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exports as a share of revenue will reach 38.5% in 2020, up from 35.6% in 2014.


Tanks and Armored Vehicle Manufacturers Federal and state governments account for 78.0% of


total revenue generated in the Tanks and Armored Vehicle Manufacturing industry. During the past decade, the wars in Afghanistan and Iraq supported strong demand for tanks and armored vehicles, especially for mine-resistant, ambush- protected vehicles (MRAPs). In 2010, however, industry revenue fell 22.9% as the US military decreased its exposure in several confl ict zones. The passage of the Budget Control Act of 2011 has accelerated this industry’s revenue losses as auto- matic budget cuts decrease defense spending. Because the US military accounts for more than half of industry revenue, the effects of the sequestration and the decline of the US military’s involvement in global confl icts will decrease demand for industry products. As such, IBISWorld expects industry revenue to fall at an average annual rate of 20.6% in the fi ve years to 2015.


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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Industry Review


tank have all experienced a pullback in production orders recently. Consequently, the company’s industry-relevant revenue reached a low of $1.2 billion in 2014, down from $2.1 billion in 2010. Like many other operators in this industry, General Dynamics has turned to international markets to cushion the decrease in defense spending cuts. Illustrating this changing direction, in the fi ve years to 2014, General Dynamics’ foreign military sales increased at an average an- nual rate of 7.6% to $689.0 million. The overall industry has also shown a similar pattern during this period, with exports


Industry Revenue - Guns & Ammunition Manufacturing in the US


Repositioning and Shifting Gears In 2009, industry revenue for tank and armored vehicle manufacturers peaked at $16.2 billion. Since then, it has decreased for fi ve consecutive years due to the deep budget- ary cuts enacted by Congress. At the same time, the wars in Afghanistan and Iraq have changed the needs of the modern military. Replacement, improvements and upgrades are con- stantly being engineered, as feedback regarding functionality is received from the battlefi eld. Yet, the sequestration cuts are having a noticeable impact on these important industry projects as well. For instance, the Army’s Ground Combat Vehicle (GCV) program—long hailed as critical for the army’s modernization efforts—got a $492.0-million cut from Con- gress in early 2014, effectively halting the program as a major acquisition initiative for the US army. Although the Pentagon is anticipated to keep the technology development portion of the GCV program alive, the production of 1894 GCV vehicles originally meant for purchase was shelved.


A deeper look at General Dynamics, an operator that ac- counts for 28.3% of total industry revenue, provides further insight into how the industry landscape is changing. General Dynamics’ primary military vehicles like the M1 Abrams battle


expected to account for 23.8% of total industry revenue in 2015, up from 9.3% in 2010.


Outlook Trends


Sequestration is expected to have a profound effect on industries that are heavily reliant on US defense spending in the fi ve years to 2020. The Budgetary Control Act is expected to cut the defense budget by $454.0 billion between 2013 and 2021. Moreover, IBISWorld expects that defense spend- ing will reach $598.0 billion in 2020, only marginally up from $597.5 billion in 2015. While the US government is expected to remain the dominant customer for industry products dur- ing this period, fi rms have begun to diversify their customer base. For example, in 2014, the US government accounted for 58.0% of General Dynamics’ total revenue, down from 69.0% in 2011. This trend is expected to continue as produc- tion orders for military vehicles remain low in the fi ve years to 2020. Further, industry operators are expected to continue seeking new customers in foreign markets. As a result, over the next fi ve years, IBISWorld expects industry exports to increase at an average annual rate of 6.2% to $1.3 billion, as demand from international governments grows.


29 — Aerospace & Defense Manufacturing 2015


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