Eurosatory 2016

REGIONAL FOCUS - North America [ES2016D5]

17 June 2016

The FY17 presidential budget request (PBR) showed a modest increase of 2% over last year’s enacted budget for the top military ground vehicle programmes. Ninety per cent of the FY17 request was for modifications to existing platforms over new-build initiatives. The military ground vehicle market has held steady, and made progress toward the success of future programmes by concentrating on priorities.

USAUSAThe Joint Light Tactical Vehicle (JLTV) programme was awarded to Oshkosh, which continues to be a prominent supplier of traditional truck platforms. JLTV was not without its hurdles as the award was protested, but that was eventually dismissed, clearing the way for the production of more than 55,000 vehicles for the US Army and US Marine Corps (USMC). The programme, unlike recent poorly managed examples, has seen improvements in recent testing results, is well priced at approximately USD250,000 and still delivers comparable protection to Mine-Resistant Ambush-Protected (MRAP) vehicles.

The Marine Corps’ Amphibious Combat Vehicle (ACV) progressed under its strategy to field incremental variants to obtain the high water-speed objective. Beginning with essentially an off-the-shelf solution for ACV 1.1 and a modest transition for ACV 1.2, the programme is set up for success. SAIC and BAE Systems were awarded engineering and manufacturing development (EMD) contracts to produce prototypes for the ACV 1.1 and one supplier is expected to be selected to build 204 vehicles by 2020.

The Stryker will receive a 30mm cannon for the vehicles stationed in Europe in order to counter Russian activity, but the Army has hopes of up-gunning many more Strykers in the future. Additionally, funding for the Double-V Hull (DVH) has been approved for the fourth Stryker Brigade Combat Team (SBCT), improving protection and keeping the Stryker relevant in potential operations.

BAE Systems was awarded the Armored Multi-Purpose Vehicle (AMPV) contract at the end of 2014. The major obstacle that lingers is the effort by General Dynamics to steer vehicle requirements in its favour and towards a wheeled solution.

While the debate on wheeled versus tracked variants is bound to continue, the Army favours a tracked solution. Using a Bradley chassis with upgraded mission packages makes sense in terms of the Army’s desire for commonality, especially as budget constraints continue.

Protecting the JLTV and a long-term approach for highly desired programmes have been the obvious objectives for both the Marines and Army. The Army’s desire to eventually replace the Bradley with a Future Fighting Vehicle (FFV) is proceeding with a realistic timeline of approximately 10 years.

The Army is clearly trying to ensure it gets the requirements right for the FFV after the failure of the Ground Combat Vehicle.

With deliveries of the M109A7 (Paladin), AMPV, M1A2 SEPv3, Stryker DVH and Bradley improvements, the Army will have essentially modernised. The FFV was pushed out to ensure funding for the JLTV, and this approach worked. The USMC also took a renewed approach to achieving its longterm objective for an organic over-the-horizon, ship-to-shore amphibious capability.

The incremental approach to the ACV 2.0 requirement will probably take until 2035 to come to fruition, but along the way the USMC will gain capability without risking the programme. Its approach has the added benefit of simultaneously reducing pressure on its AAV fleet, which buys time needed to develop the ACV 2.0.


The USA, with a five-year CAGR of 1.91% and a market value of USD66.8 billion, dominates the Americas region overall, accounting for 80.4% of the procurement.

Existing programmes over the forecast period include USD6.7 billion for the Stryker and Double-V Hull, continued M1 Abrams including M1A2SEPv2 (USD6 billion), Bradley upgrades and modifications of USD5.6 billion and FMTV (USD3.73 billion). There also exists approximately USD9.67 billion in stated opportunities including HMMWV Modernization, the ACV 1.1, the FFV, the JLTV and the AMPV.


Top suppliers to the region start with General Dynamics with USD16.1 billion forecast over the period representing a strong 20.0% of the market share. Its revenue is chiefly dominated by main battle tanks (MBTs) with 58% and infantry fighting vehicles (IFVs) with 33% by platform segment. The Abrams, Piranha and light armoured vehicle (LAV) families dominate sales to the region.

Oshkosh has a much improved position with USD16.1 billion forecast and 19.4% of the total market share, with revenue derived from trucks and protected vehicles, but no combat vehicles however; its Families of Heavy and Medium Tactical Vehicles as well as the JLTV has solidified its position for the foreseeable future.

BAE Systems holds third place by market share with 18.2% and USD15.1 billion forecast over the period. Its vehicle segments are divided with IFVs representing 35% of the business in the region, followed by self-propelled artillery with 25% and recovery vehicles with 10%.

The vehicles that make up these healthy positions are the M2/ M3 Bradley, M109 and M88 Hercules respectively. Near the end of the forecast its AMPV adds to its position in the region.


Joint Light Tactical Vehicle (JLTV) Overview

JLTV is a joint Army and USMC programme to procure a replacement for the long-serving High-Mobility Multi-Purpose Wheeled Vehicle (HMMWV) platform. Designed in the context of the Cold War, the HMMWV lacks protection, particularly against underbody blast threats and rocket-propelled grenades (RPGs).

Efforts to mitigate this shortcoming have added enough weight to severely limit the platform’s mobility. JLTV focuses heavily on survivability and mobility, as well as ensuring that the platform is able to accommodate current and future electronic and communication systems. The JLTV contract for low-rate initial production (LRIP) of 16,901 vehicles was awarded to Oshkosh on 24 August 2015.

FY17 budget

FY17 activity procures 2,020 LRIP vehicles with the Army receiving 1,828 vehicles and the Marines receiving 192. These vehicles will allow an initial operating capability (IOC) in FY18 for the Marines. The USMC will procure all its JLTVs by FY22. The Army achieves IOC in FY19 with procurement continuing until approximately 2040.

Stryker DVH Upgrade (MOD) Overview

The Stryker family of 8x8 vehicles has been in service for more than a decade. The 10 variants have provided a great deal of flexibility to the Army’s ability to shoot, move and communicate within the Stryker Brigade Combat Teams.

Although the Stryker is the newest vehicle family in the Army, the past 10 years have taken their toll with demanding drains on space, weight and power as well as cooling (SWaP-C). The most pressing shortcoming at present is survivability. Through a DVH upgrade programme this is being addressed for current and future operations. Additional crew protection improvements are also part of the upgrade.

FY17 budget

The USD727.8 million FY17 request supports the fielding of the previous procurement of the third DVH brigade set and procures 123 vehicles of the fourth DVH set.

Funding also supports the fielding of the 30mm weapon systems, which were part of an urgent operational need to increase the firepower of the Stryker Infantry Carrier Vehicles (ICVs) that operate within the US Army European Command.

Funding also supports other aspects of Engineering Change Proposal (ECP) 1 to include: power generation, suspension and network upgrades, training devices and safety modifications.

Paladin Integrated Management (PIM) – M109A7 (MOD) Overview

PIM (now designated the M109A7) builds on the advances made in the M109A6 upgrade, converting existing M109A6 self-propelled howitzers (SPHs) – in service for more than 20 years – to the M109A7 PIM standard.

PIM integrates components of the Bradley, the cancelled Future Combat Systems, and the current M109 fleet onto a new chassis. Although this will lead to a growth in overall weight of up to 5%, the growth potential that is added is significant, allowing heavier armour packages and other future upgrades to be made.

The second major improvement is the replacement of the current hydraulic gun and turret drive systems to an all-electric system.

This has been accompanied by a major redesign of the vehicle’s power system, allowing greater modularity and ease of field repair.

A total of 580 sets of vehicles, each comprising one SPH and one Carrier Ammunition Tracked (CAT), will be procured. This programme will extend platform life into the 2050s. FY17 budget The FY17 request for PIM is up USD215.1 million over the FY16 enacted amount. The focus for FY17 is funding for support of Full-Rate Production (FRP). Base funding of USD469.3 million and Overseas Contingency Funding (OCO) of USD125.2 million will provide for 48 PIM sets. Additional funding of USD63.1 million will provide other modifications to existing M109A7 vehicles.

M1 Abrams (MOD) Overview

The Abrams MBT has been in service for more than 30 years.

It exceeds its SWaP-C limits and has shortcomings in network capability, survivability and lethality. In order to restore lost capability, the Army has initiated ECP and modification programmes to address these shortcomings. The ECPs provides hardware and other updates to address SWaP-C gaps and also allow for hosting future technologies to keep the M1 capable until 2050.

FY17 budget

The USD573.87 million FY17 request continues with armour production transitioning to the ECP 1A armour package configuration. In addition, it procures the remaining ECP 1A hardware in support of FY18 M1A2SEPv3 production. Funding will continue support for the Total Integrated Engine Revitalization (TIGER) and Transmission Enterprise programmes, Direct Support Electrical System Test Sets (DSESTS) and upgrades to Training Aids, Devices, Simulators and Simulations (TADSS). Additionally, funding supports the production facility in Lima, Ohio and other locations.

M2/M3 Bradley Overview

The Bradley IFV, in service since the early 1980s, also exceeds its SWaP-C limits. This proven tracked fighting vehicle fills a niche within the Army’s portfolio and requires improvements to maintain it. Two related programmes currently under way that combine to address these shortcomings are the Bradley Improvement Programme and Bradley MOD. The Bradley Improvement Programme uses ECPs to produce improvements in track, suspension, powertrain and electrical systems. Bradley MOD procures hardware and field modifications to the Bradley platforms. This programme also provides the Bradley with enhanced command and control, lethality, survivability and situational awareness.

FY17 budget

FY17 base procurement dollars of USD276.4 million supports procurement of multiple modifications to the Bradley family of vehicles, including the procurement and installation of upgrade ECP1 kits; procurement and installation of upgrade ECP2 kits; TADSS, and programme/ engineering support. Current projections indicate that the Bradley IFV will likely remain in the armoured brigade combat team (ABCT) formation until the 2050s. FY17 R&D funding provides USD101.8 million for ECPs including improvements, survivability enhancements and test and evaluation.


CanadaCanadaAs a prosperous and stable country, Canada faces few direct security threats either internally or from overseas.

Canadian foreign and security policy is focused on the promotion of international peace and stability through the fulfilment of its commitments to NATO, the United Nations and other multilateral bodies.

The government regards a stable world order as central to the physical security of Canada and essential for the domestic prosperity of a country heavily dependent on international trade, especially with the USA.

Canada’s defence industry is extensive, although indigenously owned companies tend to be small and medium-sized enterprises (SMEs). This can be attributed to the extensive acquisition of larger Canadian firms by major international companies and the resultant influx into the country of their subsidiaries. Conducting business in Canada is generally straightforward, given the mature and stable nature of the country, although defence market entrants may face some challenges.

Procurement has not always proceeded smoothly and the government has faced criticism over transparency, cost increases, delays and uncertainty on a number of projects. The release of the country’s Defence Procurement Strategy in 2014 was designed to address these problems, as well as to respond to input from industry. Part of the new strategy was the introduction of an annually published Defence Acquisition Guide (DAG), which details Canada’s expected requirements and ongoing acquisition programmes. 2015’s DAG was released in May 2015 at CANSEC in Ottawa.

Defence spending

The Canadian armed forces are undergoing a large-scale recapitalisation and modernisation programme under the Canada First Defence Strategy (CFDS). However, the repercussions of the 2008 global financial crisis and subsequent recession, as well as extended deployed operations in Afghanistan, mean that defence spending will not achieve the original planned levels of CAD490 billion over a 20-year period.

Canada’s defence budgets have been declining in recent years, with the budget for 2012/13 set at USD18.9 billion; a USD1.9 billion cut from 2011/12. This was followed by a further reduction in the 2013/14 budget, which set expenditures at USD17.5 billion.

The 2015 budget was in real terms the lowest in the past five years, at USD17.1 billion.

Despite this, Canada retains an extensive procurement programme across all three services, although it is facing increasingly strong headwinds as the Department of National Defence (DND) is forced to find savings to align the programme with broader government spending reductions.

Canada’s 2015 budget authorised military spending that, at USD17.1 billion, is USD3.7 billion lower in real terms than its 2011 peak.

However, in May 2015 it was announced that the Department of National Defence’s annual ‘budget escalator’ would rise from its current 2.5% to 3% in 2017, adding an extra CAD2.3 billion to the annual defence budget by 2026.


Canada’s five-year CAGR of 6.98% and a market value of USD6.1 billion accounts for 7.3% of the region’s end-users made up of the Tactical Armored Patrol Vehicle (USD1.59 billion), Light Armored Vehicle (LAV) III Upgrades (USD1.58 billion) and Medium Support Vehicle System (MSVS, USD500 million). Stated opportunities also exist for Logistics Vehicle Modernization (LMV), forecast at USD637 million.

Information from IHS Jane’s Markets Forecast, Defence Budgets and Navigating the Emerging Markets

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