  Hence  it  is  a  market  with  huge  potential.  If  we  consider  the  challenges,  which  India  faces,  are  average  IPR  protective  laws  and  the  risk  of  frauds.      Suggestions  Government  should  continue  its  industry  friendly  policies  and  also  make  some  A&D  specialized  SEZ(Special  Economic  Zone).  Import  duties  on  equipment’s  related  to  MRO  should  be  reduced  or  removed  ,  IPR  laws  should  be  made  stringent  and  frauds  should  be  dealt  strictly.      2.4  A&D  Industry  in  China  Aerospace  Industry  Export  &  Import          2.4.1  Present  Scenario  China  as  expected  is  un-­‐doubly  the  leader  of  BRIC  and  it  is  keeping  its  position  even  in  A&D  industry  too.  Just  referring  this  Aerospace  export  &  import  graph  we  can  see  that  in  year  2011  export  and  imports  were  6391.72  million  USD  and  622.32  million  USD  respectively.  The  exports  are  huge  as  compared  to  Imports,  which  shows  it  is  already  a  manufacturing  factory  of  A&D  industry  though  still  there  is  potential  to  increase  it.  And  even  in  defense  sector  they  are  self-­‐sufficient.  Their  fighters  are  one  of  the  best  in  world.  And  now  they  are  planning  to  break  the  duopoly  of  Boeing  &  Airbus  from  Commercial  Aircraft  sector  by  launching  their  fully  indigenously  built  commercial  jet.  Comac  ARJ21  and  Comac  
  • 14. 14   Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries    C919  are  two  variants  Comac  (Commercial  Aircraft  Corporation  of  China,  Ltd.)  is  planning  to  launch  challenging  Boeing  &  Airbus.                  2.4.2  PEST  Analysis   PEST(ANALYSIS(FOR(A&D(INDUSTRY(IN(CHINA( POLITICAL(&(POLICY( ECONOMIC( 1.  Stable(Government.( 1.  Second(largest(Economy(&(Second(as(per(GDP.( 2.  Full(Support(to(A&D(sector(by( 2.  ConNnuous(increase(in(Defense(budget.( government.( 3.  SOEs(exists((in(Fighter(aircraK(&(Defense(producNon( 3.  No(private(sector(&(No(FDI(in(Defense(&( but(presently(using(indigenizaNon(and(only( Defence(Avionics.(( targeNng(domesNc(market.( 4.  35%(FDI(allowed(in(Commercial(AircraK( 4.  (Presently(targeNng(the(domesNc(market(for(defense( sector.( sector(&(Global(market(for(Aerospace.( ( 5.  Low(cost(resource(available.(( SOCIAL(&(LEGAL( TECHNOLOGICAL( 1.  Highmoraleduetorecenteconomic 1.  SOEsdirectlycomingintocompeJJonwithBoeing& successofChina. Airbusforbuildingcommercialjets. 2.  Requiredtalentavailablewhichcanbe 2.  HasallthetechnologyforbuildingasuccessfulA&D directlyusedforA&Dindustry. Industry. 3.  LanguageBarrier. 3.  AreawareofInternaJonalProcess&Quality 4.  ChinaA&Dsectorworksinhighlyclosed standardsandcanfollowthem. environmentasdominatedbySOEsand 4.  AregoodatreOengineering. closelymonitoredbyGovernment. 5.  HaveagoodR&D&Manufacturingsector. 6.  HasaweakITsupportascomparedtoIndiaforA&D sector. 7.  Hasarecentlydevelopedverylarge&successful Spaceprogram.                                            
  • 15. Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries   15    2.4.3  SWOT  Analysis     SWOT(ANALYSIS(FOR(A&D(INDUSTRY(IN(CHINA( STRENGTH( WEAKNESS( 1.  (Stable(Government.( 1.  No(private(sector(&(No(FDI(in(Defense(&( 2.  Full(Support(to(A&D(sector(by(government.( Defense(Avionics.( 3.  35%(FDI(allowed(in(Commercial(AircraH(sector.( 2.  Language(Barrier.( 4.  ConJnuous(increase(in(Defense(budget.( 3.  China(A&D(sector(works(in(highly(closed( 5.  Low(cost(resource(available.(( environment(as(dominated(by(SOEs(and( 6.  Required(talent(available(which(can(be(directly( closely(monitored(by(Government.( used(for(A&D(industry.( 4.  Chinese(Quality(is(sJll(a(concern(as(the( 7.  Are(aware(of(InternaJonal(Process(&(Quality( Chinese(products(are(not(widely(considered( standards(and(can(follow(them.( robust.(( 8.  Are(good(at(reTengineering.( 5.  Lacks(the(support(in(IT(where(India(has(an( 9.  Has(the(required(Infrastructure.( advantage.( OPPORTUNITIES( THREATS( 1.  Can&give&a&tough&compe22on&Boeing&&&Airbus& 1.  Rise&in&compe22on&from&India&as&a&Tier&1,2,3& in&near&future.& supplier&for&A&D&sector.&& 2.  Can&become&leaders&in&2er&1,2,3&suppliers&for& 2.  Hesita2on&in&western&countries&in&sharing& A&D&sector.& informa2on&with&China&as&it&can&become&their& 3.  China’s&rela2on&with&BRIC&countries.&& compe2tor&in&near&future.& &      2.4.4  Market  Growth  China  is  a  big  market  for  Air  Traffic,  till  now  only  big  cities  are  connected  still    small  towns  are  out  of    reach.  Hence  we  can  say  the  main  market  is  still  not  tapped  to  its  potential.  This  give  a  lot  of  opportunity  for  commercial  airliners  ie.  Boeing  &  Airbus.  As  far  as  defense  is  considered  they  are  independent  enough  and  have  a  strong  domestic  defense  industry.  Also  they  haven’t  open  up  their  defense  sector  for  outside  world.    2.4.5  Opportunities  They  eyeing  opportunity  in  commercial  aircraft  market  which  is  now  dominated  by  duopoly  of  Boeing  &  Airbus.  They  are  planning  to  launch  their  first  aircraft  within  a  couple  of  years.  They  are  already  a  hot  destination  for  offset  manufacturing.  But  are  still  not  into  global  defense  market.  One  basic  reason  may  be  the  absence  of  private  companies  in  Defense  sector.  They  can  also  try  to    tap  the  MRO  segment.      Suggestions  Chins  is  doing  many  things  right.  Just  I  would  suggest  them  to  built  some  trust  in  global  companies  so  that  they  may  open  their  R&D  centers  in  China.  Also  they  should  make  IPR  regulations  more  stringent.  In  order  to  reduce  language  barrier  Chinese  government  has  made  compulsory  English  education  in  schools.          
  • 16. 16   Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries    2.6  How  to  grow  together  as  BRIC  using  A&D  industry  as  a  tool?    Can  BRIC  works  together  as  a  team?  Can  they  develop  a  sustainable  model  of  co-­‐operation?  I  can’t  answer  this  at  a  general  level  but  at  the  level  of  A&D  industry  it  is  fairly  possible.  One  of  the  basic  thing  is  that  no  two  BRIC  countries  are  similar  in  terms  of  core  competencies  and  this  can  help  them  to  work  together  also  by  doing  so  their  dependence  on  US  &  Europe  will  drastically  reduce.    If  I  would  had  been  given  a  task  to  frame  a  strategic  policy  for  BRIC  in  A&D  sector,  first  of  all  I  would  taken  an  account  of  core  competencies  of  each  BRIC  country.    Starting  with  Brazil  we  can  say  they  have  an  upper  hand  in  Business  Jet  segment  they  can  focus  on  Business  Jet  markets  and  manufacture  them.  India  ,China  &  Russia  are  one  of  the  biggest  markets  for  business  jets  as  the  growing  number  of  business  leaders,  politicians  &  eminent  personalities  all  require  business  jets.  India  ,China  &  Russia  can  give  a  preference  Brazil’s  business  jets  as  they  will  be  economical  than  those  from  US  &  Europe.    While  speaking  about  Russia  one  thing  comes  into  mind  is  Sukhoi  &  AK  47.  Their  core  competencies  are  Fighter  aircraft  and  Arms.  They  can  produce  them  and  sell  them  to  India,  Brazil  and  China.  Russian  products  are  economical  &  robust  but  the  problem  comes  for  spare  part  availability.  This  can  be  solved  if  Russia  give  some  Indian  or  Chinese  countries  contract  of  producing  spares  parts  for  their  Aircrafts.  At  present  India  is  one  of  the  largest  buyer  of  arms  and  BRIC  constitute  16%  of  total  world  defense  market.  It’s  a  huge  opportunity  for  Russia.  India  masters  of  IT  services  and  a  growing  hub  of  R&D.  India  can  provide  the  IT,R&D  and  all  other  services  to  all  the  requirements  of  Brazil’s  Business  jet  company,  Russian  Defense  industry    and  China’s  commercial  aircraft  industry  &  offset  manufacturing.  It  is  also  a  destination  of  offset  manufacturing  after  China  in  BRIC.  This  can  help  India  to  diversify  its  services  industry  at  global  level.  China  the  most  strongest  economy  of  BRIC.  It  has  bigger  dreams  than  any  of  BRIC  country.  At  present  they  are  targeting  commercial  aircraft/jet  market,  which  means  to  break  the  duo-­‐poly  of  Airbus  &  Boeing.  For  China  India,  Russia  &  Brazil  are  certainly  hot  markets.  India  ,Brazil  &  Russia  can  give  a  preference  to  Chinese  Commercial  airliners  as  they  will  be  economical.  Also  China  is  a  hot  destination  for  offset  business  means  Brazil  can  shift  some  of  its  Embraer  offset  activities  in  China  &  India.    If  the  above  strategy  can  be  implemented  it  will  be  a  WIN-­‐WIN  situation  for  all  BRIC  Countries.  BRIC  countries  should  look  each  other’s  as  partners  and  not  as  competitors.     -­‐-­‐-­‐-­‐-­‐-­‐-­‐-­‐-­‐-­‐-­‐-­‐-­‐-­‐-­‐-­‐-­‐                                
  • 17. Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries   17    Exhibit  1  Present  A&D  Breakup    Exhibit2   Revenues Profits Fortune/ %/change/ %/change/ Rank Company $/millions $/millions 500/rank from/2009 from/2009 1 Boeing 36 64,306.00 .5.8 3,307.00 152.1 2 United6Technologies 44 54,326.00 2.7 4,373.00 14.2 3 Lockheed6Martin 52 46,890.00 3.8 2,926.00 .3.2 4 Northrop6Grumman 72 34,757.00 .1.5 2,053.00 21.8 5 Honeywell6International 81 33,370.00 8 2,022.00 .6.1 6 General6Dynamics 86 32,466.00 1.5 2,624.00 9.6 7 Raytheon 104 25,183.00 1.2 1,840.00 .4.9 8 L.36Communications 159 15,680.00 0.4 955 6 9 ITT 217 11,155.00 2.3 798 24 10 Textron 233 10,525.00 .0.2 86 N.A. 11 Goodrich 337 6,966.90 4.2 578.7 .3.1 12 Precision6Castparts 409 5,539.60 .19.9 921.8 .11.7 13 Alliant6Techsystems 472 4,807.70 4.9 278.7 79.7 14 Rockwell6Collins 478 4,665.00 4.4 561 .5.6 Issue6date:6May623,62011  (Source:  Fortune  500)        Exhibit3  Recent  Growth  in  A&D  Sector     2011   2010   ChangeRevenue   $677   $648   5%Operating Profit $60 $59.1 2%Operating Margin 8.86% 9.13% -27bps*All  monitory  figures  in  US$ billions (Source: Boeing annual report; EADS annual report)    
  • 18. 18   Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries    Exhibit4  Globalization    Exhibit  5            Exhibit  6      
  • 19. Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries   19      Exhibit  7          Exhibit  8:  IP  Risk    
  • 20. 20   Development  &  Opportunities  of  Aerospace  &  Defense  (A&D)  Industry  in  BRIC  Countries        Exhibit  9  Frauds  &  How  they  are  dealt.              Sources  &  References:    1.A&D  Insights  2011  by  Mr.  Neil  Hampson    published  by  PricewaterCoopers  (PWC).  2.  A&D  Insights  2012  by  Mr.  Neil  Hampson    published  by  PricewaterCoopers  (PWC).  3.  Aerospace  &  Defence  2011  year  in  review  and  2012  forecast  by  Mr.  Neil  Hampson  and  Mr.  Scott  Thompson    published  by  PricewaterCoopers  (PWC).  4.  Unlocking  Potential  Indian  Aerospace  &  Defence  Sector  by  KPMG    &  CII.  5.  SIPRI  Military  Expenditure  Database  2012.  6.  2012  Global  aerospace  and  defense  industry  outlook:A  tale  of  two  industries  by    Deloitte.  7.Wikipedia