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Global naval maintenance costs seen rising

Feb. 5, 2013 at 12:50 PM   |   Comments

RIO DE JANEIRO, Feb. 5 (UPI) -- Global naval maintenance costs are expected to almost treble in 10 years and it's not clear if naval forces worldwide will have the resources to cope with the rising costs.

Recent slow growth forecasts have forced analysts in Brazil to revise downward estimates of state funds the government is likely to funnel into defense regeneration. Defense spending outlook in other Latin American countries remains sketchy, with some countries refusing to publish relevant data.

Diplomatic moves by the regional Union of South American States and other advocacy and campaign groups have also been defeated by a transparency gap.

Be that as it may, it is going to become increasingly costly for navies to keep their seaborne assets and personnel in trim.

The latest report from Irish publisher Research and Markets looked at "The Global Naval Vessels MRO Market 2012-2022" and that market's profile, size and major drivers.

MRO -- maintenance, repair and operations -- generally defines items such as consumables and all equipment and supplies used toward maintenance, compressors, pumps, valves to repair tools, computers, fixtures and furniture.

Naval vessel operations entail recurring expenditure on supplies of all those supplies plus other costs related to maintenance.

The global naval vessels MRO market was estimated to be worth $4.8 billion in 2012 and is likely to increase at a compound annual growth rate of 9.68 percent during the forecast period and reach a peak of $12.1 billion by 2022, the Research and Markets study said.

The report looked at major causes that would generate demand for various MRO items, looking also at how moves toward modernization would affect on those costs.

Brazil leads Latin America in the volume of spending toward naval refurbishment but its neighbors in South and Central American and the Caribbean aim to catch up. Cash constraints are seen to be holding back several regional navies.

Brazilian data indicated that an economic downturn in Brazil could also impact on the cash stream into the state defense apparatus.

Brazil is building several submarines, including a nuclear-powered submersible with French help, naval craft for tactical defense duties on its rivers, coastal defense craft and other naval vessels.

Brazil's large offshore oil and gas development program has led to increases in defense outlays. Chile is developing its southern region both for tourism and for mineral development, and Argentina wants to spend more on naval regeneration after several decades of neglect and financial constraints.

UNASUR has set sights on independent naval defense development but lags behind other regions.

North America leads the MRO market, the Research and Markets study said.

The study suggests that defense cutbacks and limitations on new acquisitions will paradoxically increase the market for the maintenance and repair sector.

As a result MRO opportunities in Europe and the Mediterranean region are predicted to grow.

Maintenance and repair on destroyers is expected to attract the most expenditure during the forecast period, Research and Markets said.

Other than those warships, expenditure on frigates and submarines is likely to claim the second and third largest segment, the study said.

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