What is Markets Forecast?

Janes Markets Forecast is a comprehensive market analysis solution that combines detailed market intelligence databases of defense industry forecasts with an easy-to-use online charting interface. It is a bottom up, sales/revenue available to industry 10 year forecast.

1. Markets Forecast is a bottom-up ten-year forecast that goes across 19 defense markets and 60 countries, that make up approximately 96% of the World’s Defense spending.
2. Markets Forecast represents the sales/revenue available to industry - not country defense equipment budgets. Although Janes Defence Budgets forecasts are used as source material, forecasts contain only the portion of the budget that is industry addressable.
3. Markets are forecast in constant dollars to ensure consistency within each country. Inflation is accounted for by using the US DoD Green Book inflators/deflators as a guideline. The Markets Forecast Charting Interface enables users to toggle between constant and current dollars instantly.
4. Forecasts are weighted by a Program P(Go) factor. This is a probability estimate, used to calculate an expected value and avoid overstatement of a market’s worth. This factor covers known programs where values are unknown/modelled, as well as opportunities. Anything less than a factor of 0.9 will include an analyst comment, detailing the rationale underpinning that value. P(go) is split into near-term (1-5 year) and long-term (6-10 years) fields to help with segmented analysis. P(go) is NOT the probability of a program proceeding.
5. Forecasts are developed by covering all the known programs/equipment first. In addition to these programs, we then add in Opportunities. Opportunities are forecast in 2 ways; Stated Opportunities (SO) and Derived Opportunities (DO). SO’s reflect where there has been a stated requirement or documentation identifying the intention to procure a piece of equipment or service, or the announcement of the need for that capability. DO’s reflect opportunities identified by our analysts where an explicit requirement has not been stated, but there is an expectation that the capability will be sought in the forecast window, and may be based on factors like aging inventory, market trends, and capability requirements, etc..
6. Records are created through a process of review, analysis and reconciliation of a wide array of information sources – either those available in the public domain or from primary research at conferences and trade events. Analysts document comments and assumptions for key fields in every database record, including areas such as unit price, delivery schedules and P(go) factors. This documentation can be found in the program-level detail export file. Follow-on program forecasts are typically credited to the product's incumbent unless an open competition has been announced or is otherwise known to be under consideration.
7. An approximation of aftermarket revenues available to the original supplier is provided in the Supplier Logistic Support (SLS) field. SLS includes spares (both initial and sustaining) and life cycle sustainment support for fielded equipment.
8. Markets Forecast captures Joint Ventures and Teams as independent contractors.
9. Markets Forecast provides the ability to customize markets of interest, either by a specific market view or a special segment to view the data (i.e., different functions, specific buckets to align with your business area(s).
10. Markets can be viewed at the System (top level) or Subsystem (major subsystem categories).

Market Intelligence

Janes develops and maintains its detailed market intelligence databases by employing highly- experienced analysts to exhaustively research worldwide defense programs and future requirements in their areas of expertise. Each with an average of 20+ years of defense industry experience or military background, our analysts carefully read and evaluate a wide array of periodicals, reports, government budgetary documents, conference proceedings and publications to “sort through the noise” and develop solid and justifiable bottom-up forecasts for all programs and future opportunities in their markets. To promote consistency across markets, Janes analysts use an established forecasting methodology.

Markets Forecast US DoD Budget Assumptions

US DoD budgets can be grouped into two categories: those related to US DoD investment expenses (Procurement and Research); and those related to US DoD infrastructure expenses (O&M, Military Personnel, Military Construction). Together, these five budget accounts comprise more than 95% of the total 051 US DoD Budget. Collectively, these accounts are sometimes referred to as US DoD “colors of money”.

A very high percentage, but not all, of the funding in the two investment budget accounts (RDT&E and Procurement) flows to the defense industry through contract awards for equipment design, development, testing and acquisition. Conversely, only about 30% percent of the infrastructure (O&M, Military Construction) budget flows to the defense industry related to equipment maintenance expenses. Essentially, none of the MilPers funding is available to industry.

Non-US Budget Assumptions

The budget line represents a top line that – in most cases – our forecast ought not to exceed. There are exceptions, of course, particularly in those nations which don’t seem to follow traditional budgeting processes. In addition, the budget forecast line ignores the fact that when nations perceive real threats to their national security, historical trends and forecasts no longer apply.

While the US defense budget submission consists of almost 20,000 pages of related material, most countries’ publicly available defense budgets are considerably more compact.

For the 59 non-US countries covered in Markets Forecast:

• Less empirical data; more modeled values
• Proactive and reactive forecast/budget updates
• Reactive updates made as contract information becomes available
• Proactive budget updates for all countries covered by Markets Forecast - 98% of global defense market
• Focused monthly team meetings used to compare aggregated market forecasts to budgets; adjustments made as necessary
• Process will integrate military capabilities assessments with budget/forecast