By Avascent Analytics team
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A quick look at the biggest stories of the week.
Canada’s Department of National Defence revealed that Canada signed a decision memorandum with the Joint Strike Fighter (JSF) office in March, further complicating their ongoing fighter aircraft replacement process. Led by Prime Minister Justin Trudeau, who has been in office since November 2015, the current Liberal administration campaigned on a platform that firmly stated Canada would not buy the F-35. While this memorandum is not a purchase of aircraft, it sets out a timetable for a potential purchase of 65 aircraft, with deliveries beginning in 2020. Furthermore, Canada remains involved in the development of the F-35, as Canadian companies have won over $800 million in F-35-related contracts since Canada joined the JSF program in 1997. Canada is currently facing an impending fighter shortfall, based on the age of its CF-18 Hornets and its commitments to NATO and NORAD. As a result, Canada has already ordered 18 F/A-18E/F Super Hornets as a stop-gap measure, and currently operates over 70 CF-18s. Defense Minister Harjit Sajjan stated that a fighter competition to select the Canadian Air Force’s future backbone fighter would begin in early 2017 and take about five years to complete. The Boeing F/A-18E/F Super Hornet, Dassault Rafale, Eurofighter Typhoon, Saab JAS-39 Gripen and Lockheed Martin’s F-35 are expected to participate in the competition.
On December 8, the Canadian Government announced the selection of Airbus’ C-295 as the winner of the fixed-wing search-and-rescue (FWSAR) competition. The C-295 beat out Leonardo-Finmeccanica’s C-27J and Embraer’s KC-390 to replace the country’s fleet of aging CC-115 Buffalos and CC-130 Hercules. The FWSAR competition was initially launched in 2004, but faced repeated delays due to competing priorities such as Canada’s involvement in Afghanistan and accusations that the competition was designed to favor the C-27J. The contract to procure the C-295s amounts to $2.3 billion and includes long-term support for the fleet. The Canadian government anticipates that final aircraft deliveries will take place in 2023. Originally, the Royal Canadian Air Force sought to procure 17 units; however, there is some speculation that this requirement could change as defense companies who participated in the competition were asked to submit recommendations for the number of FWSAR aircraft they believed suitable to fulfill SAR missions.
UK, France, Spain
Britain, France, and Spain signed a long-term maintenance contract with Airbus Defence and Space for the A400M military airlifter. The new agreement, effective as of December 1, will run for an initial two years and allow the three countries to draw on a common pool of spares and technical support. Through the sharing of resources and services, all three will benefit from major cost cuts, greater efficiency and greater flexibility to meet specific operational requirements. The contract was awarded through the Organisation for Joint Armament Cooperation (OCCAR), an international program management agency in charge of many joint-European purchases. The deal paves the way for any other OCCAR nation to join later and benefit from the contract.
On December 6, the United States approved the sale of an AEA-18G Electronic Warfare Range System to Australia for approximately $115 million. The system is used to train pilots in electronic warfare operations, and is intended to improve Australia’s self-defense capabilities and, in so doing, enhance the stability of the Asia-Pacific region. Per Avascent Analytics’ GPS data, the market for electronic warfare training systems is worth $2.4M, but will shrink through 2021.
The United Kingdom signed a $127 million development contract with General Atomics on December 5 to develop new unmanned aerial vehicle (UAV) platforms under the Protector program. The UAV platforms will be used for both intelligence collection and strike missions. In order to improve the ability of the new UAVs to perform in these roles, imaging and datalink systems will be upgraded and the platforms will be armed with Brimstone 2 missiles and Paveway IV bombs. Per Avascent Analytics’ data, the market for UAVs in the UK is shrinking at a rate of 2.3% through 2021 and only 3.7% of the opportunity space is open to new business. However, the portion of the UAV market focused specifically on combat UAVs will grow by 14.7%.
South Korea’s National Assembly approved an increase in its defense budget for 2017 to a record-high 40.35 trillion won ($34 billion) on 5 December. Military spending will account for ten percent of the country’s national budget, which was approved by the South Korean National Assembly at $342 billion. This is the first time the country’s defense budget has exceeded $34 billion, in line with the “Mid-Term Defense Plan 2016-2020,” published by the Ministry of National Defense in April 2015. The Plan called for the country to spend a total of $200 billion on defense over the five-year period. Avascent Analytics anticipates that $13.9 billion (38.8%) will be spent on operations and maintenance expenses, $10.3 billion (30.5%) on military personnel costs and $10.4 billion (31%) on defense investment. Critically, the 2017 budget for anti-missile systems also increased $145 million to $1.5 billion. While significant, this fell short of the defense ministry’s request in October for a $606 million increase.
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