Global turndown in construction of commercial ships, makes for businees opportunties in military equivalents, suggests market research by IBISWorld
The national security considerations of governments and long-term planning undertaken for military expenditure have ensured that revenue for the Global Military Shipbuilding and Submarines industry has been relatively stable.
IBISWorld expects that industry revenue will increase at an annualized 1.2% to $38.9 billion in the five years through 2012. “This growth is primarily attributed to the demand for military ships and boats to protect coastal waters and to expand and renew navy fleet sizes,” says IBISWorld industry analyst David Stephen. “The contributions to industry revenue are particularly strong from North America, Europe and North Asia.” Government military budget cuts are forecast to lead to slower revenue growth of 0.3% over 2012.
Global Military Shipbuilding and Submarines industry profit margins have been relatively stable over the past five years, stemming from the contractual and long-term nature of shipbuilding. Nonetheless, profit margins declined slightly in the aftermath of the global downturn.
“Customer countries burdened with high levels of government debt started cutting defense spending, which put pressure on industry margins,” says Stephen, “and the industry was able to reclaim previous profitability levels through capacity cuts.” Profit margins are expected to remain stable over the next five years due to the stability of military demand and naval spending.
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