Connector and Cable Assembly Supplier

Facts & Figures: Military Market

In this issue’s Facts & Figures column, the military market is showing slow growth but is still very profitable.

The military connector market is large, achieving $3.2 billion in sales in 2014. The following table provides connector sales by geographic region for 2013 and 2014.

The North American market, mostly US, accounts for approximately 50% of total military connector demand. Further, it is estimated that the US defense industry manufactures 75% of all military electronic systems worldwide. Of the 75%, approximately 50% of production is for the US government and private US companies and the remaining 25% for foreign entities.

Military connector sales are trending down, with the industry growing in the low single digits for several years. In 2014, sales growth was only 2.3%. However, that result is not bad considering overall spending on military. For example, it is estimated that total spending on military worldwide is down 10% from past years. This reduction is a function of less government spending due to “fewer boots on the ground,” fewer military bases, and similar circumstances; it is not the result of less spending on sophisticated electronic weapons systems.

We believe that future military connector sales will remain at about the same level as the recent past.  We forecast a five-year CAGR of 3.1%.

Military/Aerospace Five-Year Forecast by Region

The following table provides a historical perspective of the sales trend. Note that connector sales are growing, but at a rate slower than the overall connector industry.

Military/Aerospace Five-Year and 10-Year History

The top 10 connector manufacturers account for approximately 73% of world connector sales. The following table ranks the top 10 connector providers and their market shares of the world military connector market.

Top 10 Military/Aerospace Manufacturers

While military connectors are now growing slower than the overall connector market, profit per sales dollar is higher. Historically, military connectors generate higher gross margins than other connector types. The military connector market is characterized by slow but steady growth and higher-than-average gross margins.

No part of this article may be used without the permission of Bishop & Associates Inc. If you would like to receive additional news about the connector industry, register here. You may also contact us at bishop@bishopinc.com or by calling 630.443.2702.

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Ron Bishop

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